By the time you read this the 2019-2020 legislative session in Sacramento will have ground to an ignominious halt having raised an inordinate amount of new taxes, increased regulatory pressure on businesses large and small, effectively ended more than 1 million California jobs for independent contractors with the passage of AB 5 (Gonzalez), and granted tenants free rent until April 2022 with no compensatory relief for landlords and no possibility of eviction. At least we now have a couple months reprieve before they start a whole new round which, given recent history and the upcoming election, will probably be even worse than the last.
But while you as a California voter, especially a conservative voter, exercise relatively little control over what the legislature does, your voice does matter when it comes to the propositions that will appear on our November ballot. There are twelve of them this year and the Southwest California Legislative Council recently took a deep dive into the Prop’s, as we do every year, and published a handy-dandy voter guide. The SWCLC is a coalition of local Chambers of Commerce including the Temecula Valley, Murrieta/Wildomar, Lake Elsinore and Menifee Valley Chambers, representing over 3,500 employers as advocates for our local business community.
At the end of this article is a link to the full 51 page research report supporting our recommendations but I’ll highlight just a few here. As always, we encourage you to do your own research and make an informed decision when you vote.
Prop 15: a definite NO. This measure proposes to eliminate the 40 year old protections afforded by the original Prop 13 in what is known as a ‘split roll tax’. This would ‘split’ commercial and industrial businesses out of Prop 13 and reassess their value every two years, producing an estimated $12 BILLION in new ‘revenue’ to the state every year. Where does that $12 billion come from? You think already stressed California corporations are simply going to swallow a $12 billion tax hike? NO, a tax increase to a commercial or corporate entity just becomes an increased cost of doing business and gets passed along to consumers of their products or services – YOU & ME! Got a donut shop in a strip mall? Your landlord will pass that increase along to you and now my donut will cost more. Laundry, tires, auto repair, clothing store – you name it, we’ll all be paying more for it if Prop 15 passes. Businesses that can’t hike prices enough to cover the increase will join the growing exodus or businesses leaving the state or going out of business entirely.
Prop 19: also a NO. Part one of this measure sounds good. It allows seniors over 55 to purchase a property elsewhere in the state and transfer their existing Prop 13 tax base to the new property. Of course we already have that ability in Riverside County and 10 others across the state in what is known as Prop’s 60 and 90. Every county could opt in and offer Prop’s 60 and 90, 48 choose not to so this will force it on them. This measure expands on Prop 90 by allowing the use of the transfer more than once and buy a property of lesser OR greater value.
You might recall a similar measure on your ballot as Prop 5 two years ago. It was defeated because unions and county governments opposed it. So why bring it back? Well, this version attempts to buy off the unions, especially the firefighters union, by actually bringing in an additional $1 BILLION a year in new taxes and earmarking a portion of that for firefighters, or at least their union. It does this by eliminating current protections afforded by intergenerational transfer of property.
As it currently exists, if you leave a property to your children or grandchildren, they inherit the property with the existing Prop 13 tax base. This has been a staple of inheritance strategy for generations as parents and grandparents try to leave something for their heirs. However, under Prop 19, those heirs would now be required to move into Grandma’s house or pay a higher tax rate. So that $1 billion revenue bump for the unions comes directly out of the pockets of your children and grandkids. Sound good?
Prop 22: a big YES. I mentioned the disaster that is AB 5 above, the bill that initially sought to force Uber and Lyft drivers to become employees (and union members). Unfortunately the unintended (or intended) consequence extended to ALL independent contractors including musicians, journalists, photographers, hair stylists, attorneys, real estate agents, and more than 1 million Californians who are essentially self-employed, enjoy the flexibility of setting their own work hours to accommodate their schedules, and work from home, rent an office space, or drive their own vehicle.
Occupations like attorneys and Realtors who have good lobbyists managed to get their jobs carved out of this fiasco but most were not so lucky, or so well-funded. Prop 22 would allow Uber, Lyft and GrubHub (app-based companies) to continue as independent contractors while increasing some benefits and protections for these drivers. You’ve recently seen threats from Uber and Lyft, California based companies, to leave the state. They’re serious. The business model they created, referred to as the ‘gig’ economy, provides flexible employment options for thousands of drivers while reducing costs and increasing convenience for the rest of us. A YES vote on Prop 22 would keep those conveniences in place.
For a comprehensive review of all 12 ballot propositions, please visit: https://tinyurl.com/CA2020props
Gene Wunderlich, Legislative Liaison, (951) 205.1911 – http://SWCLC.biz