Prop. 15 will fund schools and make corporations pay a fair share of property taxes

Proposition 15 gives Californians a chance to fix one of the most glaring errors of the past four decades: a massive tax break for wealthy commercial property owners who can afford to pay their fair share of taxes.

In 1978, Prop. 13 transformed the way property taxes are calculated in California. Its passage meant the taxable value of a property would be based on its original purchase price rather than its current property value.

This has worked great for Californians who bought their homes a long time ago and, as a result, pay much lower taxes than neighbors who bought their homes more recently.

Prop. 15, known as “split roll,” won’t affect property taxes on residential properties, regardless of what its opponents like to claim. It will, however, remedy the historic injustice that has allowed large corporate property owners to avoid paying their fair share of property taxes.

The inclusion of non-residential properties in Prop. 13’s reform has starved local governments of billions of dollars in revenue for long enough.

Enter Prop. 15. By changing the rules that govern property taxes for commercial properties, it would pump billions of dollars a year into schools and local governments.

If California voters approve Prop. 15, industrial and commercial property will be reassessed based on current market value. According to estimates conducted before COVID-19 hit, this change would generate between $6.5 billion and $11.5 billion per year. Sixty percent of the money would flow to local governments while 40% would be reserved for schools.

That money has to come from somewhere, and proponents of Prop. 15 say the wealthiest corporate property owners in the state can afford to pay more.

Opponents of the law say that, despite its good intentions, it would still hurt small businesses and farmers. For example, many small business owners have leases that require them to pay a portion of the building’s property taxes. Some worry that Prop. 15, coming so soon after the coronavirus shutdown, could do further harm to businesses struggling to survive.

In addition, while farmland would be exempt from reassessment, opponents like the California Farm Bureau say the law is imperfect and could still result in higher taxes for farmers in some cases. They say those costs will be passed on to consumers in the form of higher prices for food and other necessities.

But Prop. 15 will phase in gradually over the next few years, meaning the impact won’t be immediate. And the proposition was clearly written to target wealthy corporations, with specific exemptions for small businesses and farmers. For example, it exempts buildings valued at less than $3 million.

Prop. 15 was clearly designed to generate most of its revenue off of large, wealthy corporations. According to a study by Blue Sky Consulting Group, which supports Prop. 15, 10.5% of property owners would pay 92% of the new taxes.

Prop. 15’s supporters include Gov. Gavin Newsom, Democratic presidential candidate Joe Biden, the California Teachers Association and many labor unions and social justice groups. Opponents include the California Republican Party, former Los Angeles Mayor Antonio R. Villaraigosa, the Howard Jarvis Taxpayers Association and many business groups.

Prop. 15’s opponents may consider it imperfect, but it’s a big improvement over the current system. For too long, Prop. 13 has robbed California’s schools and local governments of desperately needed funds. Prop. 15 provides a tangible solution.

The Sacramento Bee Editorial Board recommends a yes vote on Prop. 15.

This story was originally published October 22, 2020 at 5:00 AM.