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Proposition 15 Could Be Economic Boom for Pasadena Unified; Critics Say It Could Devastate Businesses

Published on Monday, September 14, 2020 | 10:06 am
 

According to the California Teachers Association, the Pasadena Unified School District could receive nearly $11 million if voters approve Proposition 15 on the Nov. 3 ballot.

Supporters say Proposition 15, the Schools & Communities First Initiative, will close corporate property tax loopholes to reclaim billions every year for California’s K-12 schools, community colleges, and local communities – all while exempting homeowners and renters, small businesses, and agricultural land.

“It’s known as the split roll initiative,” said Scott Phelps, vice president of the Pasadena Unified School District Board of Education, who supports the proposition. “For years and years, they’ve been trying to get one of these things on the ballot that would split the rules for property taxes.”

Supporters claim Proposition 15 will help rebuild our economy and generate $12 billion for schools and fix issues caused by Proposition 13 more than 40 years ago.

Prior to the passage of Proposition 13 in 1978, local property taxes were the main source of K-12 funding. Local property taxes made up 60 percent of school funding, while the state kicked in around 30 percent.

California school districts had their own tax bases and set their own tax rates. The state guaranteed a base level of funding for each pupil and districts combined that with local taxes to increase funding to the desired level.

But as those taxes increased many people began struggling to pay their taxes and stay in their homes.

Proposition 13 decreased property taxes by assessing values at the 1976 rate and restricted annual increases of assessed value to 2 percent per year on all residential and commercial property.

Nearly 80 percent of voters passed Proposition 13.

One year later, property tax revenue dropped by almost 60 percent and school funding plummeted across the state. School districts were forced to make budget cuts resulting in the loss of arts programs, librarians, assistant principals, sports programs, and other staff positions and vocational education.

Proposition 15 is supported by Gov. Gavin Newsom, Bernie Sanders, Democratic Presidential Nominee Joe Biden and Vice Presidential Nominee Kamala Harris, and the California Democratic Party. The proposition is opposed by former Los Angeles Mayor Anthony Villaraigosa, the Black Chamber of Commerce, and the California NAACP.

Critics claim that increasing taxes on commercial property will force businesses to close and put people out of work.

“I think a good example of how it will cause harm is closer to my neighborhood in Highland Park,” said Stephen Smith of CaliforniaSchoolChoice.org, past candidate for Congress and a Tea Party member

“There’s a really nice, full business district down there. It’s been there forever. Lots of fairly old little mom and pop shops. They can afford to be in business because the rents are real low due to Prop 13.”

According to Smith, if Proposition 15 passes rents at those businesses will increase and many of those businesses will be forced to close.

Pasadena Chamber of Commerce CEO Paul Little said  Proposition 15 would undermine the basic principles of Proposition 13, which set fair tax rates for all properties, and it would significantly raise the property tax rates for commercial property owners, resulting in increased rents for tenants and lessees.

“That, in turn, would either raise costs to do business or force wages lower to offset significantly increased costs,” Little told Pasadena Now. “People somehow have the notion that increased costs to businesses are somehow absorbed. The fact is increased costs to business means increased costs to consumers and suppressed wages for employees.”

According to Little, if the measure passes in the midst of the worst economic downturn in the economy since the Great Depression, the passage of Proposition 15 could further drive California’s economy down and make any recovery much more prolonged.

“Is that what we really want?” Little said. “Oh, homeowners are the next target for proponents of Proposition 15. They have said as much while decrying the supposed negative impacts Prop 13 supposedly has on services and education. In reality, the problem isn’t one of income. Californians are the 13th most taxed people in the nation. The problem is how the state of California prioritizes spending.”

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