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In a rare challenge to Proposition 13 of 1978, backers of what is often dubbed “split roll”  submitted 1.7 million signatures recently to place this measure on the November 2020 Statewide Ballot. Of those, proponents only need 997,139 valid signatures to qualify.

Split roll is a term for treating certain commercial properties differently than other types of properties for the purpose of property tax assessment. Signatures for the initiative are now being distributed to county registrars’ offices across the state. This initiative is similar to one that had already qualified for the ballot. The revised version makes technical changes to the former and provides for certain exceptions and changes that proponents hope will make it more attractive to the electorate. Should the initiative formally qualify, it will replace the original version on the fall ballot.

The initiative is being proposed by the Schools & Communities First campaign,  whose communications director said, in part , “Schools & Communities First is proud to make history by submitting more than 1.7 million signatures of support from Californians, illustrating the momentum and support for this initiative…”.

According the Legislative Analyst’s Office, should this measure pass, it would result in a “Net increase in annual property tax revenues of $7.5 billion to $12 billion in most years, depending on the strength of real estate markets. After backfilling state income tax losses related to the measure and paying for county administrative costs, the remaining $6.5 billion to $11.5 billion would be allocated to schools (40 percent) and other local governments (60 percent).” The text of the measure includes intent language to, “Ensure that any new revenues going to cities, counties, and special districts as a result of this measure will be allocated in the same manner as other property tax revenues, consistent with prior ballot measures approved by voters…”

Dating back to 1978, Proposition 13, generally limits property tax rates at one percent (plus smaller voter-approved rates to finance local infrastructure). A property’s taxable value generally is based on its purchase price. In out years the tax may only increase by 2 percent or the rate of inflation, whichever is lower.

This measure seeks to require certain commercial and industrial properties, as well as vacant land not intended for housing, commercial agriculture, or protected open space to be taxed based on their actual market value, as opposed to their purchase price. It also exempts from taxation the first $500,000 in value of a business’s personal property. The measure exempts from taxation all personal property of small businesses—as defined in the initiative itself. Additionally, properties owned by individuals or businesses whose property holdings in the state total less than $3 million are exempt from market value taxation.

This measure is still in the signature validation phase and CSDA will be monitoring for any new developments.