Local business and agricultural organizations object to measure
Most of the over-the-phone public comments at Tuesday’s Santa Barbara County Board of Supervisors meeting supported a resolution backing Proposition 15.
But many dissenting voices were expressed through letters to the board.
Many opponents were individuals involved with business and agriculture and included organizations such as Grower-Shipper Association of Santa Barbara and San Luis Obispo Counties, the Buellton Chamber of Commerce, the Santa Maria Valley Chamber of Commerce and the Santa Barbara County Farm Bureau.
Despite the written opposition, the supervisors passed the resolution supporting Proposition 15 with a 3-2 vote.
Proposition 15 would change the income tax system created by Proposition 13 in 1978.
Under Proposition 13, commercial, and industrial properties are taxed according to their purchase price, with tax limited to no more than 1% of that price with an annual adjustment of either the inflation rate or 2% per year, whichever is lower.
By contrast, Proposition 15 would have properties taxed according to their fair market value, with the exception of properties zoned as commercial agriculture and those whose business owners possess $3 million or less in California holdings.
A common criticism those in agribusiness made against the proposition was that exempting only agricultural land to the proposed income tax increase is too limited.
In a letter sent to the board from the Grower-Shipper Association of Santa Barbara and San Luis Obispo Counties, President Claire Wineman wrote that while the proposition has “some limited exemptions for agricultural land,” it “fails to exempt agricultural fixtures and improvements.”
Fixtures and improvements include agricultural properties such as irrigation systems, processing facilities, fruit trees, vineyards, barns and wineries.
Ms. Wineman’s letter added that many agricultural support businesses such as farm equipment dealers, warehouses and food processors would be impacted by property tax increases.
Ms. Wineman told the News-Press that local business has been significantly impacted over the last several years by requirements such as an increased minimum wage, irrigated lands regulatory program regulations, and most recently, COVID-19 compliance regulations.
She said a tax hike for sections of the agricultural sector not exempt from Proposition 15 would add to the “cumulative effect on our ability to be successful” and make it more difficult for California agriculture to compete with farmers in other states.
Santa Barbara County Farm Bureau executive director Teri Bontrager also objected to agricultural support businesses not being exempt from Proposition 15.
“Every step in the process of producing food and getting it to your neighborhood grocery store or restaurant — planting, irrigating, harvesting, processing, transporting, storing — is exposed to higher property taxes under this poorly timed and flawed measure,” she wrote.
Another major point raised by those opposed to Proposition 15’s “split roll” tax is the higher cost of doing business and higher prices for goods and services that would precipitate from it.
Kathy Vreeland, executive director of the Buellton Chamber of Commerce, wrote the Board of Supervisors that Proposition 15 would “increase (the cost of) items like food, utilities, daycare and healthcare.”
“There will inevitably be a loss of jobs due to rising costs of doing business,” she wrote. “Also increasing in price will be, the cost of goods, services, products and rental prices making it a less-competitive climate for California businesses to grow and create jobs.”
Ms. Vreeland was also one of several people to call Proposition 15 ill-timed due to the recession caused by COVID-19, referring to the proposed income tax increase as “insensitive and detrimental” to the local business community.
In the Santa Maria Valley Chamber of Commerce’s letter to the board, President Glenn Morris said changing the income tax system from Proposition 13’s would ultimately impact the wallet of local governments.
“The existing acquisition-based assessment system embedded in Proposition 13 keeps property taxes stable and predictable,” he wrote. “Changing this system would make the property tax a volatile revenue source for local government, at a time when their budgets are under significant threat,” he wrote.
In an interview with the News-Press, Coalition of Labor Agriculture and Business executive director Andy Caldwell, one of the few anti-Prop 15 voices to actually speak during Tuesday’s meeting, called the proposition’s three supporters on the Board of Supervisors — 1st District Supervisor Das Williams, 2nd District Supervisor Greg Hart and 3rd District Supervisor Joan Hartmann — “fiscal illiterates.” (Mr. Hart is the board chair.)
Mr. Caldwell, who is also a News-Press columnist, said he was unimpressed with Proposition 15 excluding properties whose business owners own $3 million or less in holdings.
He noted many small businesses don’t actually own the properties on which they’re located and pay for triple net leases in buildings and commercial centers worth upward of $3 million, meaning the proposition’s tax increases would apply to them.
The minute property taxes are reassessed and raised, Mr. Caldwell said, this increase will show up in the rents of business owners and especially threaten the ability for small mom-and-pop shops to keep doing business.
He added that some businesses in Santa Maria are on older land that has appreciated in value over many years to the point where the land has more value than the business.
If reassessed, the heightened property taxes could usurp those businesses’ incomes and drive them out of business, Mr. Caldwell said.
Mr. Caldwell is running for Congress in the upcoming election for California’s 24th District against incumbent Rep. Salud Carbajal, D-Santa Barbara.
Rep. Carbajal fully supports Proposition 15. In a statement to the News-Press, he said that the proposition will produce a combined $45.5 million for Santa Barbara and San Luis Obispo counties, which will cut taxes for small businesses and serve the public without increasing taxes on residential property owners.
His statement also said, “Prop. 15 closes a multi-billion dollar tax loophole that serves the top 10% of the richest corporations. By asking them to pay their fair share, we can make critical investments in local schools, colleges, and essential services, including funding to support our first responders.”