California will vote on the Schools and Local Communities Funding Act in November 2020.
Taxes certain commercial and industrial real property based on fair-market value—rather than, under current law, the purchase price with limited inflation. Exempts agricultural property and certain small businesses. Dedicates portion of any increased revenue to local services and to supplement, not replace, state’s minimum-funding guarantee to schools. Provides tax exemption for $500,000 worth of tangible personal property used for business and all personal property used for certain small businesses.
A “yes” vote supports this constitutional amendment to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value, rather than their purchase price, and allocate revenue from the change to local governments and school districts.
A “no” vote opposes this constitutional amendment, thus continuing to tax commercial and industrial properties based on a property’s purchase price, with annual increases equal to the rate of inflation or 2 percent, whichever is lower.
SOME INTERESTING FACTS ABOUT THE ACT
- Currently 55% of voters support increasing property taxes to a market value on all commercial property.
- The proponents of the split roll measure believe it will raise $12 billion in new annual revenues.
- 70% of likely democrats, (democrats outnumber registered republicans 8:5) support split roll.
- If Commercial property is more valuable to cities than housing, then fewer housing units will be built.
- Pension funds are heavily invested in Commercial real estate and with higher taxes, returns will provide less income for retirees.
- Is split roll, the first step to changing taxes on residential property.
- Split roll will increase vacancy rates and have negative impacts on small business growth because of costs passed on to tenants.
- Increased expenses (property tax) gets passed on to tenants.
- Properties used as short term residential rentals would be reassessed.
- Increased property tax expense will reduce improvements being made to property.