SACRAMENTO, Calif. (CN) — A group looking to break up California’s iconic property tax code and spur billions in new commercial property taxes for local governments and schools said Thursday it has enough voter signatures to qualify a measure for the November ballot.
Uniting behind a coalition of labor unions, education officials and a nonprofit ran by Facebook CEO Mark Zuckerberg and his wife Priscilla Chan, the tax reformers are pushing major changes this fall to California’s landmark Proposition 13. The coalition said Thursday it was submitting over 1.7 million signatures to county voting officials, easily surpassing the 997,000 necessary to put their proposal before statewide voters.
The group believes its massive signature-gathering effort indicates California voters are warming to the possibility of changing the property tax framework that has been in place for decades, considered one of the most influential tax measures ever approved. It claims the 40-year-old measure is a “tax loophole” that deprives the state of billions in taxes each year.
“The overwhelming support for the Schools and Communities First initiative is reflected by the 1.7 million signatures, the most ever gathered in California, to put this important measure on the ballot,” said Toby Boyd, president of the California Teachers Association. “Schools & Communities First will help provide the resources our students, families and communities need for public education, healthcare, housing and public safety.”
Passed in 1978, Proposition 13 set base property tax rates at 1% of assessed value and caps annual increases at 2%. If a property is sold, it is reassessed at current cash value, meaning properties on the same street can have vastly different taxable value.
Approved by nearly 63% of voters in 1978, Proposition 13 was a hallmark victory for California conservatives and anti-tax advocates.
The proposed November ballot measure would create what’s known as a “split-roll property tax.” Commercial properties will be taxed at market value while leaving in place current tax rules for residential owners. Large commercial properties would be reassessed every three years, and smaller businesses and farming properties would be exempt.
Proponents claim the proposed tax reform could produce up to $12 billion, with new tax revenues split between local governments and schools. A separate group has already qualified a similar measure, but it’s expected the sides will settle and bring just one measure to voters.
But stashing a central piece of the popular Proposition 13 will require the proponents to jump into the political arena with a powerful group of anti-tax advocates and state business groups. Both sides are well funded, paving the way for a fundraising and advertising blitz with the potential to exceed the $100 million mark.
Opponents warn raising certain commercial property taxes will trickle down to the average Californian in the form of increased consumer prices and rent.
“It’s going to be a knockdown, drag-out fight,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association — named after the author of Proposition 13.
Coupal says the taxpayers association and the state’s business community could spend up to $60 million defending Proposition 13, which he calls the “third rail of California politics.”
Aside from the deep-pocketed business groups, the proponents face other challenges including the skyrocketing anxiety of Californians mired in the coronavirus pandemic. It remains to be seen whether voters will embrace sweeping tax reforms during the middle of a potential recession, but just 47% of respondents in a recent statewide poll taken before the pandemic said they supported the split-roll measure.
“We don’t need a $12 billion tax hike,” Coupal said. “Homeowners have seen for 40 years unrelenting attacks on Proposition 13 and they fully appreciate what would happen if the commercial protections were stripped — residential would be next.”
If enough of the signatures are verified and the latest split-roll measure makes the November ballot, the proposal will need a simple majority of state voters to pass.
Obstacles aside, the split-roll proponents argue the sheer size of their signature-gathering canvassing gives them a fighting chance come November.
“This historic accomplishment doesn’t come easy, and it illustrates the fact that Californians overwhelmingly want to bring more resources back locally for our critical government services and schools,” said Anthony Thigpenn, of the progressive voter organizing group California Calls, in a statement. “Those local leaders on the front lines know exactly what the most pressing needs are in their communities, and now more than ever we must ensure they have the tools at their disposal to continue doing their jobs.”