Berry: Proposition 13 News: Split-Roll Proposal, Again

Want to tank the California economy over night?  Want to assure property values and tax revenues go down?  Want equity in homes lost?  Easy.  Just vote for the split roll ballot measure to end Prop. 13 protections for commercial and industrial property.

“Andrew Breitbart, American political publisher, writer and commentator, said “politics is downstream from culture.”  Influence the culture and you will influence the politics. 

Howard Jarvis succeeded because he waged a cultural war. He hammered the point that people, not politicians, are the ultimate deciders.  And people had decided government got too big at taxpayers’ expense.

On the other side of the cultural war, then and now, are the profligates.  For them, no amount of revenue will ever be enough. “

This is not only a tax battle, it is a cultural battle.  The higher the tax, the less freedom people have.  Hence higher taxes allows government to set the lifestyle we can live.  Sad.

Proposition 13 News:  Split-Roll Proposal, Again

Marcy Berry, Exclusive to the California Political News and Views  10/11/19  

On November 3, 2020, California voters are likely to see on their ballot an initiative proposing to begin assessing commercial and industrial property at market value.  Since the passage of Proposition 13 in 1978, commercial and industrial property has been taxed at purchase price. 

The generic name for the 2020 proposal is the split-roll initiative, although voters will see a more appealing title on the ballot.

The “California Tax on Commercial and Industrial Properties for Education and Local Government Funding” (#2017-055), the original version of the initiative, is already eligible to be on the ballot.  A more voter-friendly version that expresses additional concerns for small businesses has the unofficial title of “California Schools and Local Communities Funding Act of 2020” (#2019-008), and as of October 8 is pending review at the California Attorney General’s Office.

So, what about the split-roll initiative? Is it not unjust that under the current system legacy business property is taxed 10 – 50% less than new property?  Would it not be fair to tax all business property at market value?  Reasonable questions.  However, the real question is whether taxpayers would truly benefit from paying an additional $11 billion in taxes.

First, for readers too young to grasp the enormity that was Proposition 13, here is a brief review.

The 1970s witnessed a gathering storm.  The U.S. inflation rate started to climb precipitously.  California’s rate 1975 – 1978 was 8% – 9%. Real estate values and property taxes climbed accordingly. Vulnerable homeowners, like seniors on fixed incomes and young families trying to make ends meet, were having trouble keeping their homes under increasingly heavy property tax burdens. 

Enter a retired entrepreneur and lobbyist for the Los Angeles Apartment Owners Association – everyman Howard Jarvis.  His message was clear, to the point, and echoed one of the most famous lines in movie history:  “I’m as mad as hell, and I’m not going to take this anymore!”  In other words, the property tax scenario was untenable, and the people had to act.

Howard Jarvis’ proposal was equally simple and to the point:  Reassess individual and business property to 1975 values to start.  Thereafter, levy property taxes at 1% of purchase price, plus a maximum increase of 2% annually.  Reassess to market value when property changes ownership, and continue the 1% cap and 2% increase.

Howls of horror from legislators, school officials, city councils, and, surprisingly, large businesses filled the air.  This proposal, they said, was an attack on the state’s entire tax structure, would obliterate local control of schools, and would decimate services like fire fighting and police protection. 

On June 6, 1978, California voters passed Proposition 13 in a landslide.  Since then, to liberals, this voter initiative stands as an abhorrent symbol, a vexing reminder that sometimes prescribed tax and spending stumbles.  Since then, efforts to overturn Prop 13, or at least eviscerate it, have not ceased.  The liberal narrative remains today as it was back in 1978.

But does the narrative against Proposition 13 make sense?  Here are some thoughts to ponder.

In its 1971 decision of Serrano vs. Priest I, the California Supreme Court declared that funding differences between rich and poor school districts did not afford all students equal protection under the law.  In 1976, Serrano vs. Priest II mandated that funding disparities between school districts be reduced to no more than $100.  Local control of schools was already jeopardized before Proposition 13 was even on the ballot.

With the passage of Proposition 13, California legislators turned to other sources of revenue – individual and business income, retail sales, hotel operations, utility services, housing development.  California stands as 11th out of 50 states in overall level of taxation. The state boasts a booming economy and a soaring GNP.  Revenue level does not seem to be a problem, in spite of Proposition 13. 

Prior to the 1970s California K-12 government schools were among the best in the country; while today they rank in the bottom half of all states.  Consider these challenges: legislators that fund unhelpful programs instead of schools, incompetent tenured educators, de-emphasis of the 3 Rs in favor or indoctrination in social justice, and regrettable home environments that necessitate non-instructional services in schools.  Repeal or reform of Proposition 13 would not remedy these challenges.

In spite of arguments favoring leaving Proposition 13 alone, powerful businesses will not ignore the tax disparities between legacy and new business property. Here is what the sides of the split-roll amendment have reported raising so far:  Support:  $5,344,548 raised.  Oppose:  $390,190 raised. 

Andrew Breitbart, American political publisher, writer and commentator, said “politics is downstream from culture.”  Influence the culture and you will influence the politics. 

Howard Jarvis succeeded because he waged a cultural war. He hammered the point that people, not politicians, are the ultimate deciders.  And people had decided government got too big at taxpayers’ expense.

On the other side of the cultural war, then and now, are the profligates.  For them, no amount of revenue will ever be enough. 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.