Proposition 5 Would Give Older Californians A Tax Break
October 16, 2018 1:42 p.m.
Scott Shafer, senior editor, KQED's Politics and Government Desk
Related Story: Proposition 5 Would Give Older Californians A Tax Break
One of the propositions on the November ballot would give a property tax break to older California homeowners who want to buy a new house. Proposition 5 would allow homeowners 55 and owner and severely disabled people to purchase a new home and then use a formula combining their new and old home values to come up with their property tax bill. Proponents say this will start moving a stagnant area of the housing market allowing young homeowners to move up. But opponents say older homeowners in California already have a number of property tax breaks. Starting with Prop 13 and the new measure would take property tax revenue away from county services and school districts. Joining me is Scott Schaffer senior editor for KQED politics and government Deskins Scott. Welcome to the program. Thank you good to be with you. Tell us why advocates say Prop 5 is needed.
Well they feel that especially older homeowners the empty nesters people whose kids have moved out and they're rattling around in these big homes with three or four bedrooms. And they feel that they're stuck there because if they sell and move somewhere else in California they're going to be hit with a much bigger property tax bill. And so that they that they might not even be able to afford that would be based on the new higher assessment of the place that they buy. And so the realtors who are really behind this the California Association of Realtors say that this will as you suggested in your introduction free up those folks to move to a place that's more appropriate for them. And then also make the place they're living in now available to young families that are looking for more space and is the senior housing market really stagnated. Well depends on what you mean by stagnated. There are about 85000 seniors in California currently who do move who sell and move somewhere else in California. So it isn't entirely stagnant.
And do we have any sort of notion about how much of a tax break this will could give older homeowners if they move from their home which is protected by Prop 13 to a new home with the conceivably higher property tax.
Well it depends on where they're moving and what the price differential is but it would be enough presumably to make it at least an option for them to move in terms of revenue. The Legislative Analyst's Office the nonpartisan Elio up in Sacramento said that ultimately over time this would cost local governments counties up to a billion dollars a year in lower revenue. That would take some time to occur. But in the end you know when this is fully playing out in California it would be about a billion dollars a year which the state would have to backfill. So it would become really a cost to the state government.
And I suppose that's one of the major arguments against Prop 5. I wonder Scott what organizations have lined up against Prop 5.
Yeah well it's primarily local government groups. The League of Cities Associations of Counties school districts and school advocacy groups because it is the property tax that largely funds local services including schools most notably schools. But other things as well. And so you have people who care about those issues as well as housing advocates. I mean one point that housing advocates make is that this ballot measure doesn't do anything to create new housing. It just allows people who you know opponents would say are already doing pretty well. They own their house and they've got a lot of equity in that house because they've owned it a long time and now we're going to give them another tax break while you've got a lot of people millennials and others trying to buy a house they can't get into the market because it's simply not affordable. And this measure does nothing to help them.
I also read there's a sort of a class and diversity element that's cropped up in the Prop 5 discussion apparently that people it would help our overall much wealthier and white than the average Californian is that. Is that part of the discussion to a certain extent.
I mean I haven't seen the numbers on that but it makes sense. I mean people who are older in California do tend to be more white than the population generally. And you know I would imagine that they're more affluent simply because they own their own home.
Now the California Realtors Association gathered the signatures to put Prop 5 on the ballot but didn't it saying that they wanted to use it as leverage for a deal with the legislature or something like that.
Well now in California there's always that opportunity and we've seen that with a couple of ballot measures including the privacy measure that backers collected the signatures for and then they got the legislature to agree to do it legislatively rather than at the ballot box. Same thing was true with a soda tax measure that was going to be on. So yeah it provides if you have the money to collect the signatures it gives you a lot of leverage to go to the legislature and the governor and say look we'll pull this off the ballot if you can give us essentially what we're asking for through the legislative process and the appeal for lawmakers is that if you do it on the ballot that only the voters can change it. Whereas if you do it legislatively then the legislature can go back. Legislature and the governor and tweak something of it isn't working the way it was intended.
But the legislature didn't go along with that and now it's on the ballot. Is there any sense that California realtors association is not actually 100 percent behind this even though they put it on the ballot.
Not that I can tell. I mean I've interviewed them. They've put 7 million dollars toward it. They along with the National Organization of Realtors. Now how much money are they going to spend and getting it passed. I don't know I haven't looked at the campaign finance numbers recently. I haven't seen any ads for it on TV. I mean there are some other sort of higher profile ballot measures right now that you are seeing on TV ads for and against. So you know we'll see there is now another ballot measure that looks like it's going to be on the 2020 ballot. Very different it would create what's called a split roll remove commercial property which right now also benefits from the tax benefits of Proposition 13 and allow residential property to still stay low on the basis of Prop 13 but require a reassessment of properties more regularly if they are commercial properties. So I am sure that you're going to seal a lot of money spent for and against that measure if and when it qualifies for the 2020 ballot.
I've been speaking with Scott Schaffer senior editor for KQED politics and government desk. And Scott thank you. You're welcome.