Split-Roll Forces Challenge Prop 13: How Will Californians React?

Split-Roll Forces Challenge Prop 13: How Will Californians React?

Supporters behind the split roll ballot measure that would remove Proposition 13’s tax protection for commercial properties had it been approved are apparently junking the initiative in favor of what they believe will be a “new and improved” plan.

“They claim they are strengthening the measure to help it pass,” says Joel Fox on his Fox & Hounds site. But “what they are doing is recognizing flaws in the initial version and not changing the thrust of a measure designed to raise taxes, consumer costs and undercut Proposition 13.”

The original measure had already qualified for the 2020 ballot as a state constitutional amendment. It would have left Prop 13’s safeguards in place for residential property, small businesses, and agricultural land. But it would have exposed commercial and industrial assets to tax hikes outside the 1978’s “sonic boom” that capped property taxes at 1 percent of a property’s assessed value.

The San Francisco Chronicle reports that Tyler Law, a spokesman for the original initiative, said limits on taxing shopping centers, office buildings and factories  “have starved funding for schools and local communities.” That’s true only if schools and local communities have insatiable appetites for tax revenues. The reality, though, is dollars have been pouring into school budgets at historical levels.

  • Days after the governor was sworn in in January, EdSource said “school districts laboring under higher mandated expenses would receive a surprise windfall — pension-cost relief — in Gov. Gavin Newsom’s first proposed state budget for 2019-20, which will also provide big spending increases for early and higher education.
  • In 2016, CalMatters said “one of the biggest winners in Gov. Jerry Brown’s January budget was public schools, which has enjoyed a rapid funding rise in recent years.” Brown’s proposed education budget for fiscal 2017 marked a “51% increase in the minimum funding for California’s public schools — according to the formula set by Proposition 98 — since 2011, when the budget was about $47 billion.”

Apparently fearing that the original effort, called, of course, the “Schools & Communities First” initiative, wouldn’t be approved by voters, Law says his group is “refiling the initiative to substantially strengthen the measure … and widen the path to victory in November 2020.”

One wonders if it will be worth it. The new initiative will require 997,113 signatures after 855,000 were collected for the original because, as Fox says, “a constitutional amendment needs signatures that equal a percentage of votes cast for governor in the last election.” Since the first effort cost $3.45 million, it’s expected the second bite will cost at least $5 million and maybe more than $6 million.

But then what’s a few million here and there if they produce $11 billion a year in tax hikes (other people’s money) down the road?

Painful as it would be, the tax hike is only one part of the overall losses that would result. A Pepperdine University study that found that a split-roll regime would cause “lost economic output and decreased employment,” and “further undermine the attractiveness of the business climate in California,” which is already about as low as it can be.

“The cost to the California economy of this property tax increase,” it continues, “would total $71.8 billion dollars of lost output and 396,345 lost jobs over the first five years of a split-roll property tax regime. These losses would be even greater in succeeding years.”

An economy is not something to be bled for political purposes on behalf of influential interest groups. Yet that is exactly what the split-roll forces hope to do. We’ll find out in the fall of 2020 how much of California understands this.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.