For more than 35 years, Proposition 13 has protected California homeowners and taxpayers. While our sales and income taxes have risen to be the highest in the nation, property taxes remain constrained and more importantly, predicable to each property owner.
Residents can anticipate their base property taxes will be 1% of their assessed valuation and will rise at no more than 2% per year. Prior to Proposition 13 the average tax rate was 2.67%. In addition, homes were revalued frequently and it was not uncommon during times of rapid property inflation to see property taxes nearly double due to reassessment. This was particularly devastating to seniors and those on fixed income. Tens of thousands of residents in our coastal communities are “house rich-cash poor” and risked being literally taxed out of their homes.
Recently, local elected officials were solicited by a San Francisco-based organization called “Evolve,” drumming up support for an effort to change Proposition 13 by reducing or eliminating its protections for commercial properties. This would represent a $6 billion tax increase with money going to local governments throughout the state. Already, more than 20 local governments and school districts have answered this siren song to raise taxes. The proponents make it enticing by telling homeowners that they will not pay, but when we raise taxes on commercial properties, we all pay. This $6 billion tax increase will show itself in higher rents as building owners recoup the taxes from their tenants. It will result in higher prices as shop and business owners get hit with higher occupancy costs and it will further exacerbate the disadvantages of brick and mortar stores that compete with internet retailers resulting in more store vacancies on the main streets of our state.
Perhaps the biggest impact will be in increased unemployment. Pepperdine University estimates that the so-called “split roll” will result in a loss of 390,000 California jobs initially and the continued loss of 100,000 jobs each year thereafter. Make no mistake, if the high tax lobby can split homeowners and commercial property owners now, they will be back soon to raise taxes on residential properties in the future.
Since the passage of Proposition 13, local governments have survived and thrived. The State is prohibited from taking local revenues, so there is no need for a $6 billion tax increase to fund more government. We should all respond with a resounding NO to this San Francisco-based tax grab.
Keith Curry is a council member and former mayor of Newport Beach. He is a candidate for the 74th Assembly District.