Evolve California’s Plan to Reform Prop 13

By Ted Lam

On a school night – Tuesday, January 23 – over 20 people sat in El Cerrito High School’s auditorium for an hour to hear Ben Grieff, the campaign director for Evolve California, talk about the drive to reform Proposition 13.

Evolve California is working to reform the infamous Prop. 13 so that owners of commercial property valued at $2 million or more would pay the 1% market rate property tax.

Grieff reminded us that Prop. 13 passed in June 1978, almost 40 years ago, as part of an anti-tax/anti-government campaign by Howard Jarvis, a wealthy property owner. California voters were willing to vote for Prop. 13 even if it meant less money for schools, which it indeed did.

Before Prop. 13, California was tied with New York State in fifth place for spending on education. Forty years later, California is in the bottom ten states for educational spending, and the lack of funding strikes hardest in the communities that can least afford it. California’s Parent-Teacher Associations (PTAs) raise $600 million a year, sometimes to pay for basic needs in schools; and rich communities can raise large sums that poorer communities can’t. Rich communities can also afford to raise parcel taxes or establish private foundations to make up for revenue lost due to Prop. 13.

It’s more important now than ever to talk about reforming Prop. 13. The Trump tax cuts greatly reduce California’s ability to deduct property taxes, while Congress added another huge last-minute benefit to corporations that own commercial real estate. All of this means even less money for crucial services like education.

Proposals to reform Prop. 13 could make huge corporate beneficiaries of the Trump tax bill pay their fair share. They could restore $11 billion every year (approximately half for schools and half for special districts, like fire districts) through the county property tax process. Seventy-seven percent of revenue from this reform would come from the 8% of commercial properties in California that have owned land since 1978. It wouldn’t change Prop. 13 for any residential properties, AirBnB property owners, renters, or those with second homes. No small businesses ($2 million or less) would be affected. In fact, as recommended by small business owners, the reform would eliminate the small business taxes. The reforms would be phased in over time to allow businesses to adjust. The proposed 1% property tax rate is less than in New York and other states.

Grieff offered this thought in El Cerrito High: Disneyland has increased its ticket prices over 800% since 1978. Yet unless Prop. 13 is reformed to require corporations to pay their fair share, when Grieff’s hypothetical future grandchildren go to Disneyland, the park will be paying the same property tax as it did in 1978 – and the average homeowner will be paying more property tax than Disneyland.

Evolve California’s website has estimates for how much money each county in the state would receive if Prop. 13 was reformed to include corporate payments (for example, Contra Costa County would get $350 million every year through commercial property tax re-assessments).  

Evolve California and other coalition partners have submitted their proposition name and description to the California Attorney General, and will begin collecting signatures between February and early May to qualify for the November 2018 ballot. They are looking for signature collectors, and will train them. They need 585,000 signatures in total but hope to get 900,000 signatures by May.

If and when the proposition appears on the ballot in November, it will require only 50% plus one of the total votes cast. Three of the four declared Democratic gubernatorial candidates support Prop. 13 reform. If the facts about Prop. 13 and the need for reform are spread widely, we hope the public will, too.

Ted Lam is retired from the USCG and currently works as a civil engineer.