Prop. 19 reflects tortuous journey to state ballot
Proposition 19 shares one characteristic with most of the other 11 measures on California’s ballot this year: It rekindles a conflict from years past. However, Proposition 19 has meandered a particularly convoluted pathway to the ballot, which explains why it wound up with three distinct sections, to wit:
• It would expand current law’s limited right for Californians over 55 to move to new homes while retaining the taxable property values of their previous residences.
• It would erase a provision of property tax law that allows those who inherit expensive homes to retain their relatively low taxable values while converting the homes into income-producing rentals.
• It would dedicate some of the additional revenue from the loophole closure to local and state firefighting agencies.
The first provision was the subject of a 2018 ballot measure sponsored by the California Association of Realtors. It would have expanded the current right of the over-55 set to transfer values within counties, or to other counties that agreed to accept them. That’s been the law for more than 30 years.
Real estate brokers have an interest in expansion since it would, at least in theory, generate more sales of homes that would produce more sales commissions. However, voters rejected the 2018 measure by a 3-to-2 margin.
The realtors wanted to try again in 2020 and qualified a measure, which also included the inherited property loophole closure and a third provision, long debated in tax circles, to require reassessment of commercial property when ownership changes in a series of transactions.
The latter provision could have undermined Proposition 15, a measure sponsored by unions and other liberal interests, that would, if passed, require regular reassessment of all commercial property for tax purposes.
Thereupon, a deal was struck by the realtors, legislative leaders and Gov. Gavin Newsom to replace the initiative with a constitutional amendment that would include the first two provisions, drop the commercial property section and add the firefighting revenue as a political sweetener to take advantage of voters’ concerns about rampant wildfires.
Even so, the legislative version didn’t meet the official June 25 deadline for inclusion in the November ballot, so the Legislature quickly passed another law extending the deadline by a few days through the subterfuge of calling a concurrent special election.
Two years ago, an article revealed that multimilliondollar homes were being maintained as high-dollar rentals, rather than occupied by heirs.
The article focused on a Malibu home with ocean views formerly owned by actor Lloyd Bridges which his sons, actors Jeff and Beau, and their sister inherited and retained as a nearly $16,000-per-month rental. But the article also cited other instances in which heirs took advantage of low property tax values to profit handsomely in the rental market.
It’s uncertain whether the cosmetically altered proposal, which was designated as Proposition 19, will fare any better than the bare-bones 2018 version that voters rejected. It’s created a split between the California Association of Realtors and the Howard Jarvis Taxpayers Association, which supports the over-55 tax shield but sees the inherited property provision as a “massive, multibillion-dollar tax increase on California families.”