Agricultural groups have serious concerns as it pertains to the split roll tax initiative that will be appearing on the November ballot. If the measure is passed it will make serious changes to Proposition 13 in reassessing commercial and industrial properties at fair market value. The California Farm Bureau Federation (CFBF) has joined the Californians to Save Prop 13 + Stop Higher Property Taxes coalition in opposing the initiative, as it could have devastating effects on the agricultural sector.
When it comes to assessing homes or businesses, there is not a Democratic or Republican way.
County assessors fairly and equitably administer California’s complex property tax laws and regulations. We try to ignore the political consequences of our actions. Sometimes our assessments result in property tax increases. Other times, we lower property taxes to reflect declining real estate values.
As residents and taxpayers, we care about adequate funding for schools and local governments, as well as the adverse impacts higher taxes can have on businesses and residents. As property tax administrators, our duties require us to objectively oversee a complex system that involves tracking every parcel in our counties and ultimately leads to a property tax bill.
However, when an initiative threatens the stability of our entire property tax system, we are compelled to speak out. We have joined the California Assessors’ Association in opposing the split-roll initiative on the Nov. 3 statewide ballot, commonly referred to as the Schools and Communities First Initiative.
Among the pressures facing California farms, ranches and agricultural businesses—economic upheaval from the pandemic, water shortages, trade uncertainty and more—you can add another: a measure headed for the November ballot that would raise taxes on California farmers.
I’m a proud 5th generation rice farmer. My family and I have invested heavily in environmentally friendly technology – because it’s the right thing to do for our state’s long-term future.
So, if I told you powerful special interests want to punish farmers with higher property taxes for installing solar energy on my property, would you believe me?
Given California’s global environmental leadership, I was shocked to learn that’s exactly what will happen if voters don’t defeat a flawed November 2020 statewide ballot measure that will destroy Proposition 13’s property tax protections for farmers and businesses.
Not only will the ballot measure strip away incentives for solar energy, but it will also raise property taxes by up to $12.5 billion per year—the largest property tax increase in California history.
Every Californian, farmer or not, will pay for this massive property tax through higher costs on everything we buy and use ranging from gas for our cars to food—all at a time when families can least afford it.
My family has been farming in California since 1898. We understand the uncertainty farmers face, whether it’s from mother nature, foreign trade deals or COVID-19. California’s guarantee of stable, predictable property taxes provided by Prop 13 is one of the few things that farmers can count on.
Prop 13 calculates property taxes for residential, business and agricultural properties based on 1 percent of their purchase price. Property tax values are only allowed to go up by 2 percent a year, which limits drastic increases in property taxes, especially when property values rise quickly.
Knowing what I will pay in property taxes gives me the certainty to plan for the future. This certainty will disappear if we don’t defeat this flawed ballot proposition in November.
The special interests pushing this measure claim agricultural properties are exempt.
The truth is it will strip Prop 13 protections for improvements on farms and ranches. For my farm, that means higher property taxes on rice dryers, storage silos, the shop where I store my tractors, processing facilities, and, as indicated earlier, the solar panels we installed to provide clean renewable power to our operation.
This increased property tax burden will be added on just about every step of production, from when our rice leaves the field to the mill and then again when it hits the grocery store shelf.
Sadly, not only will the proposed property tax increase hurt consumers, but it will also penalize investments in renewable energy. Sustainability is a guiding principle for our farm. My family and I knowingly took on the added expense of installing solar panels under the assumption we would be able to provide a greener, more affordable product to consumers with lower future energy costs.
However, unless defeated, the flawed ballot measure changes the rules of the game.
It will eliminate the property tax incentive for solar energy systems that encourages green energy production in our state. As a result, my farm will be forced to pay property taxes on the full value of our solar panels.
This radical tax law change comes as California is struggling to meet its goal of 100% renewable energy by 2045.
An unexpected property tax hike on solar energy systems will disrupt my farm and all other businesses that made expensive solar energy investments. It will raise property taxes on large- scale solar facilities throughout the state that provide power to consumers which will further drive up energy costs for California families.
The powerful special interests pushing this massive property tax hike are out of touch with California’s environmentally friendly policies.
Equally important, their scheme would destroy Prop. 13 and hurt our state’s farmers at a time when the nation relies more on California-grown food more than ever.
As a fifth-generation farmer deeply committed to sustainability and feeding our state, I urge all Californians to say no to the flawed property increase ballot measure this November.
– Greg Van Dyke is a fifth-generation rice farmer from Sutter County. He is CEO of the Rice Growers Association of California and is also President of Cultivating Change Foundation, the largest LGBT-agriculture organization in the US.
Many opponents of the original Proposition 13 have never given up.
The same groups that fought the ballot measure more than four decades ago when 65 percent of the state’s electorate passed it have repeatedly tried to destroy the measure’s important property tax protections.
When Prop. 13 was on the ballot in 1978 I opposed it, but the voters approved it. As chair of the Assembly Revenue and Taxation Committee, I had a responsibility for the legislative implementation of Prop. 13 to make it work.
However, in the decades following Prop. 13’s implementation, I’ve come to recognize the law’s many benefits. For homeowners, small business owners and employers – large and small – Prop. 13 has provided stability, predictability and certainty. This certainty is even more important for the 46 percent of California businesses that are owned by racial minorities including African Americans.
California has a feast-or-famine budget. When economic times are good, large businesses and the well-off fund the vast majority of California’s budget. This funding allows the state to provide generous benefits to Californians who need them most. However, when the state faces an economic downtown, revenues coming into the Capitol crash – and with it, public education and social safety net programs are stretched thin.
This November, many of the same groups that opposed Prop. 13 four decades ago are pushing the largest property tax increase in California history – a shortsighted act made even more myopic given the walloping we’re experiencing with the COVID-19 crisis. Today, tens of thousands of small businesses across California have shuttered their stores. Still, proponents are proceeding full speed ahead with a proposal that will remove business properties from Prop. 13’s protections and require them to be reassessed at current market value at least every three years.
This unprecedented property tax increase will raise costs to businesses by up to $12.5 billion annually or, if they lease, lead to significant rent increases. Businesses, in turn, will pass these higher costs on to consumers – families and other small businesses – ultimately making everything we buy more expensive.
Proponents of this massive property tax hike attempt to portray their measure as “small business friendly” by claiming small businesses are exempt. This demonstrates a general lack of awareness of how most small businesses operate. Most small businesses rent the property where they operate and have what’s called a “triple net lease,” where property taxes, insurance and maintenance costs are passed directly onto tenants.
Worse still, as a former legislator and leader in California’s African American community, for African American small business owners, the measure’s skyrocketing property tax increases will be devastating. Many of the fore mentioned are my friends and clients.
Look at the facts: According to the 2012 Survey of Business Owners by the U.S. Census Bureau, 46 percent of all businesses in the state are owned by racial minorities including African Americans. They often rent their property and are subject to higher rents when property taxes increase. And, African American-owned small businesses are nearly twice as likely to fail because they have insufficient cash flow or sales to cover their costs than U.S. businesses as a whole.
Even before the unpredictable, tumultuous events of COVID-19, this massive property tax increase demonstrates an insensitivity and lack of awareness about the struggles that small businesses, particularly minority small businesses, face.
If small business owners manage to stay in business – which is no guarantee – adding to their challenges is neither prudent nor advised. Changing course on Prop. 13 will not only be costly to you and me, but it will be costly for California and our economy as a whole.
Willie Brown is a former San Francisco mayor and the longest serving Speaker of the California Assembly, Wlb@williebrowninc.com.
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