For the past 42 years, two words have had the ability to almost always start an argument in California. Those two words are, “Prop 13.” Passed by voters in 1978, Proposition 13 requires that residential, commercial and industrial properties be taxed based on purchase price rather than current market value. Simple, right? No, not really.
For many people in California, Prop 13 is something close to sacred. These people will tell you that it is the only reason they can own a home, the only reason they can afford to live in California. And any attempt to change Prop 13 is universally rejected by these folks — universally seen as a means to raise taxes and undermine home ownership.
On the flip side of the coin, others look at the history of Prop 13 as a primary reason that California schools and students have suffered. Quite simply, by blocking the ability to tax based on real property values, schools have been underfunded for decades. In 1978 California’s per pupil expenditures was above the national average; today it is far below. While calculations differ, California’s poor standing is clear. States like New York spend over $10,000 more per student than California. This from a state that prides itself in being a leader in science and technology.
Proposition 15 on the November 2020 ballot offers a solution to both homeowner and education advocate concerns. In essence, it leaves in place the tax calculation for homeowners, and for properties owned for commercial agriculture. However, phased in over time, most commercial and industrial properties would be taxed based on market value. Many argue that this is a fair solution given that homes often change hands, each time resetting their tax base to the current market value, while commercial and industrial properties often are held over time, sometimes for decades, allowing their tax base to stay low. In fact, advocates of Proposition 15 claim that between $8 and $12.5 billion per year would be generated, with 40 percent distributed to school and community college districts.
You will likely see raging arguments coming in social media and in (appropriately distanced) neighborhood discussions. Expect deliberately misleading posts on social media and ads paid for by big corporate and industry groups claiming the downfall of home ownership in California. With the election still months away, posts on Facebook incorrectly declaring Californians will see soaring home property taxes are already appearing. But like all political discussions, it’s a good idea to know the facts and keep a clear head: Passing Proposition 15 could provide a long needed lift to California schools and community colleges, and it will not raise residential property taxes.
Author: Lisa S. Romero