On June 22, California Gov. Gavin Newsom came to an agreement with state legislative leaders on a post-COVID-19 budget to reckon with the new fiscal realities arising from the pandemic. Although seemingly less severe than the governor’s initial proposal in the May revision, the new cuts could put a lot of strain on social services many Californians rely on. Funding for education and health services are not at immediate risk of cuts, but a system of deferred payments could put school districts in a severe bind.
The budget cuts present in these deferrals could mean a shortfall of billions of dollars in the next fiscal year. The state Legislature will be on the hook for covering these expenses, as much of California’s education budget is reliant on state revenue. The cuts, if enacted in 2021, could even mean layoffs for teachers and administrative staff.
Local and county budgets seem to be in a similarly poor situation. Amid the pandemic, cities across California are facing budget cuts on their own, and the state itself will need to find new sources of revenue if it wants to stop cuts and layoffs in education, health and homelessness services. The good news is that Californians have an option to prevent many of these cuts by voting in favor of Proposition 15.
Prop. 15, also known as the Schools and Communities First initiative, is a tax measure that would create a “split roll” mechanism for property tax assessments. This means commercial landowners who own more than $3 million in commercial property, with the exclusion of agricultural land, will have their taxes assessed at the current market value of their land rather than its purchase price. This measure would effectively revoke Prop. 13 benefits for companies such as Disney and Chevron.
The revenue from this measure is expected to raise roughly $12 billion a year, 40% of which would go directly to schools and community colleges. The rest would go to county and municipal governments.
Not only would the revenue from this tax raise be an important lifeline, but it could also put an end to a profoundly inequitable part of California’s tax policy. Property taxes, as they have operated since 1978, are capped at 1% of their purchase price, with additional limits placed on increasing the assessed value of the property. As a result, policymakers must fill gaps caused by shrinking property tax revenue with taxes that are reliant on economic activity, such as income and sales taxes. In addition to the fact that these revenue sources take a big hit during recessions, when government funding is needed most, they are regressive sources of revenue. At a time when landowners have seen windfall profits in land wealth, it seems we are increasingly reliant on taxing the working class to fund basic social services in the state of California.
Land prices have skyrocketed in California over the last several decades, largely due to land scarcity in a state with high housing demand. But it seems the primary beneficiaries of this phenomenon are large, incumbent corporate landowners of commercial properties, who often appear to hold on to lots longer than working families do.
Not only is this situation unjust and backward, but it is also within the power of California voters to change. This November, California voters should vote “yes” on Prop. 15 to put an end to one of the most glaring inequalities of our tax system as well as provide emergency revenue to services millions of Californians rely on.
Let us not fear decisive action when it is most needed. Now, more than ever, Californians need the protection of teachers, firefighters and public health workers. We must demand that wealthy commercial landlords, who have profited so handsomely from the housing crisis, pay their fair share to protect Californians from ruin and austerity. Vote “yes” on Prop. 15.
Connor Finney is the regional organizing director in West Los Angeles for California YIMBY.