Property Tax Initiative on “Split Roll” Qualifies for 2020 Ballot
Oct. 18, 2018
An initiative to scale back Proposition 13 protections for commercial and industrial properties is now eligible for the November 2020 ballot. Specifically, the initiative seeks to assess commercial and industrial properties at fair market value while leaving homeowners’ Proposition 13 protections in place, a concept known as “split roll.”
There have been numerous attempts to update the commercial property tax assessment system in recent years – both in the Legislature and by voter initiatives – but this new initiative marks the first effort to successfully qualify for the statewide ballot. Under the initiative, commercial and industrial properties would be assessed at fair market value (rather than purchase price) and reassessment would occur at regular intervals (rather than points of sale).
In their fiscal analysis, the Legislative Analyst’s Office (LAO) estimates the measure would generate $6.5-$10.5 billion in increased property tax revenues, depending on the strength of real estate markets. The measure first allocates funding to cover the increased administrative costs borne on counties to perform additional assessments and then some to backfill state income tax losses (since higher property taxes equate to lower taxable incomes). The remaining amount would be allocated to cities, counties, special districts, and schools as prescribed under current law.