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Split Roll Prop 13

Commercial Real Estate Leaders:
A public employee union-led effort to overturn Proposition 13 protections for commercial real estate revealed itself last week.  At this point the sole purpose of the group seems to be political communications in order to “move the needle” of public opinion to support split roll.  This is intended to set up legislative efforts to push a bill, which will continue to be used as a platform for political communications; and finally to pave the way for passage of a proposition.
At this point, as leaders of the commercial real estate industry, the most important thing you can do is make sure you are conversant about the issue and are able to push back on the political arguments they are moving forward.  Below is an example of an article that does that, in plain English.  Joel Fox is President of the Small Business Action Committee – and is our partner in fighting split roll as part of the Californians to Stop Higher Property Taxes.
“California’s small businesses struggle every day to overcome our state’s massive tax burden and keep their doors open,” said Rex Hime, president of the California Business Properties Association. “By continuing to raise taxes, the state is forcing businesses out of California, and they’re taking our jobs with them. A split roll property tax proposal is the last thing California’s businesses need. Further, the increased costs from this proposal will ultimately be passed on to California consumers at a time when many California families are struggling to make ends meet.”
With pressure from this new group, we will see more and more activity from activists and the press.  We hope this type of information will help you respond as you go about your business but when conversations about Prop 13 and split roll will surely come up with everyone from tenants to elected officials to push back against advocate arguments.  Bottom line… this $9 billion tax on business in California is a recipe for disaster!
It’s Not About Fairness, It’s About More Tax Money
By Joel Fox — Editor of Fox & Hounds and President of the Small Business Action Committee
Monday, May 11th, 2015
The campaign to change Proposition 13 by the self-styled “Make it Fair” coalition is not about fairness, it is all about more tax money.
The coalition claims business gets tax breaks under the current property tax system. Their favorite example to point to was a deal over a Santa Monica hotel purchase that was engineered in such a way that a property tax increase was avoided when the property was sold.  But when a fix to the problem supported by the business community was introduced in the legislature the plan was spiked by pressure from the influential public employee unions because they didn’t want a fix, they wanted a campaign issue to undo Prop 13.

The reason is because it is not about fairness it’s about the money.
You can bet that fairness in the minds of Prop 13 change promoters doesn’t include either dealing with the pension issue or re-thinking cheaper, more effective ways to deliver services to the citizenry. (Remember Gov. Mario Cuomo’s admonition: It is not government’s role to deliver services but to see that they are delivered.)
If the conversation were truly about fairness there would be talk of reimagining government for the 21st century not financing a 19th century governmental structure with the expensive additions of items like unfettered pensions for government workers paid for by beleaguered taxpayers who don’t enjoy the same privileges.
The Make It Fair coalition is looking for the $9 billion in additional revenue a new USC study says a split roll would bring in — a study commissioned by a member of the coalition. While the report discussed the approximate $9 billion take from a split roll there was no discussion of how that huge tax increase would affect the collection of other taxes. There will be consequences to the job market as businesses compensate for the new taxes including cutting jobs that would affect both income and sales tax collections in the state.
Economic consequences and negative effects on the business climate are an important part of this Prop 13 makeover debate but the USC authors noted their sole purpose was to discover how much a split roll would produce. However, they went out of their way to suggest at the end of both the Introduction and Conclusion of their report that the state needed additional money for certain budget items echoing their sponsors’ political agenda and going beyond the stated academic purpose of the paper.
Not a surprise since it’s not about fairness it’s about the money.
Is the discontent promoted by a small group of left leaning organizations and public employee unions widespread?  How real is the threat presented to Proposition 13 by a coalition made up mostly of old faces who have wanted to dismantle Prop 13 for the longest time?
The question is will big money players like SEIU and teachers unions step up to engage in the multi million dollar battle over a split roll? SEIU is already providing seed money for the so-called grass roots efforts. The teachers unions are weighing their options with an eye on the possibility of extending the Proposition 30 tax increases that may face less opposition than attempting to change Prop 13.
Don’t kid your self — the make it fair argument will ultimately cast a wider net. Notice the advocates of the change are talking about corporations AND wealthy landowners. Wealthy landowners as individuals, perhaps? In case no one has noticed, the wealthy in California pay the highest income tax rates in the country. But clearly that is not enough for the tax increase advocates.
Will expensive residential landowners be next in line for a property tax increase if a split roll succeeds? Where is the line drawn on who is a wealthy landowner in a state with high housing costs? The word to voters watching this emerging debate on fairness is: Beware.
Because it’s not about fairness it’s about the money.