This is the wrong time to overhaul California’s property tax law. Vote no on Prop. 15

California’s method of property taxation is an unholy mess — so much so that at some point we need to throw it out and start over.

But this is not the right time for the overhaul proposed by backers of Proposition 15; not when so many businesses already face financial ruin on account of the coronavirus pandemic. Prop. 15, the split-roll initiative on the November ballot, would impose one more economic burden, especially on small businesses.

If the measure passes, non-residential properties will no longer be eligible for the tax break enjoyed by homeowners, thanks to the 1978 passage of Proposition 13.

Prop. 13 drastically changed the way taxes are calculated, by basing the taxable value of property on the original purchase price, rather than adjusting it every year to reflect current market value. That’s been a boon for Californians who bought their homes decades ago, and as a result, pay much lower taxes than their neighbors who purchased homes more recently.

If Prop. 15 passes, the tax roll will be “split,” meaning residential property will still be taxed based on purchase price, while industrial and commercial property will be reassessed based on current market value. According to pre-COVID estimates, that change would generate between $6.5 billion and $11.5 billion per year, with 40% going to schools and the remaining 60% to local governments.

Farmland would be exempt from reassessment, but opponents like the California Farm Bureau say improvements — such as barns, irrigation systems and food-processing facilities — would be taxed at the higher rate, with devastating consequences for California agriculture.

Supporters counter that it’s large, wealthy corporations — not family farms and other small businesses — that would generate most of that new revenue. According to a study by Blue Sky Consulting Group, which supports Prop. 15, 10% of property owners would pay 92% of the new taxes.

Backers of the measure also point out that properties valued at under $3 million would be exempt — another effort to place the biggest burden on large businesses.

Fair enough. After all, do the Amazons, Googles and Apples really need a tax break originally intended to prevent Californians from losing their homes?

They don’t, which is why the split roll would make sense for California — if it weren’t for the negative consequences that would be particularly damaging at this moment.

Chief among them: Property owners could simply pass on the tax increases to their tenants, causing even more business closures and job losses.

And in this uncertain economy, who knows whether owners of commercial and industrial property could even find new renters, which could mean even more vacancies in struggling downtowns and industrial parks.

In other words, the timing couldn’t be worse — something that could not have been foreseen when proponents decided months ago to put the measure on ballot in 2020.

Even so, the measure has strong support from a number of Democratic leaders, including presidential candidate Joe Biden and Gov. Gavin Newsom, as well as from educators, labor unions and environmental and social justice groups.

It’s easy to see why. The split roll would provide enormous economic relief to cities, counties, schools and other public agencies that have been forced to ask voters to approve special taxes — such as school bonds and sales and bed taxes — to provide basic services.

That’s a huge burden on both local governments and taxpayers. It’s especially unfair on young people trying to break into the housing market. Not only are they faced with high housing costs and bigger property tax bills, chances are they also must pay off bonds that finance schools and fire stations, parks and libraries.

It’s intrinsically unfair, and it’s time Californians faced the fact that Proposition 13 has lifted the tax burden from one generation only to place it squarely on the shoulders of the next.

Ideally, we would repeal Proposition 13 completely and replace it with a more equitable system. But given the lack of political will for that, the next best choice is to tax commercial and industrial property at a higher rate — just not this year, when there already are so many businesses struggling to survive.

The Tribune Editorial Board urges a no vote on Proposition 15 in 2020, but we strongly support taking another look at a split roll measure at a future date, when California has come out from under the shadow of COVID-19.

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This story was originally published September 27, 2020 at 5:10 AM with the headline "This is the wrong time to overhaul California’s property tax law. Vote no on Prop. 15."