Prop. 15 Tax Measure Set to Fail in California, but It’s Close

A file photo of a commercial property in Los Angeles on Feb. 28, 2018. John Fredricks/The Epoch Times

One of California’s most-watched propositions this election, Proposition 15, is on its way to failing, but it’s close. As of Nov. 9, results showed 51.8 percent of the vote was against Prop. 15, and 48.2 percent for it.

Prop. 15 would essentially raise property taxes for many commercial property owners to garner an estimated $8 billion to $12.5 billion annually for schools and local governments.

Opponents say that, although the measure was designed to impact only property owners with large holdings (a combined value of $3 million), those owners would pass the increased costs along to their small-business tenants.

The measure would reverse Prop. 13, which allowed commercial properties to be taxed based on their original purchase price (plus small annual increases) instead of market value.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, which has opposed Prop. 15, told The Epoch Times he thinks voters came out against it “because they know that when the businesses that they patronize have to pay more, that that increases consumer costs.”

“It’s very expensive to live here [in California]. And that cost of living is driving a lot of people out of the state,” he said. “Businesses are struggling in California, and I don’t think we need to give them another reason to move out.”

Proponents

Gov. Gavin Newsom endorsed the proposition in September.

“It’s a fair, phased-in and long-overdue reform to state tax policy, it’s consistent with California’s progressive fiscal values, it will exempt small businesses and residential property owners, it will fund essential services such as public schools and public safety, and, most importantly, it will be decided by a vote of the people,” Newsom said, according to a California Federation of Teachers (CFT) press release.

If Prop. 15 passes, the transition from taxing on the purchase price to taxing on the market value would begin fiscal year 2022–2023.

CFT President Jeff Freitas said, “The governor’s support of Prop 15 is critical to ensure that this essential initiative passes and our schools have the resources they need so that our students receive the education they deserve.”

Sixty percent of revenue collected from the proposition would be split between local governments and special districts, while 40 percent would go to school districts and community colleges.

Opponents: Business Costs High, School Benefits Low

But Coupal doesn’t think enough of the taxes would reach students.

“I think, ultimately, virtually all new taxes in California will be used to address the unfunded liabilities in the pension funds, so they'll say it’s used for schools,” Coupal said.

“I think they’re aware of this, and I think at the end of the day, voters look at the level of taxes that we’re paying, and they’re realizing that we’re not getting the value that we’re paying for,” he said.

Ballots are still being counted, and Coupal said, “We’re watching the votes very carefully. It’s not over until it’s over, and it’s not over until the votes are certified.”

John Kabateck, California state director for the National Federation of Independent Business, said in a press release: “Small businesses throughout California are happy to see the ‘No’ vote on Proposition 15 holding a narrow lead, but they will watch to see if it will stick.

“It’s a direct dollars-and-cents issue for them because they are certain to be hit with the largest property tax increase in California history at the worst possible time, should it pass. This is the most important election result for small businesses of any kind.”

Local Resolutions

In September, the Orange County Board of Supervisors voted 3–2 against a resolution that criticized Prop. 15. If that resolution had passed, the board would have taken a stance against Prop. 15, and some board members felt it wasn’t the place of the county to take a stance like that on a state measure.

But all board members expressed personal opinions of disapproval for Prop. 15.

At least one city in Orange County passed its own resolution. Laguna Hills City Council adopted a resolution against Prop. 15 in October with a unanimous vote.

“Don’t think that the next step won’t be to come after your homes—and as expensive as it is a place here in California to live, that would be disastrous,” Laguna Hills Mayor Janine Heft said at the time.