For more than four decades, California homeowners and businesses alike have benefited from predictable and stable property taxes, thanks to Proposition 13. This in turn has provided local governments and schools with a dependable source of revenue. Unfortunately, all of this is at risk on November 3, when voters decide the fate of a measure to raise property taxes on commercial and industrial properties by $12.5 billion each year.
Unless defeated by voters, Proposition 15 will “split” the property tax roll, requiring that business property and farm production be assessed differently than residential properties.
Today, property taxes for land, improvements and structures are calculated based on 1% of the property value at acquisition. Annual property tax increases are capped at 2%, even when property values rise quickly, providing certainty that property owners won’t receive a sky-high property tax bill.
Under Proposition 15, certain commercial and industrial properties will be reassessed to market value at least every three years. The proponents tout that the measure will be a boon for local governments across the state, but that couldn’t be further from the truth.
For small rural counties like Yuba, Proposition 15’s complex exemptions and high administrative costs would likely result in an overall decline in net property tax revenue, not the massive gains promised by proponents. Even the nonpartisan Legislative Analyst warned about this unintended consequence.
And if this isn’t bad enough, Proposition 15 will be the nail in the coffin to small businesses that are already reeling from the COVID-19 pandemic. According to the National Federation of Independent Business, 78 percent of small businesses rent their property. Most small businesses use triple net leases which make them responsible for paying the property taxes, maintenance and insurance costs.
Without a doubt, Proposition 15’s higher property taxes will be passed along to small businesses in the form of higher rents. Small businesses will have few choices to cope – either lay off employees, raise prices on consumers or shut their doors. That means a higher cost of living and even more job losses when millions of Californians are applying for unemployment and struggling just to get by.
Even worse, Proposition 15 would subject improvements on agricultural land, like barns, orchards, vineyards, dryers, and processing plants to skyrocketing property taxes. For a county like Yuba that depends on agriculture, Proposition 15 would be devastating.
And while homeowners might think they are safe, the truth is that the supporters of Proposition 15 have a long history of saying they want to repeal all of Proposition 13’s taxpayer protections – even for homeowners.
Simply stated, Proposition 15 is a wolf in sheep’s clothing. It will do nothing but fund large urban counties, create a never-ending administrative quagmire, and harm Yuba County residents by cutting funding for our local schools, law enforcement and fire departments, at a time when we need it most.
Stephen S. Duckels,
Yuba County assessor
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