LOS ANGELES (CBSLA) — A key issue on this year’s ballot is Proposition 15, which would adjust the original 1978 California Proposition 13, and allow commercial properties to get taxed at their fair market value rather than the value at the time when they were purchased.
Prop. 13 started as a revolt by homeowners who claimed counties kept raising property taxes so often that they couldn’t afford to stay in their homes.
The initial proposition placed a strict cap on increases — at no more than 2% each year — for homes and commercial property, which was a landmark change.
Some families were spared from losing their homes when it first passed in the 1970s but opponents of the proposition said, as a result, counties also lost funding for critical services like schools.
“I’m the head of the PTA at my son’s school. He’s in fourth grade and I see the struggles every day,” said Prop. 15 supporter Denise Robb.
Robb, a Pasadena political science professor, said California has a chance to correct what she calls a “terrible injustice” in the state’s tax laws.
Prop. 15 requires commercial and building worth over $3 million to be taxed based on current market value instead of the original purchase price.
If the proposition passes, many businesses would see their tax bill rise as a result. It would also be the first significant change to the original Prop. 13 in 40 years. All other past ballot initiatives have all failed.
“It would reclaim $12 billion every year for schools, community colleges, cities and families in need,” said Joseph McKellar, Co-Director of faith-based group Pico California, which focuses intervention on racial, economic, health and environmental equity in the state.
Of the projected $12 billion in revenue, under Prop. 15 the state and counties would get access to it first, then 60% of what’s left would go to local governments and 40% to school districts and colleges.
Homeowners and renters would still be protected, as well as properties less than $3 million.
People opposed to Prop. 15 say the issue with the proposition is that those property tax increases will negatively impact small business owners and consumers throughout the state
“They don’t understand that really many of our small businesses rent,” said Tracy Hernandez, CEO of the L.A. County Business Federation. “It’s a crazy tax increase at this time when we’re just trying to survive.”
Social media ads have featured local business owners opposing the proposition, and Board of Equalization member Ted Gaines has also written an editorial warning Californians against it.
“If you think the other guy is going to pay for it — the ‘fat cat’ that owns all the property — that’s just not the case,” Gaines said. “That’s not the way economics works.”
Both sides have put plenty of money into campaigning for and against Prop. 15. As of June, supporters have spent over $20 million and those fighting against the proposition spent over $5 million.
The issue is up for a vote on the Nov. 3 ballot.