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The Pros and Cons of Prop 15
We profile Prop 15 which has been called the biggest change to California's tax system in a generation. It will hike property taxes on big businesses raising billions for schools and local governments.
LOS ANGELES - In 1978, escalating housing prices drove California voters to the polls to approve Proposition 13. It amended the state constitution and provided that property taxes had to be based on the purchase price of a home or business. It even put a cap on what annual tax increases could be.
Now comes Proposition 15.
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John Kim is with YES ON PROP 15. According to Kim, “California has been carrying the corporate bottom line for massive corporations for 42 years and we just can no longer subsidize it anymore.”
Kim says Proposition 15 has a couple of goals. One goal is to help education and local governments financially.
By splitting the tax rolls and separating business and residential property taxes they hope to get big businesses to pay more money. 12 Billion dollars in more money!
Kim says 40% of that money would go to schools from K12 thru community colleges.
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60% would go to local governments including cities, counties, fire and water districts, but not the state.
Importantly, Kim says homeowners, home businesses and agriculture would not be affected.
Kim continues, "And, so the idea of fixing an error; one portion of proposition 13 in order for us to get that 12 billion dollar at a moment like this. It's just the most rational decision we can make.”
To Tracey Hernandez with NO ON PROPOSITION 15 this measure “... is a terrible huge property tax increase.”
Hernandez is the CEO of the LA County Business Federation.
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She says, "Prop 15 is a terrible huge property tax increase that’s going to crush small businesses and all of Californians that can least afford it by raising the cost on everything we’ve got to buy.
And, it’s protected. Californians voted it in to keep our property taxes and increase reasonable over time."
Hernandez says, "Given the pandemic and economic issues businesses are having "this is a terrible time to go after property owners to get another 11 billion dollars a year.”
Hernandez and Kim disagree on the rules of the Proposition on how money is distributed. Hernandez says, “There’s no restriction. They can do whatever they want.”
Kim's counter?
“There are very clear transparency and accountability rules about how the money flows.”
Hernandez claims if Prop 15 passes it could be fatal to some small businesses.
She explains, “Most small businesses rent their properties they don’t own them. And then in their lease, it's a straight pass-through; property taxes increases are just passed through to the small business. Those that are struggling right now in the pandemic just to hang on are going to get hit with a big increase in their operating and then you know what happens. Some businesses will close. Some will have to cut employees."
And, then there is the debate over whether Prop 15 steps one of a process that down the road would take down Proposition 13!
Says John Kim from YES on PROP 15: "There’s no strategy in the coalition that says this is step one and the residential is next. That’s sort of a conspiracy theory being laid out by the opposition.”
And, Tracy Hernandez with NO on PROP 15 gets the last word in this story.
She says, “They would actually like to do is undo all of the prop 13 protections but what they’re doing taking political calculations so right now they’re just saying let's just split commercial property from residential. Let’s just get this big new tax increase now. We’ll get that underway and then we can come back later because we still need more money. We see this as the money grab and they’ll come back later and address the homeowners.”
Of course, you get the last word at the polls on all of the propositions including PROP 15.