Bloomberg Endorses Measure to Revise Proposition 13, Raise Commercial Property Taxes

Stepping up his presence in California ahead of the March 3 presidential primary, former New York City Mayor Mike Bloomberg threw his weight behind a proposed ballot measure to remove tax protections on commercial property currently enjoyed under voter-approved Proposition 13, the landmark anti-tax measure approved by voters in 1978.

Under Proposition 13, county assessors treat all property — commercial and residential — the same when it comes to taxation. That would change under the proposed initiative, dubbed "Schools & Communities First" by its supporters.

Homeowners and some small businesses would not be affected by the measure, which includes a tax of 1% based on the purchase price and annual increases of up to 2%.

Supporters of the ballot measure, including powerful public employee unions such as the Service Employees International Union and the California Teachers Association, say they are in the final stages of collecting the signatures needed to place the measure before voters in November.

“Improving public schools and helping more students achieve at higher levels — as we did in New York City — requires dedicated teachers and faculty, and that costs money. But for too long, corporations in California have used property tax loopholes to avoid paying taxes that are essential to funding public schools, and California’s children have paid the price," Bloomberg said.

The measure to create a so-called "split roll" with higher taxation on commercial property could generate $8 billion to $12.5 billion a year, according to a recent analysis by the nonpartisan Legislative Analyst's Office. Some of those funds would be directed to K-12 public schools.

"The Schools & Communities First Initiative will be a big step towards ensuring schools throughout the state are properly funded, so more of California’s students succeed and reach their full potential," Bloomberg added.

The media mogul, who is self-funding his entire presidential campaign and spending lavishly in Super Tuesday states, including California, is the fifth Democratic presidential candidate to back the measure, joining Joe Biden, Bernie Sanders, Elizabeth Warren and Pete Buttigieg. Other candidates, including Kamala Harris and Julian Castro, also endorsed it before they dropped out of the race.

The constitutional amendment would reform protections currently enjoyed by industrial and commercial property owners, requiring their property to be taxed based on their market value, rather than their purchase price.

At the same time, it would continue to assess taxes on residential properties based on purchase price, creating what is known as a split roll. Much of the additional revenue generated by the current value assessments would be split among local governments and special districts, along with school districts and community colleges.

A poll late last year by the Public Policy Institute of California found likely voters split down the middle on the proposed measure, with 46% saying they support, 45% opposed and 9% not sure.

For decades, critics of Proposition 13 have said it has slashed school funding and is responsible for the declining quality of public education. Supporters, including the California Chamber of Commerce and other pro-business groups, say the law has provided stability and predictability for property owners.

The two sides pledge to spend aggressively for and against the measure if it qualifies.

In addition to the five presidential candidates who back it, state Assembly Speaker Anthony Rendon, Senate President Pro Tem Toni Atkins and Superintendent of Public Instruction Tony Thurmond, as well as other elected officials and unions, have also endorsed it.

If the initiative qualifies it will likely join other controversial measures including ones related to eliminating cash bail and classification of so-called gig economy workers.