RED ALERT – Split Roll Property Tax Initiatives Filed

The hammer has finally dropped and two initiatives have been filed for Title and Summary with the Attorney General’s Office to change Proposition 13 and end tax protections for commercial real estate by enacting a Split Roll Property Tax. It is reported from multiple sources that the California Teachers Association (CTA) is the source for both of these measures.

These two initiatives join one other measure introduced last month, and come after successfully defending Proposition 13 in several different venues this past year, including legislative measures, in the state budget, and at the Tax Commission.

As we have discussed there are several different approaches that can be taken to enact a split roll.  One of CTA’s measures increases all commercial taxes by .55%.  The other requires continuous reassessment and bases taxation on current value.

Both of CTA’s measures have political “sweeteners” thrown in like doubling the homeowners property tax exemption, doubling the renters tax exemption, and increasing the types of agricultural properties that are not subject to the commercial assessment. One of the measures lists a whole bunch of benefits to education, meant not only as a way to fully control the monies raised from this tax increase, but to also sway voters who naturally want to support their public schools.

Although this is the beginning of the official process, we are already taking actions to prepare for the battle, such as meeting with those responsible for writing the ballot analysis, analyzing the economics of the measures, formulating an opposition campaign, and beginning our fundraising efforts to defeat these measures. 

In addition to these three measures, we are also expecting to see split roll measures from at least one public employee union and from the SF Assessor Phil Ting led group “Close the Loophole,” which was registered this year specifically to pursue a proposition.

These measures seek ways to allow California State Government to continue spending your taxpayer dollars without addressing the issues of realistically setting wages and benefits for state employees and dealing with overspending and regulatory inefficiency, such as not allowing workers to put in 40 hours a week in four days, if they desired, instead of requiring overtime for any hours worked over 8 in a single day. 

If you have any doubt about the negative impacts of a split roll, please click here to read the study entitled "The Economic Effects of California Adopting a Split Roll Property Tax."

These propositions are clearly an immediate threat to anyone who owns commercial property in this state. BOMA members will need to step up and be counted if we are to defeat these ill-conceived measures.

See below for highlights of the provisions and links to read the full measures.

CTA Measure 1:  EDUCATION AND TAXPAYER FAIRNESS ACT - Submitted to the CA Attorney General’s Office for Title and Summary on November 05, 2009.

ENACTS A SPLIT ROLL PROPERTY TAX

By adding a new .55 percent ad valorem property tax (on top of existing 1% tax) to the “full cash value” of non-exempt non-residential property (commercial property).

To make the tax increase on businesses more palatable the measure also does the following:

• Doubles the homeowner property tax exemption from $7,000 to $14,000.
  

• Doubles the Renters’ Tax Exemption.
  

• Exempts first $1,000,000 of personal property tax to “protect small businesses.”

• Exempts property that is zoned and used for “agricultural production” (expands current ag exemption).

• Exempts all residential properties including multi-family.
  

Money bypasses State’s General Fund and goes directly to “Public School Investment and Accountability Fund” for distribution to K-12 districts (78%), Community Colleges (11%), and CSU (11%).  University of California does not receive any funds.

Funds are specifically directed to be spent on class size reduction, instructional supplies & equipment, school librarians/nurses/counselors, staff development for teachers designed by teachers, to provide for planning time for teachers, art/music/vocational programs, increased compensation for teachers, and school safety.


CTA Measure 2: PROTECT HOMEOWNERS AND CLOSE CORPORATE TAX LOOPHOLES ACT - Submitted to the CA Attorney General’s Office for Title and Summary on November 05, 2009.

ENACTS A SPLIT ROLL PROPERTY TAX

• By mandating an immediate reassessment of non-exempt non-residential property (commercial property).
  

• Mandates a reassessment of commercial property a least every three years.

• The “full cash value” becomes the new “fair market value".

To make the tax increase on businesses more palatable the measure also does the following:

• Exempts property that is zoned and used for “agricultural production” (expands current ag exemption).

• Exempts first $1,000,000 of personal property tax to “protect small businesses.”

• Doubles the homeowner property tax exemption from $7,000 to $14,000.

• Doubles the Renters’ Tax Exemption.

• Gives counties cut of new tax revenue to pay for administrative costs of reassessments.

• Gives counties 10% of these tax revenues after assessment expenses.

• Revenue goes directly to state General Fund – does not direct how funds are spent.

PARCEL TAX - THE LOCAL VOTER CONTROL & GOVERNMENT ACCOUNTABILITY ACT - Submitted to the CA Attorney General’s Office for Title and Summary on October 09, 2009

ENACTS A SPLIT ROLL PROPERTY TAX

• By reducing from 2/3 vote requirement to 55% vote requirement the ability to increase certain local property taxes.