Reading the Props: Prop 15—Who Cares?

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

Every two years, I read the full text of all statewide ballot propositions—because at least one Californian should.

Next is Prop 15.

Proposition 15 is nothing but hype. 

Its proponents say it will boost the schools and enact tax fairness and reform the previously untouchable Prop 13. Its opponents say it will threaten Prop 13, and hurt businesses and the economy. But after reading the measure twice, I’m convinced it won’t do much at all. 

Of course, Prop 15 makes a lot of noise, which may be its purpose. And it has many words—it would add no fewer than five new sections of the already excessively complicated and long California State Constitution. 

Prop 15 is billed as a split roll—because it creates a different way of assessing certain commercial and industrial properties for property tax purposes. But it would be more accurately described as the Swiss cheese roll. Because it’s full of holes and exemptions that could be relatively easily exploited to avoid higher taxes, or to challenge reassessments. 

There are big exceptions for properties that involve or are occupied by small businesses (which could include some quite large businesses, with as many as 50 employees), for properties whose owners have $3 million or less, and for even smaller businesses. Also more broadly, tax rates go up, and property taxes are literally a tiny fraction of the cost of property, and thus are very small items for businesses. Because property taxes are so insignificant, the notions that this change will produce the billions more that California schools need, or that this will somehow inspire new housing in the face of local opposition, are delusions. 

Also worth noting: None of the small stuff in Prop 15 will happen anytime soon, if it ever happens at all. The main switch of the measure—taxing some commercial and industrial properties—doesn’t even phase in until the second half of 2022. Properties occupied mostly by small businesses don’t get taxed on market value until late 2025 at the earliest. That’s plenty of time for changes.

More broadly, Prop 15 really doesn’t change the heart of Prop 13. That measure’s anti-tax limits on local governments and the state legislature remain in place. So do the limits on rates. Indeed, most of the text of Prop 15 is devoted to reinforcing Prop 13, and making plain that this doesn’t alter that measure. That is sure a strange way to reform Prop 13.

Prop 15 also adds to the Prop 13 system in another way. It provides more ballot box budgeting of the sort that Prop 13 has long inspired—by creating a new trust funds for revenues, and a new formula to govern it. Budget formulas and protected budget accounts are part of the Prop 13 disease, not a cure.

So what is Prop 15? It’s really a political document, designed to get what is perceived to be a victory over Prop 13. The hope of its backers is that it will clear the way for more taxes and a dismantling of Prop 13. I, for one, would love to see a dismantling. But I don’t think Prop 15 will lead to the end of Prop 13, much as I wish it would.

There are a couple reasons for this. The first is that Prop 15 actually further embeds Prop 13 in the Constitution—quite literally, with thousands of more words. The second is that the Democratic interests behind this measure have had  huge supermajorities in the legislature in recent years, but have done nothing to reform the Prop 13 system that rules our state. Such reform wouldn’t just bring in more dollars. It would restore greater democracy at the local and state level. 

But the dirty secret is that there is little appetite for more democracy, especially at the local level, among the elites who control the Prop 13 system. Both left and right have made their peace with Prop 13, and aren’t prepared to challenge it. So Prop 15 is, in the end, pretty meaningless. It doesn’t much matter if you vote yes or no.

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