By: Orange County Supervisor Todd Spitzer
Last week, the Board of Supervisors unanimously approved a resolution in support of Proposition 13 and in opposition to the split roll. Supervisor Todd Spitzer brought the resolution to the Board of Supervisors after the Howard Jarvis Taxpayers Association encouraged local government across the state to pass similar resolutions.
“Proposition 13 is one of the most important laws in California history,” Supervisor Spitzer said. “Prop 13 has defended taxpayer rights in this state for 36 years, and we must take a stand against attempts to undermine it.”
With the passage of the resolution in defense of Prop 13 and opposing the split roll, Orange County becomes the largest jurisdiction to pass this sort of resolution. A number of Orange County cities have also passed the resolution, including Buena Park, Fountain Valley, Irvine, Laguna Niguel, Los Alamitos, Mission Viejo, Newport Beach, Rancho Santa Margarita, San Juan Capistrano, Tustin, and Villa Park. The full text of the resolution can be read here.
Proposition 13 was passed by California voters on June 6, 1978 by a margin of 64.8%-35.2%, passing in 55 of 58 counties, with even stronger support in Orange County, where it passed by a margin of 70.3%-29.7%. Proposition 13 is enshrined in the State Constitution as Article XIIIA.
Prop 13 places property taxes at 1% of assessed value at time of purchase with a cap of no more than 2% annual increase. Advocates of the split roll are attempting to undermine Prop 13. The split roll would allow homeowners to be protected by the Prop 13 tax increase cap but would remove the cap for business owners.
In the first ten years after the passage of Proposition 13, California personal incomes grew 50% faster than the national personal incomes. California’s job growth rate was double the nation’s rate in the first ten years after Proposition 13 passed.
California has the highest sales tax in the nation, the highest income tax in the nation, and the highest corporate tax in the West. The split roll would needlessly add commercial property tax to that list. The split roll would remove one of the last business incentives in California. The Tax Foundation ranks California 48th in the country for business tax climate. The California Taxpayers Association found that 60% of property taxes are paid by business, which is slightly higher than the 58% figure before Prop 13 passed.
The split roll would cause job losses, put small businesses at risk, and increase prices on consumers. Small businesses would face higher lease costs. Dry cleaners, pet groomers, barbershops, small restaurants, neighborhood bookstores, and other mom-and-pop businesses would be hit by higher lease prices as their landlords pass the cost on to them.
As the resolution notes, “Voters intended Proposition 13 to protect all property owners, and they had rejected previous attempts to impose higher taxes on small businesses, knowing that these so-called ‘split roll’ proposals would inflict irreparable harm on California’s economy…”.
On November 3, 1992, California voters rejected an attempt to implement a split roll via Proposition 167, which was defeated by a 58.8%-41.2% margin statewide, with even stronger opposition in Orange County, where voters rejected Proposition 167 by a margin of 66.9%-33.1%.
Prop 13 is under attack across the state. On June 3, the San Francisco Board of Supervisors voted unanimously to weaken Prop 13 to implement the split roll. 10 other cities in California have passed similar resolutions, Santa Monica and 9 Bay Area cities (Albany, Berkeley, Brisbane, Emeryville, Oakland, Palo Alto, Richmond, San Leandro, and Sebastopol). In Orange County, the Coast Community College District has passed the resolution calling for the weakening of Prop 13 to implement the split roll.
Assemblyman Tom Ammiano (D-San Francisco) is an advocate of the split roll and has said his long-term goal is to “nuke” Prop 13. The split roll is the first step in the dismantling of Prop 13.
Even before Prop 13, there was no split roll. Before Prop 13, California charged the same property tax for both commercial properties and residential properties.
The precedent of the split roll would endanger residential property taxes. If businesses lose their Prop 13 protections, it would only be a matter of time before Sacramento came back with the argument that it is unfair for homeowners to have Prop 13 protections while business owners do not. Sacramento’s solution in that case would not be to restore Prop 13 protections for business owners – it would be to remove Prop 13 protections for homeowners.