Newsom backs tax reform in Prop. 15 ballot measure
SACRAMENTO — Gov. Gavin Newsom has endorsed an initiative that would overhaul California’s iconic Proposition 13 by changing how commercial property taxes are calculated — a measure likely to be one of the hardestfought issues on the November ballot.
After months of declining to weigh in on the ballot measure, Proposition 15, Newsom announced his support as he also pledged not to sign any of the proposals to increase income taxes on the wealthiest Californians that were floated at the end of the legislative session.
“California, like every state in America, is currently experiencing the severe financial aftershocks of global pandemic,” Newsom said in a statement Friday. Prop. 15, he said, is “a fair, phasedin and longoverdue reform to state tax policy.”
The measure would change Prop. 13, the 1978 voterapproved initiative limiting property tax increases. It would create a “split
roll,” maintaining a strict cap on annual tax hikes for homeowners, but lifting it for most large commercial properties.
Under the initiative, those commercial properties would be reassessed every three years instead of when they are sold. Critics have long complained that Prop. 13 — which sets the tax rate at 1% of the price when a property is sold and restricts increases to 2% annually — has deprived the state of revenue from large businesses that rarely change hands and are still paying taxes based on assessments from decades ago.
Organized labor, a major ally of Newsom, is behind Prop. 15, which could raise an estimated $12 billion annually for schools and local governments. The campaign celebrated the governor’s endorsement as “another watershed moment in the push to close corporate tax loopholes.”
But business groups and other opponents of the initiative warned that it would only deepen the economic recession. The
California Chamber of Commerce said in a statement that “Proposition 15 will tank our recovery, hamstring small and minority businesses’ ability to rehire laidoff workers, and cost every consumer hundreds of dollars every year” when companies pass on the cost of their higher taxes.
Both sides have already raised tens of millions of dollars for the campaign, which will have significant implications for local budgets.
Searching for new revenue to offset a massive state budget deficit, many supporters of Prop. 15 have also pushed lawmakers to raise the top state income tax rate and create a firstinthenation wealth tax. Both of those proposals died at the end of the legislative session in August without a vote. Newsom said Friday that “in a global, mobile economy, now is not the time” for those types of tax increases.
Newsom also made endorsements on several other measures Friday, and now has weighed in on nearly all the initiatives on the Nov. 3 ballot.
He supports Proposition 14, to renew a bond funding stem cell research; Proposition 16, repealing a ban on state affirmative action policies; Proposition 17, restoring voting rights for parolees; Proposition 18, allowing 17yearolds to vote in primaries if they turn 18 before the general election; Proposition 19, letting older Californians and victims of natural disasters keep their property tax rate when they move to a new home; and Proposition 25, to end cash bail.
He opposes Proposition 20, which would roll back an earlier expansion of parole for some crimes, and Proposition 21, allowing local jurisdictions to adopt more expansive rent control policies.