Property Tax “Split Roll” a Grave Threat to California Agriculture

By Ted Gaines
California property owners have benefitted from Proposition 13 for so long, it’s hard to remember the time before it when property taxes shot up unpredictably year after year, forcing seniors from their homes, blowing up family budgets and crushing businesses. That ugly past could be in California’s future if the Proposition 15 “split roll” initiative passes this November. Defeating it must be the highest priority for the agriculture industry and everyone who cares about farming and ranching in California.

Prop. 13 put the brakes on those wild increases and for the past 42 years, it has guaranteed stable and predictable annual property taxes. It mandates that property tax assessments are based on a property’s sales price, which gives a concrete data point to establish value. Both commercial and residential properties are taxed at 1-percent of that sales price and annual increases are capped at 2-percent. Properties are only reassessed when sold or substantially improved. It’s the most consequential and successful tax reform in California history.

But the billions of dollars Prop. 13 has saved families and businesses is precisely why it’s become a target for ravenous special interests who want to wring every possible penny from taxpayers.

Prop. 15 would undo Prop. 13’s protections and require annual reassessment of some commercial properties, leading to the same property tax wild west that inspired Prop. 13. It would extract up to $12 billion in new, additional taxes from Californians. Commercial landowners will see their taxes skyrocket. Small business owners who pay “triple net” leases, where they are required to pay their portion of the property tax for the space they rent, will see those costs filter down to them and their already challenged bottom lines.

But, as bad as that would be for the economy overall, split roll takes special aim at agriculture and would sweep across our farms and ranches like a wildfire.

Prop. 15 exempts agricultural land from these annual reassessments, but it makes a devious change to the definition of “land.” Currently agricultural “land” includes the land itself, improvements, and fixtures. Prop. 15 eliminates fixtures and improvements and exposes them to annual reassessment.

What does that mean? It means that irrigation systems will be subject to annual tax increases. It means that barns, dairies, fences, processing plants, silos, refrigeration units, storage sheds, and much, much more will be subject to annual reassessment.

Incredibly, it will also expose mature fruit and nut trees and vineyards – by the millions –to annual reassessment. Prop. 15 will turn farms into a tax collector’s playground.

Agriculture is a $50-billion industry in California that supports hundreds of thousands of jobs. Around 90-percent of California farms are still family owned. The industry, as with so many others, is straining from the shocking and unforeseen effects of coronavirus. This massive jolt in tax costs could be the blow that leads to mass sales and closures of family farms and destroy legacies that stretch back more than a century.

California is blessed with some of the world’s best farmland but it’s cursed by some of the worst public policy. Prop. 15 would only make it harder and more expensive for agriculture to flourish in our state.

Protect farming and ranching by voting “No” on Prop. 15 this November.

Ted Gaines represents the Board of Equalization's First District. He is a leading taxpayer advocate and is committed to providing trustworthy and transparent representation for the nearly ten million constituents in 30 counties of northern and eastern California.