Supporters have conceded defeat of a union-backed initiative that would have resulted in higher property taxes for commercial and industrial property to provide additional funding for local governments, schools and community colleges.
Proposition 15 trailed 51.8%-48.2%, according to figures released Tuesday by the Secretary of State's Office. It was one of 12 statewide propositions left up to California voters to decide in the Nov. 3 election.
"California's challenges are not going anywhere, and this election result has shown that there is strong public demand for closing the corporate tax loopholes which cost our local communities billions every year,'' said Alex Stack, the communications director of the campaign on behalf of Proposition 15.
Rob Lapsley, president of the California Business Roundtable and a co-chair of the No on Proposition 15 campaign called the proposal deeply flawed.
"From day one, we knew that if voters understood the harm this deeply flawed tax hike would impose on California's economy and its families, farmers and small businesses, voters would reject this ill-advised effort," Lapsley said. "Today's victory should send a clear message to the proponents and warn all politicians that voters will continue to reject attempts to dismantle Prop 13.''
What supporters dubbed the "Schools and Communities First'' initiative would have allowed for annual unlimited reassessment of commercial and industrial properties to their fair market values.
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Under terms of Proposition 13, the landmark property tax reduction and limitation measure approved by voters in June 1978, increases of assessed value of real property are restricted to 2% per year except if the property is sold or there is construction.
Proposition 15 would have mainly applied to large and older businesses, as it would have exempted owners of commercial and industrial properties with a combined value of $3 million or less. There were also exemptions for all residential and agricultural property.
The initiative additionally would have exempted from taxation $500,000 of combined tangible personal property and fixtures from small businesses.
Proposition 15 would not have changed Proposition 13's tax limit of 1% of the property's full cash value.
Passage of the initiative would have resulted 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 an 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 kindergarten through 12th grade schools and community colleges, with the remaining 60% going to other local governments.