Local Dem Leaders Should Do More Homework on Prop. 15 - Voice of San Diego

Opinion

Local Dem Leaders Should Do More Homework on Prop. 15

Opponents claim Proposition 15 will force companies to leave the state, when just the opposite is true.

Demonstrators in Oakland urge voters to support Prop. 15. / Image via Shutterstock

It was very disheartening to hear the number of Democratic candidates who feel it is in the best interest of their constituents to oppose Prop. 15. It appears they have not done their homework about this proposition. Community leaders, homeowners, parents and teachers all support Prop. 15 because this measure would bring funding back to schools that was taken away when Prop. 13 went into effect.

Prior to Prop. 13, property was regularly reassessed and taxed based on its current market value, which was increasing at a dizzying rate (in 1977, it increased 28 percent). Homeowners became unable to afford their property taxes. Prop. 13 stopped these regular reassessments and instead based property taxes on the purchase price of the property at the time it was acquired. This revision applied not only to residential property but also to commercial property.

This means that Disneyland, oil companies, hotels and other large companies that have not transferred ownership are able to keep their property taxes frozen at 1975 valuations with no more than a 2 percent increase per year. Even upon transfer, their powerful legal teams challenge tax reassessment, providing minimal documentation for the challenge. If they continue the appeal for two years, the value they claim “becomes the taxable value of the property by default.”

Prop. 15 changes the way commercial properties are assessed for taxes: Property would be assessed at current market value rather than waiting for a change of ownership to trigger a full reassessment, and the reassessment would occur no less than every three years.

Opponents claim this proposition will force companies to leave the state, when just the opposite is true. California has among the lowest property taxes in the nation at 1 percent. Any new company trying to establish a business in the state has to pay property taxes on its land, based on today’s market value while competing with companies that are paying 1970s tax rates. That is bad for competition and for new businesses.

Additionally, Prop. 15 protects small businesses: Properties worth less than $3 million will not be reassessed (just like residential and agricultural property) and their property taxes will not increase. And, businesses with less than 50 employees will no longer have to pay taxes on their business equipment, which will save them money. And larger businesses may even take a $500,000 exemption on their business equipment tax. So, it will be only the biggest businesses that will be paying this increase. Ninety percent of the money from this proposition will come from the top 10 percent of the businesses.

Imagine two pieces of property that are almost identical, with gas stations on them. One of them is paying 1970s property taxes; the other 2015 property taxes. Will one of them charge much cheaper prices for their gas? No, they will both charge the market rate. The older one might go down a penny or two to outcompete the other, but the price is not determined by their property tax rate, it is determined by the market rate. If Prop. 15 passes, the property owner of the older parcel will just get less profit. That profit will go to our schools and communities, where it is needed. Prop. 15 makes a lot of sense.

Myles Pomeroy is director of public policy for the League of Women Voters of San Diego.

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