CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, FEBRUARY 5, 2013, OR THEREAFTER
FOR RELEASE: TUESDAY, FEBRUARY 5, 2013, OR THEREAFTER
BY THOMAS D. ELIAS
“PICKING THE SMART PROP. 13 FIGHT”
From the moment it became clear last
fall that Democrats won supermajorities of slightly more than two-thirds in
both houses of the California Legislature, Proposition 13 has been in the
political crosshairs.
That’s a sea change for the landmark
1978 initiative that limits property taxes to 1 percent of the 1975 assessed value
or 1 percent of the latest sales price, allowing yearly increases of no more
than 2 percent to adjust for inflation.
No one has seriously proposed going
back to the pre-13 system of taxing properties based on their current market
value, which often saw levies double or triple over the space of less than five
years in times when housing and land prices mushroomed.
The change most commonly proposed is
the so-called “split roll,” which would see commercial and industrial property
taxed at a higher rate than residential. So far, no one has settled on what
that new rate might be.
Whatever rate the change advocates
(they like to call themselves reformers, but one person’s reform can be
another’s abomination) might settle upon, the mere consideration of a split
roll will surely spark vocal outrage.
You can count on the Howard Jarvis
Taxpayers Assn., namesake of Proposition 13’s prime author, to bombard
homeowners with direct mail warning of a threat to raise their taxes by
thousands of dollars per year. Split roll, of course, poses no such threat. But
that won’t change the fury, which could dominate the November 2014 election
campaign if this issue reaches the ballot.
Although the idea has been around for
decades, the split roll concept never got serious consideration before because
everyone in Sacramento knew it could only occur via another ballot proposition,
and the Legislature would need a two-thirds vote of both houses just to put one
on the ballot.
That’s a possibility now, with
Democratic supermajorities in both houses, but only a slim one because
Democrats are not nearly as lockstep a party as Republicans. Dissenting
Democrats are rarely the targets of recall campaigns or serious primary
election opposition, something that frequently befalls Republicans who deviate
from the party’s steadfast no-new-taxes platform.
But there is a way to reform
Proposition 13 without a ballot initiative and without any need for a
two-thirds vote anywhere. That’s to change some of the assessment rules and
definitions adopted by legislators (all now termed out or deceased) in 1979,
just after 13’s passage.
Those rules allow some commercial and
industrial properties and apartment buildings to escape reassessment when they
are sold. While residential property taxes rise immediately upon sale because
homes generally pass directly from one owner to another, things can be more
complex with other types of property.
The 1978 rules do not consider a
property to have changed hands so long as no one individual controls more than
a 50 percent stake in it. This can allow limited partnerships, for one type of
ownership, to save big money on their tax bills.
The same rules also
apply to other types of partnership, like one infamous sale of a vineyard to
the Gallo wine family, in which several persons got major new stakes, but no
one controlled a majority. The rules are outlined on page 42 of the state’s
handbook for assessors (http://www.boe.ca.gov/proptaxes/pdf/ah401.pdf).
Various estimates place the funds
state and local governments could get by changing these assessment rules at
anywhere from $5 billion to $12 billion yearly. A change, then, could produce
about as much revenue as the tax increases in last fall’s Proposition 30
without any need for an expensive, contentious initiative campaign.
This would surely be a lot easier than
trying to force a split roll on resisting businesses. When such assessment
changes were first proposed almost 10 years ago by former Democratic state Sen.
Martha Escutia, they were essentially hooted down by politicians afraid of
political suicide.
But with split roll on the table,
assessment rule changes may look a whole lot less threatening to business
property owners.
So here’s a hint to the new Democratic
supermajorities: Choose your fights wisely. Be incremental. When you can make a
major improvement to the fairness of Proposition 13 with relatively little
pain, why insist on getting into a war you might lose over something much
tougher and more sweeping?
-30-
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net
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