Homeowners Have New Reason to Be Concerned About Prop. 13 “Reforms”

David Kline
Vice President of Communications and Research, California Taxpayers Association

During a June press conference in Sacramento, supporters of a split-roll property tax measure took great pains to say they want to raise property taxes on business owners only, not on homeowners. Exactly one month later, however, a supporter of the measure indicated that homeowners are indeed on the hit list.

Most of the testimony at a July 10 informational hearing of the Assembly Revenue and Taxation Committee in San Francisco was predictable – Lenny Goldberg testified in favor of higher property taxes, for example – but one of the big surprises was that a split-roll supporter made it crystal clear that she also hopes to wipe out Proposition 13 protection for long-time homeowners.

Invited panelist Jennifer Bestor, research director for Educate Our State, blasted Proposition 13’s acquisition-value system and criticized differences in property taxes for long-time property owners and newcomers. She voiced support for requiring the reassessment of homes when owners die and leave property to their children – a change that would cause massive tax increases for many Californians, just when they are mourning the loss of a loved one.

Another surprise was a disagreement between various split-roll supporters on the issue of taxing rental properties. Ms. Bestor claimed that the ownership landscape of residential property is much different than it was in 1978, and she said that residential rental property owned by Los Angeles businessman – and former Los Angeles Clippers owner – Donald Sterling is “subsidized” by other taxpayers because it has not been sold in many years, and thus has not been reassessed. She made it clear that she believes frequent reassessments should be made, to increase Mr. Sterling’s property tax burden. Many “Make It Fair” supporters in the audience seemed to agree.

Meanwhile, Democratic Assemblyman Bill Quirk repeatedly stated during the hearing that it would make no sense to put residential rental properties in the same category as other business properties, and that rentals should be categorized with homeowner-occupied property.

The treatment of residential rental property is likely to be a big topic of conversation as the split-roll debate continues. Those who support Proposition 13 protections have noted many times that if owners of rental property are hit with tax increases, the renters will end up paying for the tax hike. This is true for those who rent homes or apartments from Mr. Sterling, as well as those who rent commercial space for mom-and-pop businesses that support many California families and add life to our communities.

Split-roll activists have muddied the waters by using statistics that confuse the issue of homeowner vs. rental property. In a June 9 column inThe Sacramento Bee, for example, Senators Loni Hancock and Holly Mitchell wrote, “This year, homeowners are on the hook for 72 percent, and the commercial side will pay only 28 percent” of the total property tax burden. This is misleading, as very little of 72 percent of property classified by the state as “residential” actually is occupied by homeowners.

As noted at the hearing by CalTax Vice President of State Tax Policy Gina Rodriquez, the 72 percent figure can and should be broken down into two more meaningful categories: only 38 percent of the property is owner-occupied homeowner property, and the remaining 34 percent is investor-owned residential property, including rentals.

Despite being held in San Francisco, the forum drew an audience that was nearly half comprised of Proposition 13 supporters. While some might characterize this as yet another surprise, it shouldn’t be, considering that polls consistently find Proposition 13 has strong support across party lines – support that undoubtedly will grow as more homeowners discover that some split-roll activists are looking their way, too.

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