Gov. Gavin Newsom has endorsed a November ballot measure that would increase taxes on commercial property owners.
Newsom called Proposition 15 “a fair, phased-in and long-overdue reform to state tax policy” in an email to supporters, according to the Los Angeles Times. It’s one of three property-related measures set for the ballot this November.
Prop 15 would institute what is commonly referred to as a “split-roll” property tax because commercial and residential taxes would be calculated differently.
The measure would revise a policy instituted in 1978 through Proposition 13. Under current law, commercial and residential property taxes are updated only in the case of a sale.
If a property hasn’t sold in several years, the owner’s bill is often dramatically lower than what it would be if assessments were more regularly updated, reducing tax revenue available to governments.
If Prop 15 is passed, taxes on some commercial properties would be based on the current market-rate value of a property.
The estimated $12.5 billion annual revenue generated statewide would go to schools and local government services. Los Angeles County could see around $3.8 billion in additional tax revenue.
Residential properties would still be taxed based on the value at the last sale. Commercial properties zoned for agriculture would be exempt, as well as properties owned by entities with holdings valued at $3 million or less, according to the Times.
Opponents of Prop 15 said it would “mean increased costs for the same small and minority-owned businesses [Newsom] has forced to close for the last six months” because of pandemic-related restrictions. [LAT] — Dennis Lynch