On July 25, 2019, U.S. Sen. Bernie Sanders (I-Vermont) spoke at the United Teachers Los Angeles (UTLA) Leadership Conference in Los Angeles, California, where he endorsed a ballot initiative to change how the state levies taxes on commercial and industrial properties and allocate the revenue resulting from the change to local governments and school districts. The ballot initiative has qualified for the election on November 3, 2020. UTLA is a supporter of the ballot initiative and has provided the campaign Schools and Communities First, which is behind the proposal, with $435,000.
Sen. Sanders is the first presidential candidate to endorse the ballot initiative. He said that billionaires and real estate developers shouldn’t receive tax breaks “while 500,000 people are sleeping out on the streets tonight and when our kids aren’t getting the education they deserve.”
Since 2016, Sen. Sanders has endorsed five statewide ballot measures in California, including Propositions 50, 61, and 64 in 2016 and Proposition 10 in 2018. Proposition 59, which advised the state’s officials on the electorate’s position on Citizens United v. FEC, and Proposition 64, which legalized the recreational use of marijuana, were approved. Proposition 61, which would have enacted a new regulation on drug prices, and Proposition 10, which would have expanded local rent control, were defeated.
The 2020 ballot initiative would amend the state constitution to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value. In California, the proposal to assess taxes on commercial and industrial properties at market value, while continuing to assess taxes on residential properties based on purchase price, is known as split roll. As of 2019, Proposition 13 (1978) requires the taxable value of residential, commercial, and industrial properties to be based on 1 percent of the property’s purchase price, with an annual adjustment equal to the rate of inflation or 2 percent, whichever is lower. According to the state Legislative Analyst’s Office, market values in California tend to increase faster than 2 percent per year, meaning the taxable value of commercial and industrial properties is often lower than the market value.
Furthermore, the ballot initiative would create a process in the state constitution for distributing revenue from the revised tax on commercial and industrial properties, with 60 percent being distributed to local governments and special districts and 40 percent being distributed to school districts and community colleges.
Opponents of the ballot initiative include the California Business Roundtable, California Chamber of Commerce, and California Taxpayers Association. Rex Hime, president of the California Business Properties Association, stated, “California already has the worst climate for business and job creation in the country. A split-roll property tax will just increase pressure on many businesses that are already finding it hard to make ends meet.”