A new bill under consideration by state lawmakers would update the Proposition 13 “change of ownership” clause to ensure full compliance and potentially net the state close to $300 million in revenue.
“The main purpose of SB 706 is to end abuses of Prop. 13 without further increasing taxes on businesses who provide jobs and revenue to our communities,” Sen. Patricia Bates, R-Laguna Niguel, told the Northern California Record by email. “The California Board of Equalization estimated that a prior version of my bill (SB 1237, 2018) could have generated $269 million annually in new tax revenue – without raising taxes. This revenue will help local governments fund essential services, especially as we work to recover from the COVID-19 pandemic.”
A Bates news release notes that SB 706 has garnered a number of institutional endorsements, including the California Business Roundtable, the California Business Properties Association, and the Howard Jarvis Taxpayers Association, whose namesake led the campaign to pass the Prop 13 ballot initiative in 1978.
“These organizations support the bill because it helps guarantee the original intent of Prop. 13 by ending abuses and removes a pretext used by left-wing groups who want to remove most if not all Prop. 13 protections from commercial properties via a ‘split-roll,’” Bates told the Record.
Under a split-roll, when different tax rates apply to commercial and industrial properties compared to residential ones, it can act as a deterrent to business investment.
SB 706 seeks to build on prior measures to clarify Prop. 13 transfer terms.
“My effort to end abuses associated with Prop. 13 used to be a bipartisan goal, until liberal interest groups realized that addressing the abuses would eliminate a major argument they were using to justify the passage of ‘split-roll’ ballot measures such as Prop. 15,” Bates said.
Last year Californians voted down the Prop 15 initiative that would have brought a split-roll system to the state.
“SB 706 builds upon a 2014 bill authored by former Democratic Assemblymembers Tom Ammiano and Raul Bocanegra,” Bates said. “Their bill, AB 2372 (2014) cleared the Assembly with bipartisan support, only to die in the Senate after interest groups realized it may actually become law and hurt their effort to pass ‘split-roll.’”
“Democratic-controlled legislative committees killed my previous bills for the same reason: SB 1319 (2020), SB 1237 (2018), and SB 259 (2015),” Bates said. “With the voters’ rejection of Prop. 15 last November, I hope my Democratic colleagues will be more willing to approve SB 706 this year.”
The bill is currently awaiting a hearing date in the Senate Governance and Finance Committee, Bates said.
“While some people tried to use extreme examples last November as a pretext to wipe out Prop. 13’s tax protections for commercial property, the Legislature can instead use a scalpel to prevent further abuses,” Bates said. “My SB 706 will end abuses without destroying Prop. 13.”