A pair of voting booths.
Voting booths. Photo by Stephanie Rivera

A union-backed initiative that would result in higher property taxes for commercial and industrial property to provide additional funding for local governments, schools and community colleges has qualified for the November ballot.

What supporters have dubbed the “Schools and Communities First” initiative would allow for annual unlimited reassessment of commercial and industrial properties to their fair market values.

Under terms of Proposition 13, the landmark property tax reduction and limitation measure approved by voters in June 1978, increases of assessed value of real property are restricted to 2% per year except if the property is sold or there is construction.

The measure would mainly apply to large and older businesses, as it exempts owners of commercial and industrial properties with a combined value of $3 million or less. There are also exemptions for all residential and agricultural property. The initiative additionally would exempt from taxation $500,000 of combined tangible personal property and fixtures from small businesses.

The initiative would not change Proposition 13’s tax limit of 1% of the property’s full cash value.

The initiative would result in a net increase in annual property tax revenues of $7.5 billion to $12 billion in most years, depending on the strength of real estate markets, according to an analysis by Legislative Analyst Gabriel Petek and state Director of Finance Keely Martin Bosler.

The analysis also found after backfilling state income tax losses related to the measure and paying for county administrative costs, 40% of the remaining $6.5 billion to $11.5 billion would be allocated to kindergarten through 12th grade schools and communities, with the remaining 60% going to other local governments.

The top contributors on behalf of the initiative are committees affiliated with the California Teachers Association ($6 million) and Service Employees International Union ($4 million), according to figures from the Fair Political Practices Commission.

Chan Zuckerberg Advocacy, the limited liability corporation founded by Facebook founder Mark Zuckerberg and his wife Priscilla Chan, has donated $1.9 million.

The top three donors to the campaign opposing the initiative are committees affiliated with the California Business Roundtable ($267,960), Western Manufactured Housing Communities Association ($200,000) and the California Taxpayers Association ($140,000).

The Business Roundtable is comprised of the senior executive leadership of major employers throughout the state; the WMHCA promotes and protects the interests of owners, operators and developers of manufactured home communities; and the CTA was established in 1926 by business taxpayers as a tax research and advocacy association.

Valid signatures from 997,139 registered voters — 8% of the total votes cast for governor in the 2018 general election — were required to qualify the measure for the November ballot, said Secretary of State Alex Padilla.

A measure can become eligible via random sampling of petition signatures if the sampling projects that the number of valid signatures is greater than 110% of the required number.

The initiative needed at least 1,096,853 projected valid signatures to become eligible by random sampling. It exceeded that threshold Friday, according to Padilla.

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