This week, while speaking at a national real estate group conference, Governor Brown said that he was not willing to fix the commercial property tax loopholes in Prop. 13 because “There is a lot of complexity.” He also said he was not willing to reform Prop. 13 because he wanted to only fight battles he thinks can win. We could not disagree more.
Taxing commercial property at current market value is not complex. It is the system used by every place in the country – except California. The simple truth is that because some large commercial property owners are paying deeply discounted taxes based on 1975 assessments, everyone else has to pay more – 9 billion more.
Prop. 13 has long been regarded as the “third rail” of California politics, but this simply is no longer the case. A majority of Californians is consistently in favor of making large commercial property owners pay their fair share for our schools and public services. According to an October PPIC poll, 55% of likely voters support reforming the commercial side of Prop. 13. This does not mean reform will be easy, but taking on the task of changing our property tax system has never been more necessary.
In 1978, then-Governor Jerry Brown opposed Prop. 13 calling it “a fraud and a rip-off.” Voters supported limiting taxes on residential homes, not realizing that Prop. 13 also included a loophole for commercial real estate. Back then, California schools were considered the best in the nation. Today, our public schools have been decimated by decades of budget cuts.
Voters overwhelmingly support increasing funding for K-12 and higher education. It is unfair to ask Californians to pay higher taxes when some commercial property owners are getting a 9 billion dollar public subsidy. It’s time that we make a structural change to our property tax system so we can start adequately funding our schools.
Second chances in politics are rare. It will be a tough fight, but Jerry Brown has three years to correct his greatest public policy failure. Regardless of all his other accomplishments, Jerry Brown’s legacy will be judged by his success (or failure) to fix Prop. 13 and restore California as a leader in public education.