Local Government

Proposition 15 Taxes Industrial and Commercial Properties Worth over $3 mill at Current Market Rate Value

The ballot argument in favor of Proposition 15 says billions that could be used to supplement school funding is given away to wealthy corporations through tax breaks. The opposing ballot argument states, “Prop 15 will be the largest annual property tax increase in California history.” Let’s take a brief look into Proposition 15.

Proposition 15 would undo some of the tax reforms instituted by the 1978 Proposition 13 but only for non-residential property valued at over $3 million. Prop 15 would not change the 1% property tax rate as provided by Prop 13 and makes no changes to single-family or multi-family residential property taxes. Residential property would maintain Prop 13’s 2% per year limit on property valuation for taxation purposes.

Prop 15 essentially reassesses non-residential industrial and commercial properties every 3 years and calculates the annual 1% property tax on the current market value for those valued at $3 million or more. To offset pass-through rent increases on small businesses and encourage innovation, Prop 15 relieves small businesses with 50 or fewer employees from property taxes on equipment and removes taxes on the first $500,000 for larger businesses. As the new assessments are phased in, properties occupied by at least 50% small businesses will be reassessed last in fiscal year 2025-26.

A study by Beacon Economics found that most property owners’ property tax on small businesses would not be increased by Prop 15. “Two-thirds (of properties studied) sold for less than $3 million” with a median price of $1.6 million.

A report by Blue Sky Consulting commissioned by Prop 15 proponents, concluded that 10% of businesses would account for 92% of the tax revenue. Industrial and commercial properties that are under-assessed by 50% or more account for this large differential.

Property tax revenue statewide is projected to increase from $8 billion to $12.5 billion per year with $6.5 billion to $11.5 billion per year going to local government, according to the State’s Legislative Analyst’s Office. Sixty percent would go to cities, counties, and special districts. Forty percent would go to schools. Analysis by School Services of California calculates Fullerton schools would increase per pupil spending by $391 to $692 at the high schools and $337 to $596 at the elementary and junior high schools. (https://www.sscal.com)

The top contributors supporting Prop 15 via “Yes on 15—Schools and Communities First Sponsored by a Coalition of Labor Groups and Social Justice Organizations Representing Families, Students, and Essential Workers” are Chan Zuckerberg Initiative Advocacy, California Teachers Association, and SEIU state and local organizations, for a total of $37.5 million.

The top contributors opposing Prop 15  via “No on Prop 15—Stop Higher Property Taxes and Save Prop 13—a Coaltion of California Homeowners, Taxpayers, and Businesses” are Blackstone Property Partners, Kilroy Realty, Macerich Management, Douglas Emmett Properties, Hudson Pacific Services, Michael Hayde, and Cypress Management via “California Business Roundtable Issues PAC” and Howard Jarvis Taxpayers Association, for a total of $48.7 million.

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3 replies »

  1. Failing to take into consideration is the adverse economic impact the pandemic has on small and large businesses at this time. Many small businesses are dependent on large corporations/businesses contracting with them to manufacture parts of their products. Increasing taxes on these two entities harms their market value and ability to compete in the global market. As for insufficient funding for education, many public school districts have top heavy administrations and divert funds from classrooms to subsidize non-academic endeavors. An example of this is Pam Keller, a teacher for Fullerton School district, who did and may still doesn’t teach students. Instead, she seems to be this school district’s goodwill ambassador to the city of Fullerton.

    • Can you provide some data on your above conclusions: “top heavy administrations and divert funds from classrooms to subsidize non-academic endeavors”, “example of this is Pam Keller …”? In fact I didn’t understand your point about her and the school spending and therefore Prop15. Can you clarify?

  2. Each school in FSD has or should have a school plan and a budget that shows which monies fund what for that specific school. By law these school plans are for the public to review whether online or at the school itself. As for FSD overall, funding for programs and how many persons funded to implement these programs are available to the public. Transparent California also gives the salaries of all FSD employees. Looking at the websites of each school allows interested persons to see who is delivering direct instruction and who is in administration. It is simple addition and subtraction to see the efficient use of tax dollars (spent in the classroom) and what is spent outside of the classroom. As for citing Pam Keller as an example, she is or was a glaring example of wasted tax dollars. Keller is a member of the nebulously named Fullerton collaborative. Receiving full-time pay as a teacher, she is or was not in a classroom. Instead, she was FSD member of Fullerton collaborative. I hope I answered your question. Now, would you please answer my question. How does the Fullerton Collaborative improve the quality of education for FSD’s students. There must be accountably with data collection that shows Keller’s presence on this collaborative has increased students’ comprehension of grade level math, reading, a better understanding of science , history, art and so forth.

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