The state's perpetual budget crisis and the appointment of a commission to recommend changes in the state-local tax system have re-ignited a debate over property taxes that seemingly ended 31 years ago with passage of Proposition 13.
The landmark 1978 measure imposed a tight limit on property taxes, which previously had been the chief support for schools and local governments, and had the indirect effect of shifting much of that burden, especially for education, to the state.
Loosening Proposition 13 in some fashion would provide more money for local services and schools, ease the burden on the state and thus reduce its chronic budget deficits. Three decades after its passage, however, it remains very popular with voters, the vast majority of whom are homeowners.
There's almost no chance that Proposition 13's limits on residential property taxes would be touched, but liberals who want to see the state's budget crisis resolved with more revenues, rather than less spending, are intrigued by the notion of reducing its benefits to business property, thus boosting revenues by many billions of dollars.
It's called a "split roll" among tax mavens, and it occupied much of the tax reform commission's most recent meeting in Davis, especially after a state Board of Equalization attorney described various ways in which it could be instituted.
At one point, Santa Clara County Assessor Lawrence Stone argued against a split roll, citing the technical difficulties and financial costs of implementing it – a sentiment adopted by the California Assessors' Association. And at another, William Hamm, a former legislative budget analyst, warned the commission that any new tax burdens on business would be passed on to consumers as higher prices.
But split-roll advocates on the commission, such as former Assemblyman Fred Keeley, continued to press for its consideration. What intrigues advocates – and worries business groups – is that while Proposition 13 is a constitutional provision that's difficult to modify, it would be theoretically possible for one form of a split property tax roll to be adopted by a simple-majority vote of the Legislature and a signature by a governor.
One section of Proposition 13 requires taxable values to be upgraded when a parcel changes ownership. Homes almost always change hands in one sale, but business property is most often transferred incrementally, as ownership of corporations changes through stock sales. And unless more than 50 percent changes hands in one transaction, Proposition 13's reassessment provisions are not triggered.
One option that the reform commission is weighing is legislation to alter the legal definition of "change of ownership," triggering an upgrading of taxable values when the cumulative transfer of business ownership rises above 50 percent.
It's still not likely to happen, but as the state's budget crisis deepens, even the politically unthinkable surfaces.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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