California officials agreed Tuesday to make slight changes to a state constitutional amendment that holds down property taxes – a move that will increase revenue available to the state.
University of California student activists said the changes to Proposition 13 constitute a partial victory for their campaign to reform the measure.
In 1978, California passed Proposition 13, which limits taxes for homeowners and business owners. Currently, the proposition includes a loophole that allows large business owners to pay taxes based on values lower than what their property is actually worth. This loophole exists because business owners do not have to reassess their property values until their property changes ownership or a single purchaser buys more than 50 percent of the property.
On Tuesday, business groups and state assemblymen reached an agreement to reform Prop. 13 so that property values will be reassessed when at least 90 percent of ownership changes in a three-year period.
Since the bill passed its congressional hearing, the next step is for it to be heard in the Assembly Appropriations Committee next week. Because the proposed changes will not have a large fiscal impact, they only have to be approved by a two-thirds vote of the state legislature.
Assemblyman Tom Ammiano (D-San Francisco) has pushed for weeks to close the proposition’s loophole for business owners, but has faced opposition from business groups such as the California Chamber of Commerce, the California Tax Reform Association and the California Business Roundtable.
All of these groups are now in support of reforming Prop. 13, after Ammiano and Assemblyman Raul Bocanegra (D-Pacoima) spent weeks negotiating with the stakeholders to make it clear that they are not targeting businesses who are small property owners and that they want the change to benefit all Californians, according to a report on Ammiano’s website.
“When real property truly has a change of ownership, it should be reassessed in accordance with Prop. 13 and these amendments will bring clarity and certainty to commercial real estate transactions and ensure compliance with Prop. 13,” said Allan Zaremberg, the president and CEO of the California Chamber of Commerce, in a statement.
Lenny Glodberg, the executive director of the California Tax Reform Association, said in a statement on Tuesday that, although the association could not discuss the position of the opposition over the past several decades, they are pleased that the bill is moving and discussions can be opened up.
The statement also said that Rob Lapsley, the president of the California Business Roundtable, said his business is in support of the Prop. 13 changes because they help ensure that reassessment thresholds are transparent and lucid and that there are no inadvertent loopholes.
UC student leaders who advocated for the reform of Prop. 13 this year tentatively applauded these changes and said they hope future changes will bring in more money to the state, resulting in additional funding that could be used to roll back UC tuition.
Students said they think commercial property tax rates should be reassessed so major companies pay the correct amount of property taxes.
Kareem Aref, the president of the UC Student Association, said students think it is wrong that homeowners sometimes have to pay exorbitant property taxes when big, older companies like The Walt Disney Company do not.
“I’m excited that something is being … done about Prop. 13, which is long, long overdue. Obviously, it’s not enough. There is a lot more that can be done and I’m excited that 2016 may hold the potential to change Prop. 13 in its entirety,” Aref said.
Conrad Contreras, next year’s USAC external vice president, said he recently went on a lobbying visit with other UCLA students to Assemblyman Bocanegra’s office in Sacramento, Calif. to ask him to address problems with the Prop. 13 loophole.
“This change is a part of a continuous process to reform Prop. 13,” Contreras said. “In the future, we would like to ask other legislators for support so we can see more of a connection (between Prop. 13 reform) and the funding of higher education.”
Compiled by Laura Boranian, Bruin contributor.