Prop 15 Results: CA Election 2020

LOS ANGELES, CA — With Billions on the line, the polls have closed on Proposition 15.

If it passes, it will raise billions in tax revenue annually for schools and municipalities by requiring large commercial property owners to pay taxes on their property's market value. It essentially reverses longstanding Prop 13 protections for commercial properties.

Check back here for up-to-the minute election results for Prop 15. Patch has you covered with live election results that will be updated until the last ballot is counted.

Opponents of the initiative, said it would end up hurting countless businesses already struggling to survive in a time of unprecedented hardship, leading to layoffs and business closures.

Prop 15 proponents, however, contended it closes an unintended tax loophole that wealthy corporations exploit, exacerbating income inequality in California and starving communities of tax revenue.

Prop 15 is an amendment to the state constitution that, “Increases funding for public schools, community colleges, and local government services by changing tax assessment of commercial and industrial property,” according to the text of the measure.

If it passes, it will eliminate the favorable taxation for commercial and industrial properties granted by the famed 1978 measure known as Prop 13. Such properties would be taxed based on their market value. Under current law, a commercial property owner will continue to pay property taxes based upon the property’s last purchase price as long as the majority ownership doesn’t change hands. If Prop 15 passes, the tax rate for commercial properties valued at more than $3 million would be reassessed at market value every few years. Residential properties would be exempt from the tax change as would agricultural land and commercial and industrial properties worth less than $3 million . The tax changes would be phased in over the course of several years.

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The measure would allot $100 per student each year to schools and colleges. Of the remaining funds, 60 percent would go to local governments and special districts and 40 percent would go to school districts and community colleges according to need.

According to Prop 15 advocates, savvy corporations structure deals in such a way as to avoid triggering tax increases when they purchase a property. They’re exploiting a loophole in current tax law, said Alex Stack, communications director for the Yes On 15 campaign.

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The result is that the bulk of the state’s property tax burden falls on residential property owners while commercial real estate companies avoid shouldering their fair share of the tax burden, he said. Schools and cities find themselves starved of tax revenue, according to Prop 15 proponents.

“It’s really about making sure top corporations are paying their fair share,” said Stack. “Prop 15 essentially closes corporate tax loopholes to bring investments back into our schools and communities.”

According to the state’s fiscal analyst, the initiative would generate between $8 billion and $12.5 billion in revenue each year.

“The folks who benefit from the current system are either really wealthy real estate investors or out-of-state or foreign entities who can take advantage of tax loopholes,” Stack added. “Up to 70% of property tax is paid for by homeowners. Through parcel taxes, sales, taxes, hotel taxes, the burden has shifted from the wealthiest among us to average Californians to fund the most basic level of critical services in schools. There is definitely a lot of inequality baked into the current system. This initiative was crafted to address a lot of inequities.”

However critics of the measure said voters shouldn’t be fooled by talk of corporate tax loopholes and exemptions for small business owners. According to its opponents, Prop 15 is just a massive new tax at a time when Californians can’t afford it. It's a tax increase that will drive companies out of business and out of state, said Susan Shelley, vice president of communications at the Howard Jarvis Taxpayer Association.

“Prop 15 is the biggest tax increase in California history,” said Shelley. “You can't just raise taxes on business without having consequences.”

According to Shelly, the exemption carved out for properties worth less than $3 million would not truly protect small businesses.

“All the little businesses that rent space in a shopping mall or office building pay insurance and property taxes for square footage,"she said. "The little tennants get the property tax increase. This is a huge increase in the operating costs of all these small businesses, and they are hurting now. So how bad will this be?”

Shelley predicts layoffs and business closures if Prop 15 passes. If that happens, she said, cities, counties and the state would lose the tax revenue.

“You can't hurt business without hurting everything,” said Shelley.

Prop 15 advocates contend the measure’s opponents are using scare tactics.

About 92 percent of the tax revenue will come from just 10 percent of landowners, according to Stack. Studies show that landlords don’t pass their current tax savings along to tenants, he said. They charge market rate regardless of their own tax advantages, so a change to their tax rate won’t affect the small businesses that rent space from them, Stack claims.

In recent weeks, two polls show the measure leading the opposition but still shy of the majority support needed to pass.

The measure’s supporters include the state’s Democratic and green parties, Gov. Gavin Newsom, Senators Bernie Sanders and Kamala Harris, the Los Angeles and Oakland unified school districts, and several county boards of supervisors such as Los Angeles and San Francisco. Several teachers and nurses unions also support the measure. Groups behind the measure include the ACLU, the League of Women Voters of California and the Sierra Club.

The measure’s opponents include Former Los Angeles Mayor Antonio Villaraigosa, and corporations such as Boston Properties, Paramount Group, Inc., and Columbia Property Trust. Organizations opposed to the measure include Americans for Tax Reform, the California Chamber of Commerce, the California NAACP State Conference, the California Small Business Association, the Howard Jarvis Taxpayers Association, and the California Black Chamber of Commerce.