By Vicky Boyd
As if the market and business disruptions from the coronavirus pandemic weren’t enough, agriculture and allied businesses face additional hardships should voters pass the split-roll property tax ballot proposal (Proposition 15) in November.
“It’s a disaster in the making,” said San Joaquin Farm Bureau Executive Director Bruce Blodgett. “The last thing we need to do is to penalize businesses for trying to get back to business, and that is what this initiative is going to do.” He said he’s afraid the ballot proposal, if passed, would be just the start of totally dismantling Prop 13.
Ken Vogel, SJFB first vice president and a cherry and walnut grower near Linden, agreed.
“I think overall, it’s not good for the economy and it’s not good for the farming economy,” he said.
In what would amount to the largest property tax increase in California history, Prop 15 would amend the 40-year-old Proposition 13 to create different tax formulas for commercial and industrial properties than for residential properties.
Because the Proposition 15 will hurt family farmers, ranchers and consumers, SJFB has joined the statewide “Family Farmers Against Prop 15 – Stop Higher Food Taxes” coalition to fight the measure. SJFB also is part of the broader “No On Prop 15” coalition comprising agriculture, Chambers of Commerce, real estate, rental property managers, manufacturers and other industries, to name a few.
Proponents say the initiative – dubbed “Schools and Local Communities Funding Act” — would close tax loopholes and require “wealthy corporations” to pay their fair share. If passed, the ballot measure is supposed to generate about $12.5 billion of new property tax revenue annually, with much of it going to education within local communities, according to proponents.
Vogel, who has been involved in education most of his life and sits on the San Joaquin County Board of Education, said he’s one of the first to support education. But he said the ballot initiative does not guarantee any additional funding for schools, despite its title.
He likened it to the deceptive title of Proposition 47, the “Safe Neighborhoods and Schools Act.” The 2014 ballot measure reclassified several theft and drug possession offenses from felonies to misdemeanors and released from jail those serving felony offenses that were reclassified.
Without any restrictions on new property tax revenues generated by Prop. 15, the state also could siphon away funds, much like it did with the “Road Repair and Accountability Act of 2017,” Blodgett said. A portion of fuel and vehicle registration taxes earmarked for road and street improvements instead went to the high-speed rail project.
Prop 15 impacts
Under Prop 15, residential and agricultural land would still be protected under Prop. 13, which limits total taxes to 1% of a property’s value when it was purchased and limits tax increases to 2% annually. A property is not reassessed until sold.
If passed, Prop. 15 would remove protection for commercial and industrial properties worth more than $3 million. That concerns Vogel because the cap isn’t as large as it sounds.
“Prop. 15 has supposed limitations on small commercial and industrial businesses, but now with the values so high, if someone has a business set up, it can exceed that limit really quickly,” he said. “The walnut processor, the cherry packinghouse – it’s all the industries in California that serve ag. If they have to pay higher property taxes, they’ll probably pass that on if they sell to ag. We as farmers are going to be faced with these higher rates.”
But farmers aren’t able to pass those higher costs on to their buyers, Vogel said. As with the state’s other high costs and increased regulations, split-roll taxes could further squeeze out family farmers, he said. It also could continue the trend of forcing other businesses to move out of state.
Measure supporters say they also will redefine commercial and industrial structures to include barns, food processors, packinghouses, dairy milking parlors and other buildings related to food and fiber production. Although agricultural land would still be protected by Prop 13, trees and vines planted on that ground would not.
As such, these operations would fall under the new taxing structure that would require a market value reassessment beginning with the lien date for the 2022-23 fiscal year. County assessors would be given two years to complete the task, after which time they would reassess the properties every three years, according to ballot measure language.
In a June letter to the Legislature, the California Assessors Association said having to reassess that many business and industrial properties within the tight timeframe would overwhelm their already understaffed offices.
In addition, the association commissioned an independent analysis by Capitol Matrix that found completing the reassessments could cost between $380 million to $470 million per year during the first five to 10 years. That doesn’t count the costs to upgrade existing technology systems to accommodate the split rolls.
Getting the word out
As part of Family Farmers Against Prop 15, SJFB will team with other agricultural groups to focus on educating farmers, ranchers and allied industry representatives about how injurious this measure would be if passed by voters. Among the numerous ag groups involved are the California Farm Bureau Federation, several other county Farm Bureaus, Western Growers and its affiliates, and the Agricultural Council of California and its affiliates.
SJFB is putting the finishing touches on its plan, but it will include extensive outreach to not only SJFB members but other farmers, family friends, business associates and other community members, Blodgett said.
“We have to get growers out there willing to talk about how this will impact them,” he said.
In the past, this type of grassroots outreach was frequently conducted at meetings or in group settings, like at service clubs, church or sporting events. With the coronavirus pandemic restricting meetings and groups of any size, Blodgett said they will have to get creative.
As many meetings have moved to digital platforms, such as Zoom, Blodgett said members should still ask to be placed on the agenda so they can make presentations about Prop. 15’s negative impacts. SJFB’s educational campaign also will include a social media component.