“The California Schools and Local Communities Funding Act” sounds like sunshine and rainbows, but it is set to cause a war of all-against-all, inside of 18 months.
This measure removes Proposition 13’s tax protection for commercial property, and has qualified for the 2020 ballot. Proponents of the measure say it “closes a millionaire, billionaire, and big corporation tax loophole”, but proponents of the measure have no idea how the real world works.
That $10 Billion Doesn’t Come from Santa
The measure changes property tax assessment to a “split roll”, where only commercial properties are re-assessed every few years. Nothing will change with the property taxes on your house, but if you own a business, work at a business, or shop at a business, you’re going foot the bill for this one.
The Legislative Analyst estimates that this proposition would raise an additional $10 billion in taxes, ahem, revenue for the state. But where does that money come from? The teachers’ unions and other groups funding the initiative think that rich landlords are just going to pony up for it. Oh yeah, that will work out just fine.
“Extra costs? Sure, let me just pay for that out of my own pocket.”— said no landlord, ever.
No way. Just like their tenant, a landlord is running a business, too. If property tax goes up, the rent goes up. If the rent goes up, the business’s prices go up, or its employees’ wages go down, or worse, both.
All Against All
The teachers’ lobby is pushing hard for this measure, since most of the money goes to additional education funding. Local governments get a piece, too, so they’re in favor of it. Commercial landowners certainly don’t want this to happen, as their taxes would go up. Businesses are against it, since their rents would go up.
If you’re a real estate developer, this makes it more interesting to build houses instead of office parks. My inner Planning Commissioner wonders if we could fit all the re-zoning proposals into a single meeting.
It’s going to take smarts to fight this. It’s going to take a team. This issue crosses party lines in uncomfortable ways, as both conservatives and liberals run businesses and pay rent in California.
We need a leader who can bring Republicans and Democrats together in the same room to come up with a plan.
I’m up for the fight. California is worth it.
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