Split Roll Would Harm Valley

San Fernando Valley residents should be aware of a legislative attack on Proposition 13 known as “split roll.” Proposition 13, of course, is the landmark law that protects the owners of homes and businesses from out-of-control property taxes. Proposition 13 has worked well since voters approved it in 1978, but that hasn’t stopped some interest groups and politicians from trying to unravel it. The law’s opponents believe government doesn’t collect enough money and think it’s a good idea to raise taxes on commercial property owners. Hence the name “split roll”; the idea is to treat commercial and residential properties differently on tax rolls. The latest version of this bad idea is embodied in Senate Constitutional Amendment 5, authored by Sens. Loni Hancock (D – Oakland) and Holly Mitchell (D – Culver City). Proponents recently called off an effort to qualify a ballot measure this year, but they will try again in the future. While “split roll” sounds like something pleasant you’d order from a local restaurant, in reality it’s a clever piece of class warfare draped in populism. If split roll were to pass, it would do a great deal of harm to the San Fernando Valley. Removing Proposition 13 protections would dramatically increase operating costs for business owners, hurting the economy. Take, for instance, a strip mall located in the Valley. If faced with a massive property tax hike, the owner will pass the increase on to the tenants, who, let’s say, operate a beauty salon or a bakery. Those small-business owners would then pass those costs on to consumers in the form of more expensive haircuts or doughnuts. The fanciful fiction of split roll is that business owners pay more, yet homeowners will somehow remain unaffected. In truth, when prices rise, that burden falls squarely on everyday people. If you’re running a laundromat, you can’t absorb dramatic increases in rent. You’d be forced to pass those costs on to your customers. When property values rise, incomes often lag far behind. Your property value might have doubled, but most likely your paycheck hasn’t. This is why the protections provided by Proposition 13 are so important. Like families, business owners also need stability and certainty. During tough financial times, property taxes provide state and local governments with a steady stream of income. Proposition 13 allows for this consistency by capping annual property tax hikes at 2 percent until the property changes hands. Sure, the state might miss out on wild spikes of revenue during boom times, but thanks to Proposition 13, downturns in property values typically don’t bust government budgets. And it’s not as if California has the lowest property taxes in the nation. We’re ranked roughly in the middle of the pack – 21st in collections per person, according to the Tax Foundation. California already has some of the highest income, gas and sales tax rates in the nation. Even so, some lawmakers seem intent on doing everything possible to ensure all of our levies, including property taxes, are the highest. Government often lives beyond its means and constantly looks for ways to increase revenue so it can grow even bigger. Instead of tinkering with Proposition 13, our leaders ought to seek ways to provide better value for the dollars that taxpayers already send to Sacramento. The last thing California needs as it continues hemorrhaging jobs to other states is to give businesses another reason to leave. George Runner represents more than 9 million Californians as a taxpayer advocate and elected member of the State Board of Equalization for District 1, which stretches from the Oregon border to Santa Clarita and the Northern San Fernando Valley.