The signature-gathering effort for a union-backed initiative that would result in higher property taxes for commercial and industrial property began Sunday in downtown Los Angeles.
What supporters have dubbed the "Schools and Communities First" initiative would allow for annual unlimited reassessment of commercial and industrial properties to their fair market values.
Under terms of Proposition 13, the landmark property tax reduction and limitation measure approved by voters on June 6, 1978, increases of assessed value of real property are restricted to 2% per year except if it is sold or there is construction.
The measure would mainly apply to large and older businesses, as it exempts owners of commercial and industrial properties with combined value of $3 million or less. There are also exemptions for all residential and agricultural property. The initiative also exempts from taxation $500,000 of combined tangible personal property and fixtures from small businesses.
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The initiative would not change Proposition 13's tax limit of 1% of the property's full cash value.
If approved by voters, the initiative would result in a net increase in annual property tax revenues of $7.5 billion to $12 billion in most years, depending on the strength of real estate markets, according to analysis by Legislative Analyst Gabriel Petek and state Director of Finance Keely Martin Bosler.
The analysis also found after backfilling state income tax losses related to the measure and paying for county administrative costs, 40% of the remaining $6.5 billion to $11.5 billion would be allocated to schools with the remaining 60% going to other local governments.
"For far too long, public education has received the short end of the stick when it comes to providing the resources our students need to succeed," California Teachers Association President E. Toby Boyd said at the Westin Bonaventure Hotel.
"But today, we are here with more than 800 educators to say, 'No more!' and announce a measure that will significantly improve the lives of our students and the communities where we raise our families. The fight for equity requires deliberate action, and Schools and Communities First would start to undo the effects of decades of chronic underfunding of our schools, colleges and public services."
Susan Shelley, vice president, communications of the Howard Jarvis Taxpayers Association, dismissed the argument that commercial property owners are benefiting from an unintended "loophole," citing rejection of Proposition 8 on the same ballot as Proposition 13, which would have created a split-roll property tax system, allowing commercial property to be taxed at a higher rate than residential property.
"The split-roll measure is named 'Schools and Communities First,' but it could be truthfully called the 'We don't have enough money to cover our overpromised pensions, and they come first' initiative," Shelley told City News Service.
"The split-roll initiative would be a huge tax increase on every business in California, simultaneously and repeatedly. Taxes would rise almost immediately for every shopping mall, hotel, restaurant, office building, factory, warehouse, self-storage facility, car wash, parking structure, movie theater, sports stadium and supermarket.
"Prices would rise to reflect the higher costs. Even the smallest businesses would be hurt as landlords passed the cost of higher taxes through to their tenants."
Donations on behalf of the initiative have been made by committees affiliated with the Service Employees International Union ($500,000), California Federation of Teachers ($250,000), United Teachers Los Angeles ($50,000) and SEIU Local 215 ($50,000), according to records from the California Secretary of State's Office.
Chan Zuckerberg Advocacy, the limited liability corporation founded by Facebook founder Mark Zuckerberg and his wife Priscilla Chan, has donated $300,000. The Los Angeles-based charitable organization, the California Community Foundation, has donated $225,000.
Valid signatures from 997,139 registered voters — 8% of the total votes cast for governor in the 2018 general election — must be submitted by April 14 to qualify the measure for the November 2020 ballot, according to Secretary of State Alex Padilla.