Many Initiatives Still Too Close to Call in California

SACRAMENTO, Calif. (CN) — A record 22 million Californians registered to vote ahead of the November general election. While the allure of choosing the next occupant of the White House no doubt spurred many of them to the ballot box, they also had a list of initiatives to decide ranging from whether the state should go to a split-roll property tax scheme to ending the money bail system.

The bid to end cash bail failed, but here’s a look at how some of the other propositions are faring — even as the vote count continues:

Proposition 15

Ignoring pleas for budget relief from California’s cash-strapped cities and Governor Gavin Newsom, voters are on the verge of rejecting a bid to amend the state’s landmark tax code and put the squeeze on commercial landlords.

With over 75% of the estimated total vote counted, 52% have voted no on Proposition 15 — the so-called “split-roll” bid. The proponents’ dreams of raising up to $11.5 billion in new tax revenues for schools and cities is on the ropes, as the measure faces a 426,000 vote-deficit as of Friday.

If the result holds, it would be further proof of the popularity and resiliency of a voter-approved tax scheme that is credited with preventing runaway tax bills for property owners in the Golden State for decades.

Seeking to make taxes more predictable and stable, 63% of Californians voted in 1978 to amend the state constitution in order to slow tax increases for both commercial and residential property. Considered by many as the “third rail” of California politics, the system caps annual tax increase on both commercial and residential properties.

The tax code has remained largely unchanged despite the fact it’s long been a target of some of the state’s most influential labor unions. Former lawmakers and governors — even during previous economic downturns — have hardly dared to challenge the tax code, wary of its reputation.

But with the state facing a record $54 billion Covid-induced deficit, proponents have been trying to convince voters they could unearth a giant new revenue stream by raising taxes on commercial properties valued above $3 million. The supporters amassed a deep and influential bench featuring Newsom, former Vice President Joe Biden, Facebook CEO Mark Zuckerberg and many of the state’s largest labor unions.

Leading the fight against the tax reform are a collection of business and agricultural groups, as well as the Howard Jarvis Taxpayers Association — named after the author of the original ballot measure. They cast Proposition 15 as the “largest property tax increase in California history” and claimed it would send commercial rents and the cost of consumer goods skyrocketing.

In the run up to the election, the sides combined to raise a staggering $139 million on Proposition 15.

To pull off a comeback in the coming days or potentially weeks, the proponents are hoping to glean more support from many of the state’s coastal counties in the final batches of votes. The proposition has had success thus far in counties like Los Angeles (53-47%), San Francisco (71-29%), Santa Clara (56-44%), Alameda (66-34%) and Marin (63-37%).

Proponents can find a glimmer of hope in the fact that according to the Secretary of State’s latest estimates, there are still nearly 1 million outstanding ballots in Los Angeles and Alameda alone. Statewide, there are an estimated 4.5 million ballots left to be counted as of Thursday evening.

Support fades inland however as voters are rejecting the split-roll scheme in counties like Fresno (40-60%), Tulare (64-36%) Riverside (40-60%) and Sacramento (53-47%). Making the comeback more difficult is the fact the measure is on course for defeat in the major coastal counties of San Diego (44-56%) and Orange (39-61%).

Mary-Beth Moylan, associate dean at University of the Pacific’s McGeorge School of Law who also supervises the publication of the university’s California Initiative Review, said the opponents succeeded in hammering home their claim that increased commercial property taxes would eventually trickle down to consumers.

“The no side did a good job of saying ‘This isn’t a tax that will only be against corporations, it’s going to impact small businesses,’” Moylan said.

Proposition 19

California would crack down on longstanding tax breaks for inherited homes but allow older residents the ability to take their cushy property tax rates with them when they move under a closely contested ballot measure.

In a race too close to call as of Friday morning, Proposition 19 was leading by a 51-49% margin.

Backed by Newsom along with realtor and firefighter groups, Proposition 19 is meant to give seniors wishing to move within the state more flexibility. If passed, homeowners over the age of 55 — as well as those with certain disabilities and wildfire victims — could keep their property tax bill with them if they sell and move to a more expensive place.

Supporters say the change could spur more seniors to downsize or move into retirement centers and carries the bonus of increasing housing supply.

“Prop 19 will open up tens of thousands of homes that haven’t been on the market for decades, creating opportunities for new buyers and helping to stabilize housing costs so more Californians can afford home ownership,” the supporters claim on their website.

The proposal, placed on the ballot by the Democrat-controlled Legislature, also purports to raise new revenue for local governments and fire departments, as it would increase the tax hit on in-family property transfers.

Led by the Howard Jarvis Taxpayers Association, the opponents argue the change would punish those simply looking to pass on family homes to their children or grandchildren. They note a similar proposal was nixed by voters in 2018.

“This is a billion-dollar tax increase on California families,” the taxpayers association warns. “The price is too high.”

Much like the related split-roll proposal, the residential tax reform proposal has performed well in the San Francisco Bay Area as well San Diego and Ventura counties. But supporters remain on edge as the measure hasn’t run up more than 60% support in any county and there isn’t a clear result as Proposition 19 is ahead by only 336,000 votes.

Proposition 14

Two decades after greenlighting a taxpayer-funded stem cell research agency, California voters are on the verge of approving billions more to find a cure for chronic diseases and cancers.

Ahead by a 51-49% margin, Proposition 14 would allow the state to sell up to $5.5 billion in bonds to prop the California Institute for Regenerative Medicine and its efforts to fight everything from Parkinson’s disease, diabetes, stroke and infectious diseases including Covid-19.

After a ban on federal funding for stem cell research during the George W. Bush administration, researchers in 2004 turned to the state ballot. They ultimately convinced voters by a 59-41% margin to create a constitutional right to study stem cell cures as well as take on $3 billion in new debt.

Since 2004, nearly a dozen states including New York and Maryland have created similar programs but on a much smaller scale.

Now the backers seek to keep the institute afloat with another $5.5 billion infusion that could ultimately cost $7.8 billion to pay off. Supporters include Newsom, the University of California Board of Regents and the American Association for Cancer Research.

Critics countered that private stem cell research has made great strides since 2004 and that the federal funding ban was lifted under President Barack Obama. With the state mired in recession, the editorial boards of several California newspapers concluded it was bad timing for Proposition 14 and urged readers to vote no.

The latest update from the Secretary of State shows over 50% support for Proposition 14 in coastal counties like San Diego, Los Angeles and San Francisco. It has effectively been shut out of the Central Valley and rural counties.

The tight race shows that California voters are cognizant of the state’s shattered finances and are not overly enthusiastic about inking new bonds during a recession, said Moylan, the UOP professor. She says though the initiative is close, the critics seem to have made a persuasive pitch.

“People are not in the mood for bonds; they are concerned about the finances of the state and are not feeling like expenditures or committing money down the line is a great idea,” she said.

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Many Initiatives Still Too Close to Call in California

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