Stay up to Date
Our weekly insiders' guide to political and policy news (Saturdays)
The business groups and other opponents of Proposition 15 are winning over many San Diego Democrats, who despite their normal allegiances just can’t seem to get on board.
In 1982, author Beverly Cleary inserted a short digression about California public affairs into the children’s book “Ralph S. Mouse,” the story of a young rebellious rodent who could speak to a child and power a toy motorcycle just by making a sound.
Ralph had been seen at the school, and the resulting reports of an infestation had gotten to the newspaper. The school superintendent was not happy until the principal assured him the reporter had it all wrong.
“[Superintendent] Crossman said that was good, because since people voted for Proposition 13 and taxes had been cut, the school district couldn’t afford an exterminator,” a teacher relayed to the class about the exchange.
Since 1978, a dig at Proposition 13 has been almost required content in any speech or op-ed by progressive Democrats trying to grapple with poor performance of public schools and the shoddy state some California services find themselves in.
Proposition 13 established a 1 percent across-the-board property tax but most importantly, it froze the assessed value of a property. A house or a shopping mall or hotel would only go up in value 2 percent every year, at most, and thus the property tax on it would barely budge. And property in California has gone up by a lot more than 2 percent per year.
That doesn’t change unless you sell your property, at which point it resets. This has led to countless stories that generally lead with some point about how Warren Buffett or a famous actor pays very low property taxes on their oceanfront mansions. We all know people who have benefited enormously from this – some paying a tiny fraction of what their neighbors pay.
The state has since increased income taxes and sales taxes and other sources of revenue, but the wound of 1978 has formed scar tissue in the brains of anyone who thinks about California public policy. Critics think it’s the central cause of California’s ills. Supporters of Proposition 13 say it keeps expectations constant and insulated from vast market fluctuations.
Every reporter who moves here notices right away how much Proposition 13 is still discussed, and pitches a story about it.
And every editor rolls their eyes. Yes, it may have wildly skewed property taxes. It may mean that one business has an enormous burden a competitor does not have. But it was impossible to imagine how it would change.
That’s when teachers unions and others came up with the idea of split roll: Maybe if they couldn’t change Proposition 13 because of how popular it is to homeowners, they could change it for the owners of hotels and shopping centers. They worked methodically to advance the idea.
Now it’s finally on the ballot. Proposition 15 has exemptions – only those with more than $3 million in state holdings would see their properties re-assessed. As an indication of the pent-up demand they generated over more than four decades, groups in support of Proposition 15, led by public employee unions, have raised more than $36 million to support it.
“Proposition 15 closes a loophole that large commercial and industrial property owners have used to avoid paying their fair share of taxes,” said Andrea Guerrero, the director of Alliance San Diego and a proponent of the measure.
Opponents and the businesses against it have raised more than $21 million.
But they’re winning over many San Diego Democrats, who despite their normal allegiances just can’t seem to get on board.
Todd Gloria, the mayoral candidate with the support of the Democratic Party and a bevy of public employee union support, says it’s not the right time.
“I see the need for additional revenue for our schools, and this is particularly acute because of the pandemic and lack of additional federal relief, but I’m concerned that the exemption that is in Prop. 15 for small businesses is not enough to protect small businesses and as a result, I’m not making an endorsement,” he said in the Oct. 2 mayoral debate for Politifest.
Barbara Bry, his opponent in the race, also a Democrat, was more adamant.
“In the middle of a pandemic, you don’t raise taxes. I know they have written in some of what they think are exemptions for small businesses. But given property values in San Diego and the way leases are written, any increase in operating costs like real estate taxes is simply passed on to the restaurants, the small businesses, the dry cleaner, whatever,” she said.
(When I asked her about a different property tax increase – Measure A, which would fund affordable housing – she demurred and said she was still on the fence. So that may be one tax you raise in a pandemic.)
Ammar Campa-Najjar, the Democrat running to represent the conservative 50th Congressional District, also couldn’t get on board.
“We’re in a recession. We shouldn’t be raising taxes at all in a recession,” he said at a Politifest debate against his rival, former Rep. Darrell Issa.
Marni Von Wilpert, the Democrat running in the San Diego City Council District 5 race, said she’s undecided and is still “looking at the fine print.” Joe LaCava, a Democrat running in the San Diego City Council District 1 race, said he is against Proposition 15 – and that it cost him the endorsement of the local teachers union.
In a key county supervisor race, District 1 in South Bay, Ben Hueso said he was against Proposition 15 and that you would “have to be very disconnected from reality to want to support” it. But days later, he flipped.
“I further reviewed the ballot measure. It does not increase taxes on ‘mom and pop’ businesses or on single-family residential homeowners,” he said in explaining why he changed his mind.
Proposition 15 is not without local support. Will Moore, who is running against LaCava in the District 1 race, made the business case for it in our Politifest debate.
“Right now, we have a number of problems in our state, we have a disjointed tax system where based on when you purchased your property, with some fancy lawyering for a commercial property, or whether you bought it a long time ago or more recently, you have a completely different tax basis and a completely different basis for competing with other businesses. And I don’t think that’s right,” he said.
Despite the rhetoric about either needing the money because of the pandemic or not raising the taxes because of the pandemic, nothing would change immediately. Proposition 15 requires the Legislature to come up with specific laws for how to phase in the reassessments of property values that would lead to the increases beginning in 2023.
The principal in “Ralph S. Mouse” told the superintendent not to worry, he was going to have the janitor put out mouse traps and that should suffice. The superintendent replied that there was only enough money for five mouse traps.
That did not scare Ralph.