Hello my name is Michele Williams Harrington and I’m here to talk to you about “Split-Roll” property taxes.
As many of you know, when prop 13 passed in 1978 it set the assessed value of a property to only be assessed on the sale of the property and increases of no more than 2% per year but ever since the passage of this tax saving measure there has been money hungry legislators who have tried their best to get around it.
One work around is what we call a split roll, a split roll would keep prop 13 protections in place for homeowners but would allow commercial property to be re-assessed annually.
Proponents of a “split roll” have argued the burden of the property tax has changed and homeowners pay more than commercial owners. However, data from the State Board of Equalization states the cumulative burden of homeowners remains lower than business owners’ cumulative tax burden.
Proponents of this tax increase have also argued property tax rates in California are too low. However, since the passage of prop 13, property taxes have increased 1000% since 1978. Property tax revenue has grown faster than the economy, growing at an average annual rate of 7.3 percent.
The worst thing about split roll is how it would affect small businesses. Most small businesses lease their property and common lease is a triple net lease where the tenant pays their portion of property taxes on the building effectively sending their rent sky high. These businesses would then be forced to pass these increases on to consumers or close up shop.
I’ve said this before and I’ll say it again, the state of California does not have a revenue problem, tax revenues in 2017 have been the highest we’ve seen in years. California has a spending problem. We have to be careful not to fall into the trap of if they don’t touch residential I don’t care, a tax increase this huge will be one more nail in the coffin of businesses in California costing all of us more in the long run.