History Lesson on Property Tax Relief: Support & Opposition
2020 was an extremely motivated time for pent up anti property tax relief movement in California. The deceptively entitled “2020 Proposition 13” went to voters on March 3, 2020. This tax hike would have increased California’s overall debt; compelling the state’s school districts to issue more debt, raising property tax bills all across the state. It did not pass, and to put it bluntly, was an utter waste of time and taxpayer’s money.
Unlike Proposition 13 passed by voters in 1978, this 2020 version of Proposition 13 would have doubled the debt caps that currently limit how much bond debt local school districts can acquire. The 2020 Proposition 13 caps on local bond debt would have been increased from 1.25% of assessed property value to 2% for elementary and high school districts, and from 2.5% to 4% for school and community college districts.
The extra property tax revenue from 2020 Prop 13 would have gone into pockets not into roads. The 2020 Proposition 13 tax hike would have cost taxpayers $740 million per year for 35 years. The cash mainly going to construction-worker unions and contractors that hire everyone, with priority spending going to people working on projects in districts that have signed labor agreements that those in power prefer. As we know, the so-called 2020 Proposition 13 failed.
Prop 15 and the Near End of Commercial Property Tax Relief
Even more dangerous for California, the 2020 Proposition 15 tax hike that was proposed to voters across all 58 counties would have removed the right for commercial property owners to avoid property tax reassessment. This would have raised property taxes on all commercial and business property owners, which would have raised commercial store rents, office and apt. rentals, rentals on all business tenants would have gone up. This would in turn have increased prices on all goods and services throughout the state of California. Considering the outcome on middle class residents and working families, it would not have been a pretty picture.
Supporters of the Proposition 15 campaign raised over $67.6 million mostly from foundations and public service unions. The top three contributors were the Chan Zuckerburg Initiative, California Teachers Association, and SEIU California. Supporters say Prop 15 is a broad coalition of 1600 organizations launched by civil rights organizations, housing groups, parents, teachers, nurses, firefighters and community-based organizations who advocate for equality and justice for communities of color
Opposition to Proposition 15 Campaign has raised over $73.1 million mostly from land developers, agricultural interests and golf and country clubs. The largest donor is the California Business Roundtable Issues PAC that has contributed more than $38 million to the No on 15 Campaign. The Business Roundtable’s biggest donors are New York-based Blackstone Property Partners who gave $7 million and Michael Hayde, CEO of the Irvine real estate investment firm Western National Group, who gave $4.5 million.
Despite the massive effort towards promoting and passing this tax hike, voters were not sufficiently confused or conned into backing the bill en mass… and they rejected this tax increase on commercial properties, supposedly depriving the California school system of what allegedly could be a significant source of consistent revenue. Although the true intended recipients of this extra commercial property tax revenue remained under questions… and backers of Proposition 15 – the first major effort to cut into beloved property tax relief afforded by Proposition 13 since it was voted into law in 1978 – finally conceded defeat, and California heaved a statewide sigh of unified relief.
The question remains – would economic collapse of the statewide consumer base and working family structure in California have been worth a few extra dollars for the educational system, which is doing relatively well as is?
Last Minute Promotion of Snake Oil Sales to California Voters
Motivated, determined and relentless opponents to property tax relief in California came up with a last minute tax hike measure, Proposition 19 – and the CA Association of Realtors shoved $35 Million at the CA Legislature to promote this unusually deceptive bill, after suffering significant tax hike losses. They managed to confuse enough voters with disingenuous and deceptive public relations to get Proposition 19 passed – by a hair – and watered down the critical Proposition 58 “parent-to-child exclusion” tax break for middle class beneficiaries and new homeowners.
This weakened California homeowners’ ability to avoid property tax reassessment without obstacles. So Proposition 19 managed to limit parent to child transfer rights to a one-year window, and only as a primary residence. No longer could investment properties avoid property tax reassessment.
So the ability to transfer parents property taxes, when inheriting property taxes from a parent, is now on a tighter path. We can still keep parents property taxes but they made it more challenging, in the midst of a Pandemic no less. Avoiding property tax reassessment and establishing a low property tax base; as well as buying out a sibling’s share of inherited property, meaning the transfer of property between siblings or sibling-to-sibling property transfer – still exists, yet with a few more obstacles to remain aware of.
We can still transfer parents property taxes in California when inheriting property and inheriting property taxes from a parent, and remain able to keep parents property taxes on any property tax transfer, such as the parent to child transfer or parent to child exclusion. It’s just not quite as simple or easy as it was prior to advent of Proposition 19.
Thankfully, enough property tax breaks survived in California to enable property owners to still save significantly on property taxes. Californians can still get a trust loan from a trust lender, working alongside Proposition 58, to buyout a co-beneficiary when inheriting property taxes from a parent – and, most importantly, to establish a low Proposition 13 level property tax base, basically forever for an inherited home, for example from a niche firm like Commercial Loan Corp.
Most Californians struggling financially from Pandemic shutdowns and health outcomes should research niche blogs like this one, or info sites like EdSource.org who looks at both sides of Proposition 15 for example, or SiliconValleyandBeyond.com who examines property taxes and Proposition 19, among other related issues. As well as state government websites such as the California State Board of Equalization. The more we know about how to use trust loans and these unique tax breaks, plus other property tax reduction solutions we have access to, the better off we’ll all be going forward.