GOP tax measure could spur ‘split roll’ backlash in CA

GOP tax measure could spur ‘split roll’ backlash in CA

(Calif.) Leaders of the state’s progressive movement have waited decades for a serious opportunity to get voter approval for splitting the property tax rules for homeowners from those of big commercial holdings.

To do so will require a big change to state laws that were ushered in by Proposition 13, the landmark 1978 tax property measure that has since stood as the unchallenged “third rail” of California politics.

But with the passage of the nation’s new tax law—that both benefits corporate interests and inflicts penalties on homeowners in high-cost, high-tax states like California—supporters say voters might be ready by the November election.

If so, schools are likely to get a big boost from the estimated $9 billion in additional state revenue the rule change would bring.

“Voters will be more than willing to close a corporate loophole that benefits millionaires, billionaires, and corporations, especially in the aftermath of the federal tax giveaway that gave hundreds of billions of dollars to those same entities,” said Helen Hutchison, president of the California League of Women Voters in an e-mail to K-12 Daily. “This measure allows California to fight back against the federal tax heist and fund its schools.”

Interest in bring a “split roll” initiative to voters goes nearly as far back as the adoption of Proposition 13 itself. Under the landmark law, property in California is generally reassessed for tax purposes only when ownership of the land changes hand.

Thus, if a homeowner bought a house in 2000 and continued to live it until today, the owner would continue also to be paying taxes based on its value from 18 years ago.

But when it comes to major commercial real estate holdings, such as an office tower or business park, it is common for the title to change hands without a technical change in ownership.

Consider a partnership that owns a large building. Instead of selling the building, which would trigger a reassessment, new partners are allowed to buy into the corporate structure instead and replace the former partners without paying higher property taxes.

The California Schools and Local Communities Funding Act of 2018 would close that so-called loophole by assessing commercial properties at their actual value. Under the proposal, homeowners would continue to receive the existing protections of Proposition 13 that restrict taxes to 1 percent of the purchase price of the land and no more than 2 percent a year, supporters said.

Along with the League of Women Voters, the proposal has the backing of a broad coalition of social welfare and community groups as well as a long list of school districts, city councils and labor unions.

Although polls have shown in the past voter support for splitting the tax roll, opponents have been able to muster anti-tax sentiments that run deep among a large number of voters and defeat the effort often before it got on the ballot.

As recently as 2014, a poll by the Public Policy of California found 59 percent of voters favored taxing residential and commercial properties differently. But even with those numbers, supporters were reluctant to bring the issue forward fearing the response from the tax and business lobby.

This time could be different and ironically, the impetus could be the creation of the GOP, which had championed Proposition 13 for nearly 40 years.