A resolution supporting Proposition 15, which would change the way property taxes are currently assessed on commercial and industrial properties under the provisions of Prop. 13, was approved Tuesday by the Santa Barbara County Board of Supervisors on a 3-2 split vote.
Fourth District Supervisor Peter Adam and 5th District Supervisor Steve Lavagnino cast the dissenting votes on the resolution that was brought to the board by 1st District Supervisor Das Williams.
“If public education is to be successful, we are going to have to do something different — fundamentally different — from a fiscal perspective,” Williams said in arguing to support the resolution, adding Prop. 15 would uphold the goals of Prop. 13 and reform it without eliminating it.
He said it would be “a game changer for our school system” and would provide “desperately needed resources” to deal with the COVID-19 pandemic.
Arguing against the resolution, Lavagnino criticized the title of the proposition — Schools and Communities First Initiative — as another in an endless line of misleading proposition titles.
“If everyone really cares about the schools, we would not take 60% of the money generated from this, we’d let all 100% of it go to the schools,” Lavagnino said. “It’s a really bad idea at probably the worst possible time ever.”
“Property tax does need to be addressed, but it needs to be addressed in a revenue-neutral manner,” he said, adding it should not be looked at “as a cash cow.”
Third District Supervisor Joan Hartmann agreed with Williams that Prop. 13 created preferential taxation because people who have owned commercial property for a long time pay less than those who have purchased commercial property recently, which bars younger, innovative entrepreneurs from coming in.
Prop. 13, approved by voters in 1978, was ostensibly written to allow people on fixed incomes to afford their property taxes and remain in their homes by setting the tax rate at 1% of a property’s purchase price, adjusted at the rate of inflation or 2% per year, whichever is less.
The assessed value only changes when a property is sold.
But Prop. 13's provisions also applied to commercial and industrial properties, and it’s immediate effect was to cut government revenues by $7.04 billion, or 57%, having the biggest impact on funding for schools and for maintaining infrastructure.
Prop. 15 would amend the state Constitution to require commercial and industrial property taxes to be based on a property’s fair market value except for those valued at $30 million or less, property used for commercial agriculture and residential property.
Darcel Elliott, Williams’ chief of staff, said if Prop. 15 were approved, it would bring a little over $100 million to Santa Barbara County, with $43.5 million going to K-12 education, $10 million to the county’s two community colleges and $30 million to the county’s general fund.
Board Chairman and 2nd District Supervisor Gregg Hart said there’s no doubt schools need money and the county can’t maintain its infrastructure with its current revenue.
“Thirty million [dollars] in the county budget would solve that problem,” Hart said.
But Adam, who has made infrastructure maintenance one of his main goals, agreed with Lavagnino’s assessment that Prop. 15 would not protect small businesses, which lease their locations and would face rent increases as landlords seek to recoup their rising property taxes.
Small businesses would then either pass that increased rent cost on to consumers or go out of business, Adam said, leaving the landlord with an empty property and depressing the rent because the landlord would be desperate for a tenant.
Unable to pay the taxes with the reduced rental income, the landlord would either lose the building or apply for a property tax reduction.
“So it’s going to do the opposite of what you want it to do,” Adam said, adding it will only result in “a catastrophic collapse of the economy.”