It’s no secret that ballot initiatives can be confusing, but Proposition 19 takes obfuscation to a whole new level.
Voters can’t be blamed if they can’t remember whether Prop. 19 is the initiative that is a massive property tax hike or the measure that actually has something good for homeowners or the initiative that has something to do with firefighting. The fact is, all three are at least somewhat true — especially the part about the big tax increase.
Let’s clear up the confusion: Proposition 13, passed in 1978, gave California homeowners certainty about their future property tax liability because increases in the “taxable value” of property would be limited to 2 percent per year. Property would be reassessed to market value only when it changed hands. But that tax hike even applied when property owners transferred a property to their own children.
In response, voters overwhelmingly passed a constitutional amendment: Proposition 58 in 1986. It allowed for property – a home of any value and up to $1 million of assessed value of other property — to be transferred between parents and children without triggering reassessment, keeping the property tax bill the same.
Prop. 19 would repeal Proposition 58 and force the reassessment of inherited or transferred property within families. The only exception is if the property is used as the principal residence of the person to whom it was transferred, and even that exclusion is capped.
The non-partisan Legislative Analyst’s Office estimates that the repeal of the “intergenerational transfer protections” will result in tens of thousands of California families getting hit with higher property taxes every year. The LAO acknowledges that Prop. 19 imposes an additional tax burden in the “hundreds of millions of dollars.”
The other part of Prop. 19 is intended to make voters forget about the huge tax increase by expanding the ability for older homeowners to move to a replacement home and transfer their base-year property tax assessment from their previous home to the new property. While this “portability” expansion has some merit, voters just rejected a virtually identical provision in 2018, when it was Proposition 5.
Another “sweetener” in Prop. 19 is providing some additional revenue to firefighters and their unions. This was a calculated move by the California Association of Realtors, the primary proponent of Proposition 19. The current round of fires is forefront in the news and the Realtors association was politically wise to dedicate a small fraction of the revenue to a group that currently enjoys a high level of popularity. Whether this is enough to offset voters’ recent aversion to big tax hikes — notwithstanding a sympathetic cause — remains to be seen.
However, California’s newspaper editorial boards have been brutal to Prop. 19, exposing it for a thinly veiled effort to churn real estate sales. For example, the Los Angeles Times called Proposition 19 “a cynical and unwelcome melding of good and bad tax proposals,” writing, “voters should reject it.”
What may also confuse voters about Prop. 19 is the rather strange yet broad coalition against it. Virtually all of California taxpayer organizations are opposed but so are many progressive groups such as the League of Women Voters.
To cut to the chase, there is one aspect of Proposition 19 that is not confusing. It would slam California families who wish to help their children achieve some degree of financial independence. So voters must decide whether the “sweeteners” in Prop. 19 are worth a big tax hike in a state where families are already being crushed by many the nation’s highest tax rates.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.