Once upon a time, California home and commercial property owners after working for decades to pay their mortgages / taxes, get their kids though school along with paying medical, food and transportation expenses, were being forced out of their homes and businesses by government.
Those who endured the Great Depression and survived WW II, the Korean War, and now ready for retirement were being deprived of their homes by punishing tax policies. Property taxes could literally double from one year to the next.
Then in 1978, Howard Jarvis and Paul Gann put Proposition 13 on the ballot (Passed with 62.6% of vote) which reduced property taxes, changed how property values were assessed and limited the percentage property taxes could be increased each year.
All property values were reset at 1976 levels. Property could be reassessed whenever it sold. Otherwise the value could be increased by no more than 2% each year for taxing purposes.
The other significant aspect of Prop 13 was that it required a two-thirds majority in both legislative houses for future increases of any state taxes. It also required a two-thirds vote majority in elections for local governments to increase special taxes. (A "special tax" is a tax devoted specifically to a purpose: e.g. homelessness or road repair; money that does not go into a general fund.)
As a result, millions of Californians have been able to keep their property and avoid thousands of dollars in taxes each year thanks to Prop 13.
Today, longtime Californians who understand and have benefitted from Proposition 13 are in shock that people would consider doing away with the property tax relief that saved their homes and businesses. However, they underestimate the ignorance of today’s voters, the socialist leanings of youngsters and the corrupt nature of Sacramento politicians.
A new initiative called “California Schools and Community Funding Act” is destined for the November 2020 ballot. The title is a euphemism used to deceive. This initiative is about removing Prop 13 limitations on commercial property thereby increasing property taxes which could bump a tax bill up 10-fold.
Supermarkets, office buildings, warehouses, factories, shopping centers, auto dealerships, medical offices, self-storage facilities, gas stations, hotels, restaurants and such would have their property reassessed at current market rates spiking their taxes.
However, buildings and real estate don’t pay taxes, people do. Increased taxes on commercial property will be passed along to the consumer.
In 2012, the Davenport Institute at Pepperdine University’s School of Public Policy did a study concluding that raising property taxes on businesses by an estimated $6 billion would cost the state economy $71.8 billion of lost output and more than 396,000 lost jobs in the first 5-years. The shame is that California does not have a revenue problem but rather a spending addiction among its leaders.
However, prior to the Pepperdine study, 12 attacks via bills, initiatives and amendments on Prop 13 benefits to commercial property had been waged but failed. Proponents of the current assault say they are just closing a “loophole,” but the tax treatment of commercial property is not a “loophole.” It was the will of the voters.
In 1978, with Prop 13 on the ballot Governor Jerry Brown and the legislature put Prop 8 on the ballot to create a split roll allowing higher taxes of commercial property. Voters rejected Prop 8 by 53-47%.
Since the 1800s, California has treated personal and commercial real estate the same for tax purposes. Prop 13 cut the property tax rate to 1% from a statewide average of 2.67% and put limits on the increases of the assessed value of property.
Opponents often argue that Prop 13 caused a reduction in per-pupil spending on education. It’s a myth. According to data from the National Center for Education Statistics, per pupil spending in California’s elementary and secondary schools has risen every year since the 1970s. Measured in constant dollars, per pupil spending in the state was $5,474 in 1969-70, $7,116 in 1979-80, $8,798 in 1989-90 and $9,255 in 1999-2000. In 2015-16, the state spent $11,893. (See https://nces.ed.gov in Table 236.65).
Those who would like to help preserve Prop 13 can go to www.hjta.org/ProtectProp13. It will explain how to volunteer, get a yard sign, and donate. There is also a printable informational sheet online or copies can also be obtained by calling HJTA at 213-384-9656 or 916-444-9950.
(Get Lou’s podcast at “No Hostages Radio” and his articles at nohostagesradio.com)