CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MAY 26, 2020, OR THEREAFTER
BY THOMAS D. ELIAS
“MEMO TO SPLIT ROLL ADVOCATES: WAIT”
FOR RELEASE: TUESDAY, MAY 26, 2020, OR THEREAFTER
BY THOMAS D. ELIAS
“MEMO TO SPLIT ROLL ADVOCATES: WAIT”
As the
coronavirus pandemic drags on, California and the rest of America wallow ever
deeper into the worst recession since the Great Depression of the early 1930s.
Millions
of Californians are out of work. Thousands of businesses that were products of
hard work, initiative, sacrifice and devoted nurturing are gone or soon will
be. In every field from restaurants to nail salons, hobby shops and sporting
goods outlets, hundreds of once-thriving businesses are dying or dead. When –
or if – their eventual replacements will appear remains unknown.
For
owners of commercial real estate, which range from individuals to large real
estate trusts owned by pension funds and millions of small investors, this is a
formula for disaster and possible destitution.
Into
this quagmire step the sponsors of California’s split roll ballot initiative,
which earlier this spring submitted signatures for a November yes-or-no vote
even as the pandemic peaked.
This
measure aims to do what liberal politicians and activists have sought since the
landmark Proposition 13 property tax limits passed in 1978: tax commercial real
estate based on market prices, while leaving residential properties alone,
their levies based on either 1 percent of the latest purchase price or 1
percent of 1975 assessed value.
If
sponsors of the as-yet-unnumbered split roll proposition, mostly labor unions,
are wise, they will pull their measure out of November. If it goes ahead, it is
likely doomed.
Even
before the pandemic, this idea’s fate was questionable, although it has some
merit. Based on late-2019 values of commercial property, it would give between
$7.5 billion and $12 billion to public schools, community colleges and local
governments, often cash-strapped since passage of the original Proposition 13.
But
only God knows what current values of California commercial property might be,
given the havoc wrought by COVID-19. It’s not merely that so many businesses
are dead or dying and therefore not paying rent, but also that numerous ongoing
businesses have refused to pay rent since the beginning of April, assured of
staying in place by government edicts that ban evictions at least until
mid-summer.
Sure,
they might eventually have to pay back rent. But even if they do, it amounts to
an interest-free loan subsidized by owners of commercial property. It’s a deal
some businesses could not resist, so at least one-fourth of all commercial
renters nationally have paid nothing for their quarters for the last two
months.
Anyone
can see this reduces the value of commercial property, and that cuts the
revenue benefits of a split roll. How long that might last is anyone’s guess.
Meanwhile,
property owners might try to respond by raising the rent on other tenants, a
cost those businesses would try to pass on to customers. So the net split roll
benefit to the voting public, if any, is unknown.
Into
this information vacuum step the pre-existing opponents of the split roll.
Prior to the pandemic, the Howard Jarvis Taxpayers Assn., named for one of
Proposition 13’s two progenitors, was already blanketing homeowner mailboxes
with material that looked a lot like official government communications.
The
split roll, the Jarvis organization claimed months ago, would “take Proposition
13 apart.” A vote against the split roll, the mailer told homeowners, would be
essential “to preserve your Proposition 13 tax savings.”
Never
mind that not a word of the split roll measure had anything to do with
residential property. As far as the Jarvis group is concerned, an attack on any
part of its favorite law is an attack on the entire thing.
Similar
arguments often help defeat local school bond measures, and this year’s canards
expanded on prior ones, claiming most money from split roll would go to fund
existing public employee pension deficits. Never mind that even if this were
true, those pensions were promises made to public employees by duly elected
officials, essentially deferred pay for the workers involved.
Reducing
pensions would be a broken promise, rendering all future government commitments
unreliable.
It’s a
climate that makes split roll’s fate very dicey this fall, if the unions
sponsoring it persist. They would be much wiser to wait for a better time.
-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, visit 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, visit www.californiafocus.net
No comments:
Post a Comment