The proponents of two propositions on the November ballot— yet to be voted on —have already filed follow up initiatives for the 2020 election. Authors of Proposition 5 to extend property tax benefits to seniors, the disabled, and to open the housing market and Proposition 6, the gas tax repeal, have authored new measures to cover the costs of achieving their intended goals. Thus opens a new initiative strategy that is driven by costly fiscal reviews of current ballot measures.
Proposition 5 is intended to expand a current law now limited to a number of counties to allow seniors 55 years old and older to move to a new house and take their current property tax assessment with them or have a reduced rate when moving to a more expensive home than current law allows. The official fiscal report from the Legislative Analyst and Department of Finance says Prop 5 would cost $150 million in the near term increasing to $1 billion per year. Reducing revenue for schools and local governments is a difficult sell.
So the California Association of Realtors, which is sponsoring the measure, filed a new initiative—just in case. The new initiative includes the senior and disabled transfer provisions and has additional features that would balance the revenue loss from the property tax exemptions. The proposed 2020 initiative would require reassessment of property that is acquired through intergenerational transfers of primary residents and other inherited property that is used as income producing property and would also address change of ownership of certain commercial property transfers that use creative means to avoid property reassessment to full market value.
According to the fiscal review from the LAO and Department of Finance, the added features might balance the cost of the property tax reductions tied to senior transfers. As the fiscal analysis summarized: “Local governments and schools each could gain or lose low tens of millions of dollars of property tax revenue per year, likely growing over time.”
The fiscal impact on Proposition 6 also cites reduced funding. The report claims a loss of $2.9 billion in 2018-19, increasing to $4.9 billion annually by 2020-21 that was primarily dedicated to “support state highway maintenance and rehabilitation, local streets and roads and mass transit.”
Supporters of Proposition 6 insist that highway and road maintenance can be managed satisfactorily without the revenues from the recent gas tax increase. The new initiative filed for the 2020 election intends to show how by creating Lock Boxes for dedicated transportation funds. In addition, it would outsource architectural and engineering work and most notably would end spending on the high-speed rail project, using funds dedicated to the project to pay off construction bonds.
While the official fiscal analysis on this measure has yet to be issued, proponents claim road funds and infrastructure funding would increase by billions of dollars.
Whether voters looking at the current ballot will contemplate what may appear in the 2020 election to manage the effects of what is passed is, to say the least, highly problematical. Voters attention on these issues generally is very short term.
But this strategy—which also takes in the likelihood that fewer signatures would be needed to qualify for the ballot if the initiatives are filed now before the next gubernatorial election voter turnout, which sets the standard for necessary signatures to qualify for the ballot—also makes it clear that initiative campaigns are about money. Not only the money needed to qualify a measure and run a campaign, but importantly the fiscal effects of the measures and the impression that information will have on voters.