The Santa Barbara County Board of Supervisors voted to adopt a resolution in support of Proposition 15 during Tuesday’s meeting.
The board voted 3-2 in support of the resolution in favor of the statewide ballot proposition that would amend the California State Constitution to require commercial and industrial properties with more than $3 million in holdings to be taxed based on their market value.
Fifth District Supervisor Steve Lavagnino and board vice chair and 4th District Supervisor Peter Adam voted against the resolution.
The item’s board letter from Tuesday’s meeting describes Proposition 15 as a corrective to Proposition 13, which was approved by California voters in 1978. Under the property tax system created by Proposition 13, residential, commercial, and industrial properties are taxed according to their purchase price, with tax limited to a maximum of 1% of that price with an annual adjustment of either the inflation rate or 2% per year, whichever is lower.
According to the board letter, the California Legislative Analyst’s Office has found that the rate at which most properties grow outpaces 2% per year, making the taxable value less than the market value. Under Proposition 15, properties with the exception of those zoned as commercial agriculture and those whose business owners have $3 million worth in holdings or less in California would be taxed based on their fair market value.
The LAO estimates that of the between $6.5 billion to $11.5 billion in property tax revenue not sent to the state, 60% of it would be allocated to cities, counties, and special districts. The remaining 40% would be for schools and community college.
During Tuesday’s meeting, 1st District Supervisor Das Williams said Proposition 15 would be “a game changer for our school system” at a time when public education is in need of greater financial support.
“If public education is to be successful, then we’re going to have to do something different, fundamentally different, from a fiscal perspective,” Mr. Williams said.
Mr. Lavagnino however, refused to throw support behind Proposition 15, calling it “a really bad idea at probably the worst possible time ever.”
Mr. Lavagnino said that if property taxes are raised, the added expense for landlords would ultimately get kicked down to business owners who rent space from them. Business owners would then be left with the option of either eating the new cost themselves or increasing prices consumers must pay for their goods or services.
Given that businesses are just starting to recover from COVID-19 shutdowns, Mr. Lavagnino said forcing them into choosing between these is like them “coming up from the third time drowning” and getting thrown “a brick or an anchor” rather than a life preserver.
This concern that small businesses or consumers will ultimately be forced to pay for the heightened property taxes was echoed by Mr. Adam. The vice chair remarked that should consumers ultimately not decide to pay higher prices for goods and services, businesses will go under, and buildings will be left vacant.
This, he said, leads to building prices getting depressed, followed by either the landlord losing the property due to inability to perform on his pro forma, or requesting a tax reduction based on the property’s current value.
“You’re going to lead to a downward spiral of values, which is going to then give you a downward spiral of revenues, and so it’s going to do the exact opposite of what you’d like it to do,” he said.
Third District Supervisor Joan Hartmann supported the resolution, saying that California’s tax burden requires “a more equitable division.”
“This isn’t perfect but it’s a step in the right direction,” she said.
Second District Supervisor and board chair Gregg Hart also voted in favor of supporting Proposition 15, citing “compelling needs for the money that would be raised” from increased property taxes. Mr. Hart argued against the claim that revenues decrease when taxes are raised.
“That argument was made when California increased the income tax on millionaires. The facts are, that did not happen. It is not true that revenues declined as a result of that tax increase,” he said.
Mr. Hartt also added that California’s property taxes for commercial and industrial properties are in the lowest 20% in the country, making it so companies will ultimately pay higher property taxes should they leave the state as a result of tax increases.
A majority of the public commenters at Tuesday’s meeting voiced opinions in favor of supporting Proposition 15, with only a few opposed.
In other business, the board accepted a COVID-19 update, had a first reading of an ordinance amending fees for Public Works Department services, adopted a resolution to amend County guidelines for implementing the California Environmental Quality Act, and approved a resolution amending the Environmental Thresholds and Guidelines Manual.