The landmark proposition passed by voters in 1978 called Proposition 13 has saved Californians billions of dollars in property tax assessments. This original Prop. 13 designates property tax rates are based on the original purchase price of a property at a fixed rate, whether residential or commercial.
This means that as property values increase with time, property taxes remain fixed and are based on the purchase price only and do not continue to elevate.
I am a big proponent of the original Proposition 13. Imagine if homeowners, especially those on fixed incomes, had to double to triple their biannual tax payments simply because the value of their property was assessed at a higher rate.
In other words, if you purchased a home at $500,000 and let’s say paid annual property taxes at $10,000 a year, you can count on paying the same property tax rate, not including additional local assessments, until the home is sold, remodeled, or refinanced.
Before the original Prop. 13 was passed, home values would have been reassessed periodically and increases in value would equal higher taxes. This translates to possibly paying $20,000 a year in property tax because the house in time might be valued at $1 million 20 years later.
Another $10,000 a year just in property tax increases would wipe out the savings or outstrip income of property owners. The 1978 Prop. 13 protects homeowners and commercial property owners from ever-increasing tax rates. This stability and logical valuation process protects all of us from tax gouging.
Now for the switcheroo. It is no coincidence that the 2020 ballot measure is also named Prop 13.
Most of us are appreciative and know the value of the original measure protecting property owners from tax gouging. Prop 13 has a positive title and is the hallmark of voter protection in California. It is no accident that the new ballot measure is also named Prop. 13.
This same title is designed to confuse the voter into voting for something that undoes much of the protections the original bill provided.
The new Prop. 13 calls for reassessment of commercial property every three years and commensurate tax rate hikes.
Of course, property owners are going to pass along these possibly very significant cost increases on to us. These increases will cause us to pay higher prices for meals at restaurants, higher rents for apartments, and higher lease costs for business property.
So much for affordable housing. Gone are affordable entry-level offices for startup businesses. Gone will be the day when tax rates are stable and predictable.
Do not be fooled by the namesake Prop. 13 on your current ballot. This new measure is nothing more than a money grab by politicians to undo much of what the original bill enacted.
I also recommend voting against Measure FD. Cleverly named using the initials of the Fire Department, this appears to be another way to scam voters.
Instead of directing some of the tax surplus money sitting in California government bank accounts, this measure adds an extra tax of 6 cents per square foot of property to conduct the same emergency services activities that our tax money is supposed to support.
The average homeowner would be paying $100-200 a year in additional assessments. But the average shopping center or large apartment complex would end up paying thousands if not tens of thousands more a year in extra tax.
Measure FD projects we, the taxpayers, will fund an extra $134 million a year forever for emergency services. The implication is that these vital services would go away or be unfunded if we don’t agree to pay extra.
Measure FD states this assessment can be “ended by voters,” implying we have control over what goes on the ballot in the first place. The voters, unless an expensive and time-consuming petition measure is undertaken and is successful, do not place measures on the ballot and the opportunity to repeal FD will likely never come up for a vote.
My recommendations are to vote NO on both Measure FD and Proposition 13. Please let your friends, family, and neighbors know how you feel about these measures as well and not to be fooled.
Jonathan Kraut directs a private investigations firm, is the CFO of a private security firm, is the COO of an acting conservatory, is a published author, and Democratic Party activist. His column reflects his own views and not necessarily those of The Signal or of other organizations.