There usually isn’t much drama when it comes to how California votes each presidential election, but the Golden State more than makes up for it with a litany of ballot measures. The bulk of the attention on this year’s crop of 12 measures that appeared on the statewide ballots has hinged on Proposition 22, a highly contentious measure that saw Uber, Lyft, and other gig economy businesses spend $200 million to successfully maintain the right to keep their workers classified as independent contractors. However, there were multiple ballot measures with implications for how America’s biggest state handles real estate and housing. Here’s a rundown of all three, a look at where things stand, and what it all might mean.
What was it?
Named the Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative, Prop 15 would have amended the state’s constitution to tax commercial and industrial properties based on their current market value rather than their purchase price. Properties associated with business owners with $3 million or less in holdings within the state would be exempt from the change.
In effect, the measure would have overwritten 1978’s infamous Proposition 13, which made all residential, commercial, and industrial properties taxed based on purchase price. The state’s fiscal office estimated that the measure would bring in between $8 and $12.5 billion in new tax revenue per year, much of which would help fund K-12 schools, community colleges, and local governments.
Who was for and against it?
Among the groups who came out in favor of Prop 15 were teachers unions and advocacy groups, such as the California Federation of Teachers, the California Teachers Association, and United Teachers Los Angeles. Governor Gavin Newsom himself voiced support for the ballot measure, calling it a “fair, phased-in, and long-overdue reform to state tax policy [that is] consistent with California’s progressive fiscal values,” citing its value in funding public schools and public safety.
On the other side of the issue was the California Chamber of Commerce, who described the measure as “riddled with flaws which will hurt all Californians” by harming small businesses (despite the $3 million exemption). Even though it would not have affected residential property tax values, the group also said the measure would exacerbate the state’s housing crisis, as they believe increased industrial and commercial property taxes would have a knock-on effect of discouraging new home construction.
How did Californians vote?
Currently, “No” has garnered 51.7%, though some outlets have described the race as too close to call as of Thursday afternoon. The office of California’s Secretary of State currently lists the results as unofficial.
What (might) happen next?
If results hold, it would mark a major win for holders of commercial and industrial real estate, who’d avoid paying a bigger share of taxes at a time where the future of certain categories of commercial real estate is already uncertain. For big businesses with nationwide footprints worried about the costs of their real estate assets, the potential failure of Prop 15 would come as a sure sigh of relief.
Simultaneously, however, the failure of Prop 15 would mark a blow for schools and local governments, who feel they’ve been on the losing end of the property tax system since Prop 13 passed in 1978. Their existing challenges may now be exacerbated by pandemic-induced budget cuts.
What was it?
Proposition 19, also known as the Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment, relates to property taxes on a more individual level than Prop 15. A “yes” vote would make it easier for Californians to transfer the tax assessments on their properties to other homes within the state, allowing the property taxes of a previous home to be applied to a more expensive one with an upward adjustment. It would also allow those over 55, with severe disabilities, and the victims of natural disasters to transfer their tax assessment up to three times instead of just once.