Have you heard the news? The state of California has gotten itself back into the worst budget deficit in years, estimated at more than $14 billion.
Not surprised? Well then you won't be too shocked that the proponents of a "split-roll" property tax have dusted off that bad idea and are shopping it around again as a solution to this chronic problem. The idea was recently pushed by LA Times columnist David Lazarus and is even being touted by some legislators. Here we go again!
The argument that our budget deficit is a "revenue problem" is laughable. Since 2000, the state budget has grown by almost 25 percent, from approximately $78 billion to $102 billion last year. This is a huge spike in spending, and only because of the great economy we had during much of that time -- driven in large part by real estate -- were revenues able to keep pace.
As many of us have been saying for years, this is a "spending problem," not a revenue problem. If California could just reduce its growth in spending by a moderate amount, the budget deficit would vanish relatively quickly.
Unfortunately, some of our policymakers are unable to slow the growth of government, and want to open the spigot of tax revenues to keep up the habit. That's where you and your checkbook come in.
Many interests in Sacramento are looking at increasing revenue streams to pay for programs that might otherwise face the budget ax this spring and summer. Not surprisingly, some of the usual suspects are pointing the blame at Proposition 13, the statewide initiative passed in 1978 that capped property taxes at 1 percent of assessed value. Under Proposition 13, the assessed value can only go up a maximum of 2 percent per year, unless the property is sold.
Several times in the past few years, advocates have tried to change Proposition 13 by suggesting the state split residential and commercial property tax rolls to force reassessment of commercial property annually, and unfairly shift the tax burden to businesses. Using a flawed static-analysis calculation, proponents suggest "split-roll" is a quick and easy way to net the state $5 billion in additional revenue, and are unwilling to analyze the actual negative impact it would have on the economy by suppressing investment and growth and increasing costs on job producers.
BOMA California strongly opposes any proposal aimed at splitting property tax assessment rolls. These proposals would treat commercial property differently than other properties, and assesses a proportionately higher amount of tax burden on nonresidential property. This effectively overrides the resounding mandate by the people when they passed Proposition 13 in 1978, which has served our state very well. BOMA California believes the public services that property taxes support (education, public safety and community infrastructure) benefit every property owner equally, without regard to ownership type, and that property tax assessment methodologies should be applied to all types of property in the same manner.
The specter of a multibillion-dollar deficit and the potential resulting cuts is once again allowing split-roll advocates to dust-off this tired idea. Unfortunately, It will be a tough fight and a huge war if it makes it to the ballot.
While nothing formal has yet been presented for consideration, the "buzz" from the tax-and-spend crowd can already be heard. BOMA California and its local associations are ready to do battle to protect our industry from unfair and inequitable taxation. It will only hurt the economy, cause job loss and increase consumer prices -- all of which will reduce actual revenue to the state, not increase it.
Businesses already pay our fair share of taxes to the state, and our industry must stand ready to once again meet and defeat this discriminatory policy that will choke off growth and investment in this state.
Hime is president and CEO of the California Business Properties Association and represents BOMA California in Sacramento.