Billionaire gubernatorial candidate Tom Steyer has signaled support for a referendum to reverse parts of Prop 13.
Steyer has not solidified any plans, but early reports are that he’s supportive of a “split-roll” strategy, which would leave residential properties alone and only reassess commercial lots. He confirmed his support for the concept to Politico, describing it as an effort to raise tax revenue to offset healthcare cuts brought on by President Donald Trump’s megabill last year.
In California, conversations about property prices, government budgets, and the state’s taxes eventually come around to Proposition 13, the 1978 voter referendum that essentially locked in a property’s assessed value — and thus the level of taxes owed on it — to that of when it was purchased.
For those who got in early, or during down times, Prop 13 has been a tonic against the state’s affordability crisis. For local and state governments it’s been a thorn to the tune of $1 trillion in forfeited tax revenue, according to the Institute of Taxation and Economic Policy. Overturning it would require another referendum, a barrier that has left Prop 13 untouched.
A similar change to Prop 13 was pursued in 2020 — Proposition 15 — but it narrowly failed with 48 percent support. Because it was a citizen-initiated ballot measure, it only needed a simple majority to pass.
That effort, which sought to reassess commercial and industrial properties worth more than $3 million, estimated an annual increase of $11.5 billion per year in additional property taxes.
A 2023 analysis by the Berkeley Institute for Young Americans found that industrial and commercial properties enjoy the most significant discounts to their assessed property values thanks to Prop 13. On average, Industrial-heavy uses, such as manufacturing and cold-storage, see a $720,000 gap between the property’s assessed and market value. Regular industrial uses enjoy an average $400,000 gap. Retail spaces have the third highest discount, at $285,000, followed by multi-family residential ($250,000) and commercial office ($160,000).
Steyer’s desire received an immediate rebuke from the latest entrant into the gubernatorial race, two-term San Jose Mayor Matt Mahan. Mahan, whose campaign has been propelled by Silicon Valley tech money, wrote in a pair of posts on X that Steyer’s idea would “make California a lot more expensive,” and said it should be a “last resort.”
“In the last six years the California state budget has grown from $200 billion to nearly $350 billion. Did you feel like government got $150 billion better? I don’t.” Mahan wrote. “We need more money to protect Californians from Trump cuts. But let’s start by cutting waste and making government more efficient. Before our government asks for more, it needs to do better with what it already has.”
Mahan has fashioned himself as a friend of the YIMBY movement (Yes In My Backyard), but his position against Prop 13 reform was viewed by many as opposing a widely shared sentiment among YIMBYs.
Matt Lewis, spokesperson for California YIMBY, said “everyone agrees that Prop 13 is a problem,” and it is “indicative of the challenges the state has in raising money and staying out of deficits.” However, Lewis said Prop 13 reform is not a core project of YIMBY. They are focused on increasing the supply of housing.
“In general, we’re annoyed by Prop 13, but we don’t work on it,” Lewis said. “The big question is about funding. Reforming Prop 13 would help, but it alone won’t solve California’s revenue problems.”
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