Some of California’s politically powerful public-sector unions are gearing up for a 2016 ballot initiative that would “reform” Proposition 13 and get rid of its so-called tax “loopholes” to promote fairness. Their goal is to hike business property taxes by $9 billion a year by eliminating the limitations imposed by that groundbreaking initiative.

And the latest evidence suggests – despite supporters’ protests to the contrary – that residential property taxes could eventually be in the cross hairs.

Proposition 13 passed overwhelmingly in 1978 against a backdrop of escalating tax bills as property values soared. The measure limited taxation to 1 percent of a property’s assessed value (plus local bonds), and capped property tax increases to 2 percent annually. Real estate is reassessed each time it is sold.

The initiative’s supporters say it let owners predict the tax rate into the future – and protected them from the judgment of local tax assessors or the tax-raising efforts of county supervisors. It’s the one of the few areas in California, they note, where taxes are at a relatively low level.

Opponents claim the proposition defunded public services and shifted tax decisions from localities to Sacramento. Unions, in particular, have long been eyeing potential income streams. (They prefer finding new revenue than, say, reforming pensions or controlling government spending.)

But Proposition 13 has long been untouchable because of strong public support, but some polls showed surprising initial approval for “split rolls,” which would tax commercial and industrial property under a different system than residential properties. Sens. Loni Hancock, D-Berkeley, and Holly Mitchell, D-Los Angeles, have introduced SCA 5, which would tax business properties at their full-market value. The measure would provide a $500,000 personal-property tax exemption to help this bitter pill go down a little easier.

Even SCA 5’s biggest champions say it’s unlikely the Legislature can muster a two-thirds vote to put it on the ballot. But advocates likely have the cash to collect signatures and put it on the ballot without the Legislature’s imprimatur.

This proposal is a big concern of the business community. Some say it should also be of concern to homeowners. “The goals of those (supporting split rolls) has always been and continues to be destroying Proposition 13 for everyone,” said Rex Hime, president of the California Business Properties Association.

Continue reading at San Diego Union Tribune.