clock menu more-arrow no yes mobile

Filed under:

Proposition 13 tax split heading to vote—in the year 2020

New proposal would leave rules for homes intact, but raise rates on businesses

Ornate and white Capitol Building in Sacramento flanked by palm trees.
California Capitol Building in Sacramento.
Photo by Feoktistoff/Shutterstock

The housing and anti-homelessness non-profit Housing California announced Tuesday that it has submitted more than 850,000 signatures on an overhaul of California’s longstanding property tax law Proposition 13 in an effort to quality for the ballot in 2020.

That’s far more than they need to make the grade, although the initiative will not officially be set for a vote until the Secretary of State’s office reviews the submission.

Housing California is part of a campaign to partially rollback Proposition 13, with a proposal that reads in part:

[If passed, the new law] taxes certain commercial and industrial real property based on fair-market value—rather than, under current law, the purchase price with limited inflation. [...This would result in] net increase in annual property tax revenues of $6.5 billion to $10.5 billion in most years, depending on the strength of real estate markets.

After paying for county administrative costs and backfilling state income tax losses related to the measure, the remaining $6 billion to $10 billion would be allocated to schools (40 percent) and other local governments (60 percent).

Proposition 13, passed by voters in 1978, limits annual property tax hikes at around one or two percent on all types of properties.

Under the new proposal, the rules would stay the same for homes—part of what made Proposition 13 popular with voters was the promise to protect homeowners from big tax swings when property values soar—but the state would have license to begin taxing businesses at higher rates.

While a potential vote is years away, divisions over the tax division are already well entrenched, with backers of the initiative, initially dubbed the “California Schools and Local Communities Funding Act,” claiming it will “restore over $11 billion a year for services that all Californians rely on like schools and community colleges.”

On the other hand, critics like former State Senator George Runner (actually commenting on a previous Proposition 13 split attempt) allege that the plan “would dramatically increase operating costs for business owners, hurting the economy.”

Commenting on Twitter, State Sen. and former SF legislator Scott Wiener speculated “split roll makes Proposition 13’s anti-housing incentives worse” by giving cities an incentive to build commercial over residential development. He also called Proposition 13’s current one-size-fits-all standard unfair.