State Board of Equalization

Tax Agency Will Have to Expand Dramatically if Proposition 15 Passes, Staff Says

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The State Board of Equalization’s County-Assessed Properties Division will need to roughly double in size if voters approve Proposition 15 in November, BOE staff testified during the board’s three-day teleconference meeting held September 22-24.

David Yeung, deputy director of the Property Tax Department, testified that the workload increase caused by the split-roll initiative “will be extensive,” as the BOE would need to revise many of its assessors’ handbooks – a process that traditionally takes more than a year for even a minor revision, in order to gather input from taxpayers and assessors, ensure compliance with statutory and constitutional requirements, and avoid unintended consequences – and would have new duties regarding the anticipated increase in assessment appeals filed throughout the state.

“I anticipate … quite an expansion,” Yeung said. “In very rough numbers, if you’re looking to quantify it, right now we’re looking at just about doubling the CAPD staff in order to handle it.”

One of the issues, Yeung said, is that some key provisions of Proposition 15 are unclear. For example, he said provisions relating to how many employees a business has, and whether a single owner owns more than $3 million worth of property statewide at current market value, do not specify who would make such determinations.

“I suspect there will be quite some workload in administering that,” Yeung said. He said Proposition 15 “is basically silent as to who will do which part, whether it will be a parallel type responsibility, or whether the assessors or the state will carry the full weight of it.” If assessors are involved in the decisions, the BOE will have to add to procedures to its assessment practices surveys – another time-consuming process – to ensure fairness and accuracy, he indicated.

Mark Durham, chief of the BOE’s Legislative, Research and Statistics Division, testified that if Proposition 15 passes the BOE staff will submit a budget request asking the Legislature and governor for an additional $21 million and 135 new permanent full-time positions, phased in over a three-year period, to administer the split-roll system.

Deputy State Controller Yvette Stowers, representing Controller Betty Yee – a supporter of Proposition 15 – reacted positively to the reports.

“Sounds like a lot of employment opportunities for the County-Assessed Properties Division,” Stowers said. “Great opportunities for everyone.”

The majority of the teleconference meeting, which lasted for several hours each day over the three consecutive days, consisted of testimony from members of the working group formed by the BOE in August to make recommendations for the continuity of assessment appeals board (AAB) operations during the pandemic. The meeting also featured lengthy discussion of ways to meet the growing demand for county assessment staff – and how the demand will increase considerably if Proposition 15 is approved.

BOE Member Malia Cohen, who recently gave birth to a baby girl, was on maternity leave and was represented at the meeting by her chief deputy, Regina Evans.

During a discussion of hiring and retaining qualified appraisers, Stanislaus County Assessor Don Gaekle, president of the California Assessors’ Association, said his office has allowed flexible scheduling for the past 32 years. Employees can work any combination of 40 hours, including 10-hour days, if they don’t have any issues on their record and as long as the public hours are staffed to provide public access at the front counter and on the phones.

“I have to say that that flexible scheduling program is the most often-cited reason for job satisfaction and is a major component of our retention efforts,” Gaekle said. (CalTax: Most private employers in California do not have the ability to use flexible scheduling to improve employees’ job satisfaction. A legislative effort in 2018 would have permitted workdays up to 10 hours per day within a 40-hour workweek without the obligation for employers to pay overtime for surpassing eight hours per day, but the bill failed. Similar bills failed in 2011, 2013, 2014, 2015 and 2017.)

George Renkei, chief deputy assessor in Los Angeles County, said his office already has trouble maintaining a full complement of qualified appraisers, and “if Prop 15 goes through I think we’re going to end up with a much greater problem than we currently have.” The most experienced commercial and industrial property appraisers “will be the most like to leave in fairly short order if it passes,” he said, because private-sector employers will lure them away with higher compensation.

On the subject of Proposition 15, Gaekle said he recently revised his estimate of the workload increase that will occur if the initiative is approved.

“In July I talked about 1,200 to 1,500 properties that I had identified that would require reappraisal because they would be above the $3 million mark,” he said. “However, I did a little more in-depth analysis and found out that between 55 and 60 percent of our commercial and industrial properties have one owner owning two or more properties, which will all have to be analyzed to see if combined, they go over the $3 million mark. Another approximately 2,000 properties owned by corporations, LLCs, limited partnerships and trusts – where ownership is not as clear – may also need to be analyzed. So really what it boils down to is potentially we’re looking at having to do as many as 2,800 valuations per year in addition to the work we already do reappraising 600 to 700 properties in total, so a big impact.”