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.