California has had a long-standing system of tying the property’s taxes to the last sales price. But California property tax may be changing, with a ballot measure that could stop that from continuing to happen. Right now the ballot measure Proposition 15, is trailing and may not pass, but there are still millions of votes that haven’t yet been counted. It could be days — or even possibly weeks — before it’s known for sure if the measure passed. With 11 million votes still uncounted, No votes were behind Yes votes by 2.5 percent.
If proposition 15 passes, commercial and industrial properties will be reassessed for their California property tax every three years. Residential property rules won’t change, though, so homeowners don’t have to be fearful of large tax increases — that’s especially important to them if they’ve owned their homes for a long time and their current property taxes are very low. Unless they sell, taxes on their properties will only be allowed to increase at the current mandated rate of 2% every year for inflation. Prices climb faster than that, which means a lot of homes and businesses are paying much less in tax than the fair market value of their property would require.
The goal of making a change to California property tax through prop 15 is to stop wealthy corporations and other business owners from shielding themselves when it comes to property tax increases. Supporters of the so-called “split roll” measure suggest that the change will go toward correcting inequities in the current tax system that make it biased toward companies and commercial businesses. The proceeds from property taxes generally go toward local government programs and schools. These entities are missing out on needed and valuable revenue due to the current California property tax system.
Proposition 15 would address that, but those who disagree with the measure say that a pandemic-riddled economy is not the time for making changes that would impose significant tax increases on businesses and commercial properties. The opponents to the change are also making an effort to say that the changes are a move toward the same kind of adjustment to residential properties. Plans to change how the residential properties throughout the state are assessed have been disavowed by Proposition 15 supporters, but concerns that future changes to the system are coming still persist.
The issue remains controversial and the vote count remains tight at the moment, as there are many strong feelings on either side. But the challenge to the current tax system is a strong one and the way it’s structured to avoid changes to residential taxes could be enough to push it into the winning column. There are other important measures being considered, as well, such as a ballot measure that would allow certain homeowners to transfer their tax base from one home to another. Small businesses would also see exemptions from Prop 15 in a lot of cases, so it’s now just a waiting game as to what the voters have decided.