Proposition 15, Property Taxes: Yes

In 1978, Californians passed Proposition 13, which calculated property taxes based on a property’s purchase price and limited increases to no more than 2 percent per year. It is not hyperbole to say that Proposition 13 is the third rail of California politics, and that whoever touches it dies. It is also not hyperbole to say that, while well intended, it had severe unintended consequences like many propositions, consequences that eviscerated local tax rolls and resulted in underfunded schools, police, fire, parks, and libraries.

Proposition 15 aims to fix part of that. It has a solid premise, to tax some properties, commercial and industrial properties, on their true value, not their purchase price. It also has a serious flaw: ballot box budgeting. The question is, does the flaw outweigh the good?

Let’s be clear, I am not a fan of Proposition 13. don’t get me wrong, I understand what drove it. As the Golden State boomed in the 70s, property values skyrocketed. Property taxes, which are assessed locally and pay for all sorts of critical local services, are based on property values. And long-time homeowners, many retired and on fixed incomes, first saw their property values go up, then saw their property taxes go up, then discovered that on those fixed incomes, they could no longer afford to pay those property taxes. Many lost their homes. Proposition 13 was aimed squarely at them.

All of California got caught up in the fervor. I mean, who wants to see grandma and grandpa lose the home they’ve lived in for decades? And oh by the way, taxes are bad.

Proposition 13 created a monster, an outstandingly uneven tax roll. One family could have bought a house way back when for $100,000, and be paying $1000 per year on property taxes. (I’m using even percentages to make this simple.) Another family could have bought the identical house next door 10 years ago for a “bargain” $1 million, and they pay $10,000 per year in property taxes. Is that fair? Many say no.

Now to be clear, Proposition 15 does not touch residential properties. It changes only how industrial and commercial properties are taxed, and it includes exceptions in those groups. Perhaps by leaving out residential properties, it was thought to make this more palatable. We’ll see.

Of course, the usual anti-tax zealots are lined up against this. They fight any tax, as if they don’t know or don’t care about what taxes pay for. But let’s be clear: We have to find a way to restore funding for local services.

Which is where the ballot box budgeting comes in. I hate this idea. It is an abdication of responsibility for governing. We hire, er, vote for, people to do the necessary work to allocate fund for a variety of government-provided services. That they fail more often than we prefer is our fault. If we want better government, we have to elect better leaders. Worse, this proposition writes the spending allocation into the state constitution.

That said, it’s hard to argue about the directive. Ballotpedia spells this out pretty clearly:

Proposition 15 would create a process in the state constitution for distributing revenue from the revised tax on commercial and industrial properties. The ballot initiative would distribute the revenue to specific areas, rather than the General Fund. First, the revenue would be distributed to (a) the state to supplement decreases in revenue from the state’s personal income tax and corporation tax due to increased tax deductions and (b) counties to cover the costs of implementing the measure. Second, 60 percent of the remaining funds would be distributed to local governments and special districts, and 40 percent would be distributed to school districts and community colleges (via a new Local School and Community College Property Tax Fund). Revenue appropriated for education would be divided as follows: 11% for community colleges and 89% for public schools, charter schools, and county education offices. There would also be a requirement that schools and colleges receive an annual minimum of $100 (adjusted each year) per full-time student.

The state’s budget analyst thinks that if this proposition passed, when it is fully implemented (it is phased in), between $8 billion and $12.5 billion will be raised each year, and most of it it would go to the above.

The anti-government zealots (also known as Republicans) can’t not like this. Money won’t be available to spend on, as they’d say, pet projects.

Opponents say that this will increase the cost of living (as if it isn’t already high here) and hurt small businesses. But that’s not true. Small businesses specifically are exempted, and increased taxes on larger businesses are unlikely to affect the day-to-day cost of living for everyday Californians.

This is a tough one. I am fundamentally opposed to ballot box budgeting. But Proposition 13 needs revision for the very fiscal survival of cities and towns statewide.

We have lived too long without resources. I think the edge here has to go to YES on Proposition 15.