UPDATE: We first wrote about the Make It Fair initiative back in October. It's the effort to repeal a business portion of Prop. 13. Now, Secretary of State Alex Padilla announced the signature gathering portion of the effort. Here is his statement:Secretary of State Alex Padilla announced the proponents of a new initiative were cleared to begin collecting petition signatures yesterday.The Attorney General prepares the legal title and summary that is required to appear on initiative petitions. When the official language is complete, the Attorney General forwards it to the proponent and to the Secretary of State, and the initiative may be circulated for signatures. The Secretary of State then provides calendar deadlines to the proponent and to county elections officials. The Attorney General’s official title and summary for the measure is as follows:REQUIRES CERTAIN COMMERCIAL AND INDUSTRIAL REAL PROPERTY TO BE TAXED BASED ON FAIR-MARKET VALUE. DEDICATES PORTION OF ANY INCREASED REVENUE TO EDUCATION AND LOCAL SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT. Taxes certain commercial and industrial real property based on fair-market value—rather than, under current law, the purchase price with limited inflation. Exempts agricultural property and certain small businesses. Dedicates portion of any increased revenue to local services and to supplement, not replace, state’s minimum-fundingguarantee to schools. Provides tax exemption for $500,000 worth of tangible personal property used for business and all personal property used for certain small businesses. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Net increase in annual property tax revenues of $6.5 billion to $10.5 billion in most years, depending on the strength of real estate markets. After paying for county administrative costs and backfilling state income tax losses related to the measure, the remaining $6 billion to $10 billion would be allocated to schools (40 percent) and other local governments (60 percent). (17-0055.)The Secretary of State’s tracking number for this measure is 1851 and the Attorney General’s tracking number is 17-0055. The proponents of the measure Anthony Thigpenn, Helen Hutchison, and Benjamin McBride must collect the signatures of 585,407 registered voters (eight percent of the total votes cast for Governor in the November 2014 general election) in order to qualify it for the ballot. The proponents have 180 days to circulate petitions for the measure, meaning the signatures must be submitted to county elections officials no later than August 20, 2018. The proponents did not provide contact information.
ORIGINAL STORY:
Next year will mark the 40th anniversary of Proposition 13, the People's Initiative to Limit Property Taxation. Prop. 13 has decreased property taxes for residents and businesses by assessing property values at their 1975 value.
It also restricted annual increases of assessed property value to an inflation factor, not to exceed 2% per year.
Now, an effort is underway to undue a piece of the business benefit of Prop. 13.
While the effort is aimed at corporations, "Make it Fair" would have zero impact on residential property taxes.
The "Make it Fair" coalition, made a video featuring Robert Reich, the former economic advisor to President Clinton, Reich is now faculty at UC Berkeley and is the focal point of the Make it Fair video.
https://www.youtube.com/watch?v=ICWx3I26An8
Make it Fair believes corporations have been taking advantage of the Prop. 13 business "loophole" and by consequence, property tax revenues for local governments and schools districts in California have suffered greatly.
GRASSROOTS PUSH
The group has been holding townhall meetings up and down the state, including this past week in Chula Vista. The group will hold their second townhall November 1st in San Diego.
The goal of the outreach is to educate the public on just how much money is, in their view, being lost to the Prop. 13 loophole. An economic study from USC claims it's $9 billion statewide and just over $800 million for San Diego County. That money, the group says, is badly needed for critical city services and school districts.
Chula Vista Councilmember Patricia Aguilar was on a panel for the Chula Vista event. She made the point, "Our local public safety organizations are desperate for money. Chula Vista has a severe police shortage and this consistent infusion of money would solve the staffing issues."
"Make it Fair" coalition members said any infusion of Prop. 13 money would go directly to local city services and school districts. It's not yet clear what the district breakdown would be.
The group will announce whether the initiative will go before voters in November 2018 in the coming months.
BUSINESS OUTCRY GROWING
Ask any business owner and they will tell you, California's business climate could use fewer regulations. They say it's hard enough to do business in the Golden State, and if the "Make it Fair" initiative is successful, it could decimate business opportunities. Indeed the state's business tax climate, according to the Tax Foundation is the third-worst in the nation.
In a story in Forbes, Economic advisor Rex Sinquefield writes, "Make It Fair's contention that loopholes in Proposition 13 allow a small number of 'giant corporations' and 'wealthy commercial property owners' to get around paying the property taxes that they could easily afford. In reality, though, the 'loopholes' that Make It Fair seeks to close are in place to protect residential and commercial real-estate owners at all places on the economic ladder. Their desired legislation (Senate Constitutional Amendment 5), which stalled in Sacramento, would create a steep tax increase for many property owners. That notion is unacceptable. Proposition 13 keeps small business owners’ doors open, even when the economy presents a variety of struggles – and it’s been providing this security for nearly 40 years."
The California Business Roundtable is beginning to mount their online ad campaign against the measure. Their language is very clear, “SCA 5 would dismantle the foundation of one of the most important propositions ever passed by voters.”
Stay tuned.