Major Public Employee Unions Endorse Split-Roll Property Tax Initiative

The California Teachers Association and the Service Employees International Union (SEIU) this week endorsed the split-roll property tax initiative that will appear on the November 2020 ballot, becoming the first major public employees’ unions to endorse the measure.

In a press release, the SEIU claimed that the current property tax system has a “millionaire and billionaire corporate tax loophole,” and stated, “Over the last 40 years, California has lost hundreds of billions of dollars in revenue, leading to chronic underfunding of schools, services, and local communities along with poor local land use decisions, and a spiraling housing crisis.”

The press release did not discuss current state budget reserves of $15.3 billion, a 66 percent increase in K-12 school spending from 2012 to 2018, or local property tax revenue increases averaging 7.3 percent annually for business property and 6.34 percent annually for homeowner property since passage of Proposition 13 in 1978.

CalTax President and Chief Executive Officer Robert Gutierrez noted that the split-roll initiative would result in higher consumer prices in California, as well as major job losses as more California companies move to states where the cost of doing business is much lower.

“It is no secret that California companies are moving jobs and investments to other states, and this initiative would speed the exodus, resulting in job losses for Californians,” Gutierrez said. “Businesses that stay will cover the cost of the tax hike by increasing consumer prices on everyday goods and services.”

The Dallas Business Journal reported December 13 that 1,800 companies left California in 2016 (the most recent year for which data is available), and Texas was the top destination state. This resulted in 275,000 jobs and $76.7 billion in capital funds being diverted from California.

The initiative (click here for the full text, and here for CalTax’s analysis) would increase property taxes on California businesses by requiring reassessment of commercial and industrial property (property not used for residential or agricultural purposes) at full market value at least once every three years. The measure includes a limited exemption from reassessment if the market value of all property owned by the taxpayer in the state and used for business operations totals less than $2 million, and also includes limited personal property tax exemptions for small businesses.

A poll released February 6 by the Public Policy Institute of California found that only 49 percent of likely voters support a split-roll property tax, while 43 percent are opposed and 10 percent said they don’t know. The support came from 58 percent of the Democrats surveyed, 37 percent of the Republicans, and 49 percent of the independents.

The poll also found that 64 percent of likely voters believe Proposition 13 has turned out to be “mostly a good thing for California.” This included 58 percent of Democrats, 67 percent of Republicans and 59 percent of independents. Only 24 percent of likely voters (28 percent of Democrats, 23 percent of Republicans and 28 percent of independents) said Proposition 13 has been “mostly a bad thing,” while the remaining 11 percent said they don’t know.

The results of the new poll are consistent with past polling showing that the split-roll proposal is not widely supported. Typically, proponents of ballot initiatives look for early support of at least 60 percent, because they know that support will drop dramatically once a strong opposition campaign is launched.

Californians to Stop Higher Property Taxes, the campaign committee established to oppose the measure and co-chaired by CalTax is actively fundraising to oppose the measure.

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