The original Proposition 13 was four paragraphs long fitting on one side of a piece of paper. SCA 5, the measure to change Proposition 13 introduced by Senators Loni Hancock and Holly Mitchell yesterday intended to increase taxes on business property is 30 pages long. Without going into the details of the proposed changes, suffice it to say the groups behind the proposal, liberal organizations and public employee unions, want more tax dollars to spend. That is despite the fact that the state treasury is enjoying a big boost in revenue.
The rhetoric of “fairness” spoken by supporters at the press conference announcing the bill does not match the impact of what the proposed law intends to do. Sen. Mitchell said at the press conference, “What we are looking to do is to take those few that are benefitting from under-assessment and bring them in line with everyone else.”
The measure would not raise taxes on a “few” but re-assess all business property annually so that they can pay the highest property tax possible.
Most of the news reports following the press conference that announced the filing of the bill spoke of “long odds” and “high hurdles” to get the bill through the legislature. Since the proposal is a constitutional amendment, it requires a two thirds vote to be placed on the ballot. Many news articles noted that there are no Republican votes for the measure.
A more interesting question is how many Democratic legislators will vote for SCA 5? I can imagine right now there are a number of political consultants drawing up campaign mailers that say: Candidate X voted to change Proposition 13.
While there seems little expectation that this proposal will get through the legislature, it is anticipated that a split roll could become an initiative measure.
The recent PPIC poll question on a split roll found only 50-percent of the voters support the idea. That mark was recorded against a simple question asking if commercial property should pay taxes based on full market value. There were no arguments offered to the respondents about possible consequences such as thousands of lost jobs, a stifling of economic growth, and devaluation of commercial property when new property taxes are capitalized into the value of the property.
A multi-million dollar campaign pointing out the negative consequences of a split roll is sure to take shape if the split roll makes the ballot.
Curiously, there is one good feature about the bill — but it was added as a form of bait to draw off criticism about the effects a split roll would have on small businesses.
In an effort to placate small businesses, a feature written into the law offers all businesses a $500,000 exemption on tangible personal property used by businesses. Frankly, personal property taxes should be done away with for businesses just as property taxes for residential personal property was eliminated years ago.
However, in SCA 5 the authors would substitute for the personal property exemption an increased subjective property assessment on structures and land with all the uncertainties of annual re-assessments that drove taxpayers to pass Proposition 13 in the first place.
Could there be another reason for the pursuit of the split roll beside the tax revenue increase to pay for services, salaries and pensions?
The push for the split roll comes at a time when there are serious discussions in certain circles about how to keep the revenue flowing from the Proposition 30 tax increase that is due to expire over the next few years.
Some might see a split roll tax increase as a substitute for the Prop 30 taxes. Pushing a split roll measure might also be a move to get all the public unions to agree on a single tax measure in which they all benefit.
It is generally perceived that Prop 30 money has been good for the schools and the teachers unions. The Service Employees International Union clearly has its fingerprints all over the split roll movement. Will this measure force the teachers unions to deal with the non-education folks on a Prop 30 extension so that two tax measures are not on the same ballot?
Or are the unions in agreement — desiring to push two major tax increases and making everyone in their camps happy?
While making the taxpayers furious.
Interesting times ahead.
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