Credit: Allen J. SchabenLos Angeles Times/Polaris
People vote at the Huntington Beach City Gym and Pool on election day in Huntington Beach.
This story was last updated at 9 a.m. Nov. 8 with updated results.

California’s Proposition 15, the first ballot attempt to amend Proposition 13, the ever-popular 1978 constitutional amendment limiting property tax increases, continues to trail.  As of Friday, the most recent update of vote totals by the Secretary of State, 48.1% of votes were cast in favor of Prop. 15, with 51.9% cast against; 13.9 million votes have been counted but 3.6 million provisional and mail-in ballots remain uncounted(Go here for the latest results on Propositions 15, 16 and 18.)

One of the most contested and expensive state issues on the ballot, Prop. 15 would raise anywhere from $10.3 billion to $12.6 billion annually for cities, counties and schools if it were to pass. Of that amount, 40% — $2.6 billion to $4.6 billion — would go K-12 schools and community colleges.

All the revenue would come from higher taxes on commercial properties valued over $3 million by reassessing them at market value every three years while leaving intact Prop. 13’s rules for reassessing homes and apartment buildings only when they’re sold. Prop. 13 limits property taxes to 1% of assessed value, with a maximum 2% increase in taxes annually. Changing taxation only for commercial properties is why Prop. 15 is called a split-roll tax.

The K-12 money would be distributed statewide through the Local Control Funding Formula, which provides extra money for low-income, foster and homeless students and English learners. The rest of additional revenue would stay local, distributed to county and city governments where the commercial properties are located.

As predicted, the initiative built up strong support in the Bay Area and Los Angeles County, whose county and city governments would have reaped most of the additional revenue from higher commercial property taxes. But it was trailing in San Diego County, Kern County and the rest of more conservative inland California.

Years in the making, Prop. 15 was proposed by the Schools and Communities First Coalition, made up of community and education advocacy groups, and funded primarily by the California Teachers Association and other public service unions. Despite the coronavirus pandemic, which prevented the grassroots, volunteer door-to-door campaign that proponents had envisioned, supporters saw this election as the best shot at reforming an anti-tax initiative they blamed for contributing to chronic school underfunding.

They were assuming a massive Democratic turnout in an anti-Trump election, and they campaigned on a theme of taxing big landowners like the Disney Corporation and oil refineries to fund schools and governments facing big cutbacks in funding due to the pandemic.  They also were counting on support from younger voters who don’t view Prop. 13 as “the third rail” of state politics.

Prop. 15 backers pointed to commercial and industrial properties paying low taxes, because some have not been reassessed in decades. Some owners finagled property sales to avoid an ownership change that would have triggered a reassessment. Prop. 15 supporters called the measure a structural reform needed to counter rising income inequality.

Not emphasized was the fact Prop. 15 would be phased in, starting in 2022-23, thus providing no immediate relief to schools and local governments from a pandemic-caused recession.

For over a year, Prop. 15 was leading in most polls, through stuck just below 50% in most recent surveys, with a significant percentage of undecided voters.

But in a massive post-Labor Day TV ad campaign, business opponents, led by the California Business Roundtable, portrayed it as a threat to already-suffering small businesses, which would see increased property taxes passed on to them through higher rents. Opponents also implied, without evidence, that Prop. 15 supporters would target homeowners next for tax increases.

The Schools and Communities First Coalition surprised observers by outraising opponents for most of the year. At the end of September, contributions to campaign committees backing Prop.15 totaled $41.8 million compared with $33.2 million for the No on Prop. 15 committees. But business and real estate interests vowed to outspend the Yes on Prop. 15 campaign by Election Day, and they did. One month later, $40 million more — enough to inundate voters with TV ads against the measure — brought the No on Prop. 15 funding to $73 million, compared to the $67 million Yes on Prop. 15 raised.

The combined $140 million raised made Prop. 15 the second-most expensive initiative on the ballot. Raising the most were supporters of Proposition 22, which would exempt gig companies like Uber and Lyft from a new state law requiring them to treat workers as employees. Led by Uber, Lyft and delivery service DoorDash, supporters raised more than $200 million.

The California Business Roundtable PAC alone donated $39 million to the No on 15 campaign, followed by the California Business Properties Association, with $2.25 million.

The California Teachers Association was the top Yes on Prop. 15 donor: $19.8 million; followed by $11.7 million from Facebook founder Mark Zuckerberg and his wife, Priscilla Chan; and the Service Employees International Union, representing non-teaching staff in schools and many county and municipal workers.

The state’s top legislative leaders, all Democrats, dozens of mayors, county supervisors, and even Democratic presidential candidate Joe Biden and vice presidential candidate Kamala Harris endorsed Prop. 15. So did Gov. Gavin Newsom, though his support was nominal. He didn’t campaign for it, unlike former Gov. Jerry Brown, whose campaigning for a temporary income and sales tax increase in 2012 was critical to its passage.

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  1. Jennifer Bestor 3 weeks ago3 weeks ago

    The surprise is not that Gov. Newsom did not campaign for Prop 15. It is that he endorsed it at all. His extended budget presentations suggest a deep understanding of state funding and school finance. Proponents displayed a willful ignorance of both. Had it passed, Newsom's administration would have owned all the fiscal pain buried in the proposition's mechanics. Starting now, Newsom would have been constitutionally forced to dig an additional $300-500 million … Read More

    The surprise is not that Gov. Newsom did not campaign for Prop 15. It is that he endorsed it at all. His extended budget presentations suggest a deep understanding of state funding and school finance. Proponents displayed a willful ignorance of both. Had it passed, Newsom’s administration would have owned all the fiscal pain buried in the proposition’s mechanics.

    Starting now, Newsom would have been constitutionally forced to dig an additional $300-500 million a year out of the General Fund for the assessors’ start-up costs. This is a time when he doesn’t have $3 million to spare. His obvious solution would have been growing deferrals by an additional half a billion a year. After all, this was “$12 billion for schools,” right?

    Second, Newsom would have had to deal with an immediate additional drop in commercial property tax revenues for school funding. Proposition 15 changed the tax methodology for commercial properties. It went beyond
    “closing the loophole” to add the equivalent of a 25% commercial occupancy surtax with limited rights of appeal. This would have been immediately reflected in commercial property values on 1/1/2021 to whatever extent owners didn’t feel they could be passed on to tenants or customers. These specific valuations will drive the 2021-22 Prop 8 declines-in-value and would have further depressed property tax receipts next year. That would, in turn, have depressed property tax contributions to school funding — just when Newsom knows he needs more, not less stable, reliable school property tax.

    Third, Newsom would have realized that, until the assessors completed the new market value reassessments and the proposition’s provisions had made it through the courts, each of those 1/1/2021 valuations would stand indefinitely. This could have been for years, since assessors say the new systems would overtax their internal systems. By shifting all commercial properties onto a new system, each property’s 1/1/2021 assessed value would have stuck until that property was reassessed. Commercial property tax would be stuck flat in limbo, for a second year, just as he faced re-election.

    Fourth, even once that limbo had been overcome, Newsom would know that a sizable chunk of the vaunted $12 billion of “new” revenue — a sixth, about $2 billion — was actually money that would have been received by school districts anyway. This is the normal 2% inflation growth plus new construction and changes in ownership. By shifting that component out of local property tax and into the separate Prop 15 fund, it would have been moved outside of the Prop 98 guarantee. This would have left Newsom to make up the $2B+ from the General Fund in Test 2 and Test 3 years. Frankly, I think he would have just reneged on his 1-1/2% catch-up commitment, but hey, what do I know?

    For me, the great heartbreak of this campaign was that (a) neither side told anything approaching the whole truth, ever, and (b) no credible think-tank or investigative journalist touched the core issues for school finance. Not the PPIC, not the CBPC, not CalMatters and, frankly, not EdSource either. The League of Women Voters was perhaps the worst offender — having had its presidents as signatories on each version of the ballot — never bothering to do one of their vaunted studies on it.

    Was there no prominent spokesperson for Prop 15 for a reason? Who would want to own it, the morning after? It was pig’s breakfast of assessment, allocation and school funding issues — created by a committee — modified by media messengers — and understood by no one. Voters were told it was “for the schools,” yet could see that only 40% would get there. They were told it wouldn’t hurt small businesses or farmers or consumers a bit — yet proponents bent over backwards to say that it exempted residential landlords. Somehow, sauce for the goose wasn’t sauce for the gander? Voters. Aren’t. Stupid. Neither are the people who could have put taken ownership.

    The education community has a brief period now when we can actually study and discuss school funding and property tax. Will we do this? Or is bashing corporate employers much more fun than crunching the numbers, telling whole truths, and coming up with a manageable solution?

  2. Alice Hood. 3 weeks ago3 weeks ago

    I am a retired public teacher and I voted NO on Prop 15. I voted no because, as a widow, I am afraid Prop 15 is a stepping stone to diminish Prop 13, which would make it very difficult for me to afford living in California. I also voted NO because as a former CTA member of 35 years, I have been very disappointed at the policies being passed by the CTA … Read More

    I am a retired public teacher and I voted NO on Prop 15. I voted no because, as a widow, I am afraid Prop 15 is a stepping stone to diminish Prop 13, which would make it very difficult for me to afford living in California. I also voted NO because as a former CTA member of 35 years, I have been very disappointed at the policies being passed by the CTA in regard to parental rights. Public Education needs to be a partnership between parents and schools, however that is quickly changing with new state laws that CTA lobbies for.

  3. John garza 3 weeks ago3 weeks ago

    Hi John, I believe the California school system is corrupt. The school will do whatever the state says and get paid under the table for it. After all, money is needed for all the special needs California has. And who is following the money. No one. Any comments?

  4. Esther Carl 3 weeks ago3 weeks ago

    As a teacher in LAUSD, I voted no on Prop 15.  Although I have been a member of the CTA for many years, I recently exited the union because their politics are radically left and, in my opinion, their policies do not put students first.  I am witnessing firsthand, public education turn into a breeding ground for political propaganda.  Even though I am a public educator, I recently pulled my children out of public education.  … Read More

    As a teacher in LAUSD, I voted no on Prop 15.  Although I have been a member of the CTA for many years, I recently exited the union because their politics are radically left and, in my opinion, their policies do not put students first.  I am witnessing firsthand, public education turn into a breeding ground for political propaganda. 

    Even though I am a public educator, I recently pulled my children out of public education.  Teachers and students are being used for the union’s political goals and pouring more money into this corrupt machine (via Prop 15) will only enable this abuse of power to continue.  

  5. Todd Maddison 4 weeks ago4 weeks ago

    In the Election Post-Mortem podcast, Louis asks “Where do people who really care about the future of schools go?” Let’s look at some actual facts to guide our answer to that. In 2012 we were told by the Prop 30 campaign that approving that tax increase was necessary to improve education in our state. Since passing Prop 30 in 2012, funding per ADA in CA has risen tremendously. The SACS database tells us funding per ADA … Read More

    In the Election Post-Mortem podcast, Louis asks “Where do people who really care about the future of schools go?”

    Let’s look at some actual facts to guide our answer to that.

    In 2012 we were told by the Prop 30 campaign that approving that tax increase was necessary to improve education in our state.

    Since passing Prop 30 in 2012, funding per ADA in CA has risen tremendously. The SACS database tells us funding per ADA is up a whopping 55% (to end of the 2019 year), an annual growth rate of 6.48%. This is a fact.

    This increase in revenue has not driven any measurable increase in education in our state, at least as measured by the CA Dashboard, NAEP, or SAT yardsticks. This is a fact.

    This is largely because the money that was generated from Prop 30 has not gone to things that improve the education of our kids, but instead to pay and benefits for school district employees. This is a fact.

    We have been told that the way to improve our education is to pay people in the education business more. That is clear, obviously, and provably false.

    Despite the fact that our media does pay some attention to the effect of pension plan contributions on the lack of money for actual education, almost no attention is paid to the incredible increase rate in pay.

    Anyone – literally anyone – looking at the public pay data on their district in the Transparent California database can see this.

    In my district, the median total compensation of administrators is $158,000/year. The median for teachers is $120,000/year. The annual rate of increase is multiples of the rate of inflation as well.

    But yet although we seem to have money for adults, we don’t have enough money for our kids.

    We need to raise taxes for that.

    All ignoring what was actually done the last time we did that, and supported by the myth that education is a poorly paid “labor of love” profession.

    Fortunately what we see from Prop 15’s failure is that more people are seeing through this. More people are not listening to the smoke and mirrors and looking at the actual data – and seeing their tax dollars were taken to line the pockets of people in the education industry in the past, not improve our kids’ education. And they’re not willing to do that again.

    If Prop 15 had contained language preventing its revenue from going to salaries and benefits they may have even gotten people like me to support it.

    But it didn’t, because no one wants to force our education industry to actually spend its money on our kids instead of the adults in the business.

    To answer Louis’ question – the only option people have is to go their board meetings.

    During the next round of raise negotiations, when your District is once again proposing to give itself raises – likely in a time of huge revenue decreases and accompanied by massive cuts to things that actually help our kids – stand up and say something.

    Ask them to disclose specifically what they’re going to cut from your kids education to fund those raises. It’s a legal requirement (AB 1200) that is almost universally ignored.

    Ask your COE why they’re allowing districts to ignore that requirement, too.

    http://toddmaddison.com/k12transparency

    Look up your district on Transparent California and bring that data with you. Ask why your district feels the need to give extra raises to people with six figure incomes and fund that by cutting from our kids, at a time when parents and kids are suffering.

    Regrettably given most school boards are staffed with people elected with contributions from special interests who benefit from those pay and benefit decisions, the odds are slim of having any effect, but that’s the only option we appear to have at this moment.

    Hopefully our people will do it.

    And our media should tell the truth about where the money is actually going – to support them in that.

    Do something that really is for our kids – for a change …

  6. Tom 4 weeks ago4 weeks ago

    We were told HOA’s would be taxed as corporations, hence it would affect homeowners indirectly. Plus we don’t trust California to spend wisely regardless.

  7. Laurie Ackerman 4 weeks ago4 weeks ago

    This Prop 15 will put our family out of business and we will become homeless too!

  8. Curtis Clark 4 weeks ago4 weeks ago

    Andre L Spearman, Thanks to the Supreme Court, corporations are people too. So, yes it is fair.

  9. Gregory Lin Lipford 4 weeks ago4 weeks ago

    “Opponents also implied, without evidence, that Prop. 15 supporters would target homeowners next for tax increases.

    Adding “without evidence” or similar phrase has become a despicable habit by many in the media. It is almost always an opinion to counter another opinion, which is to say that it has no place in a news report. Moreover, it speaks poorly of a reporter who admits to not seeing relatively clear historical evidence in support of the original assertion.

    Replies

    • John Fensterwald 4 weeks ago4 weeks ago

      Thanks for your comment, Mr. Lipford.
      Perhaps I missed it: Can you point to statements by organizers of Prop. 15 that called for amending Prop. 13 as it applies to homes and apartments? Certainly opponents of Prop. 15 insinuated they had. I found no evidence.

  10. Jennifer Bestor 4 weeks ago4 weeks ago

    Didn’t Proposition 167 in 1992 attempt to amend Proposition 13? Admittedly, a bit of an omnibus tax bill, it nonetheless included, according to the LAO’s voter guide summary, “a provision that requires more frequent reassessments of business properties [that] would increase local property tax revenue by $1 billion to $2 billion annually, beginning in 1993-94.”

    Replies

    • John Fensterwald 4 weeks ago4 weeks ago

      Jennifer, you may be right. I was unaware of that, and no one had brought it up.

  11. andre l spearman 4 weeks ago4 weeks ago

    Do we really have a democracy when it currently allow massive money interest to buy the airwaves, spread untrue information and allows the purchasing of community leaders names behind ballot measures that are actually good for under-resourced communities. I think the legislators simply need to change the law to make corporations pay their fair market value and level the playing field. It is strange to watch the media coverage of this issue without a conversation … Read More

    Do we really have a democracy when it currently allow massive money interest to buy the airwaves, spread untrue information and allows the purchasing of community leaders names behind ballot measures that are actually good for under-resourced communities.

    I think the legislators simply need to change the law to make corporations pay their fair market value and level the playing field.

    It is strange to watch the media coverage of this issue without a conversation about who bought influence. Alice Huffman, president of the California NAACP, collected more than $1.2 million for her media consultant work. This is more than shameful, it seem unethical. She is not alone. Willie Brown has always been on the side of big money, because our system of elections forces them to raise money for the people who are resistant to fair taxation.

    Until we make the public airwaves free of big money interest, we can not say we have a democracy in California and the United States. When we allow corporations and their leaders to freely spend money to control the messages through the media, money interest will continue to rule our lives unchecked. The Business Roundtable, Chamber of Commerce, Lyft, Uber, Door-Dash, etc all have one interest. They want to avoid taxes, shelter their incomes and control how we vote and what we hear in the media. Until we fix this, it is a sham.

    Replies

    • Sean Smith 4 weeks ago4 weeks ago

      Amen!

    • Paul Muench 4 weeks ago4 weeks ago

      Money didn’t get proposition 16 passed this year. Money didn’t get Meg Whitman elected either. It is possible for money to lose out.