Editorial: Prop. 13 must be part of the tax reform debate

by Editorial, Sacramento Bee

No single politician is going to change Proposition 13, the iconic 1978 initiative that slashed property taxes, anytime soon.

It’s easy to understand why. A Field Poll last September showed that 34 years after its passage, voters by a ratio of more than 2-to-1, 63 percent to 29 percent, support Proposition 13. However, support narrows when the question is limited to altering commercial property taxes.

Starting today, a handful of political leaders and advocates are reopening a conversation about aspects of the system of assessing property taxes on businesses. That’s an important step.

This coming November, Gov. Jerry Brown will ask Californians to approve a ballot measure to raise income and sales taxes by about $5 billion a year for five years. That initiative would help the state close the budget deficit.

But to fix California’s system of financing government, thoughtful people must devise a fair restructuring of the state and local tax system. Proposition 13 ought to be part of that discussion.

The initial messengers aren’t ideal. To be credible, advocates of overhauling Proposition 13 must enlist moderates and Republicans. That hasn’t yet happened.

Assemblyman Tom Ammiano, D-San Francisco, is chairing today’s hearing on Proposition 13. He’s one of the most liberal members of the Democratic-controlled Legislature.

Los Angeles Mayor Antonio Villaraigosa will testify at the hearing. He often has pushed for tax hikes. Villaraigosa said the effort to change the law will be difficult and won’t happen soon. But he also told The Bee, correctly, "We need to engage in this debate."

As part of Ammiano’s inquiry, the California Tax Reform Association will release a report detailing disparities in commercial property tax rates. While the group is backed by organized labor, its research is solid and worth considering.

The tax reform association notes that under the law, businesses can change hands but avoid paying higher property taxes by keeping property in trusts, partnerships and limited liability corporations to hold the land.

"Large amounts of prime Silicon Valley land are held at low values by large commercial landowners, such as Stanford Research Park and the Irvine Company," the tax reform association says in the report. "This land is leased to new businesses at market rates, while the owners still pay the extremely low property taxes of the 1970s and ’80s."

Although today’s hearing won’t produce legislation, at least not in the near term, the effort should be worthwhile. Proposition 13 has been in place for more than three decades. It’s not going anywhere.

But no part of the tax system is sacred and above review. All Californians would benefit from an equitable and up-to-date tax system.