Farm Bureau warns ag interests of Proposition 15 impacts

Proposition 15 opponents are making a final push, telling farmers, ranchers and winery owners that the measure, if approved by voters Nov. 3, could increase property taxes and ultimately raise the cost of living for Californians.

About a dozen people gathered online at a No on Prop 15 town hall Zoom meeting on Tuesday, Oct. 13. Speakers included representatives of the California Farm Bureau Federation and consultants on the No on Prop 15 campaign, and attendees included local winery owners.

As proposed, Prop. 15 would increase property taxes on commercial properties worth more than $3 million. Called the split-roll tax because it splits the property tax roll by assessing business property differently than residential property, the proposal would change the way commercial and industrial land and buildings would be taxed.

If the proposition is approved, the taxes would be based on how much the properties could be sold for instead of their original purchase price, overturning elements of Proposition 13.

Because property values typically increase at a faster rate than inflation, the legislative analyst is estimating the increased taxes could generate $6.5 billion to $11.5 billion in new funding that would be distributed to local governments and schools.

Prop. 15 proponents say the measure is needed to close property tax loopholes benefiting wealthy corporations, reduce small-business taxes, and reclaim billions of dollars to invest in schools and local communities.

“Our schools have the most crowded classrooms in the nation and our local communities are struggling to respond to the impact of COVID-19,” states the argument in favor of the proposition in the Voter Information Guide.

Robert Spiegel, a policy staff representative at the California Farm Bureau Federation, said at the town hall meeting that nearly every farmer and rancher in California would be affected because the measure does not discriminate between small, medium and corporate farms.

“The split-roll tax raises commercial, industrial and agricultural property taxes separate from residential properties, which are afforded protection by Proposition 13 that puts caps on tax increases at 2 percent annually,” said Spiegel, noting that tax assessors are bound to levy taxes based on the tax code.

The taxes affect three components: land, improvements and fixtures, Spiegel said. Any type of improvement to wineries, dairies or barns for raising livestock, avocado groves, fruit and nut trees and similar ventures would result in increased taxes if the properties are reassessed at fair market value year after year, he added. Wineries are included, Spiegel said, because they convert a raw resource into a commodity and are therefore labeled an industrial facility.

Improvements to properties could be anything from building green houses to upgrading irrigation, he said.

“There would be a massive tax hit on commercial, industrial and agricultural properties,” Spiegel said.

He noted that the ag industry has been hit with challenges in water supplies, labor and pests in the past 30 years. But one thing it has been able to rely on is consistent property tax valuations.

“This undermines our ability to compete nationally and internationally,” he said.

Currently, due to Prop. 13 property tax protections, a piece of land or building is typically taxed at its purchase price in the year it is bought, then adjusted each year by up to 2 percent for inflation. When a property is sold again, its taxable value is reset to its new purchase price. Under Prop. 15, commercial and industrial land and buildings could be taxed based on how much they could be sold for instead of their original purchase price. The change would go into effect beginning 2022.

Beth Edwards, co-owner of Edwards Vineyard & Cellars winery in Ramona, said she is considering rebuilding a barn that burned in the 2007 Witch Creek fire. She wanted to know if a replacement barn could be valued at an amount equal to its value in ‘07.

Spiegel said under existing law, a new barn would trigger a fair market value reassessment of the structure. The difference, he said, would be that under Prop. 15, the tax rate would be adjusted each year based on fair market value, rather than increasing no more than 2 percent each year. So likely the property would be taxed at a higher value each year, unless there is a recession, he said.

Ned Wigglesworth, general consultant on the No on Prop 15 campaign, said as of Oct. 13, polls indicate the opposition campaign in San Diego, Imperial Valley, Napa and Sonoma counties, and the central and northern California coasts, has made strides in gathering voter support, which appears to be running neck-and-neck with Prop. 15 supporters.

Wigglesworth said the No on Prop 15 campaign has a $2.3 million budget to spend mostly on radio, display, social media and digital advertising, signs and bumper stickers.

“That is tremendous progress but we’re still at risk,” he said. “Our message is critical. No one is more credible than the farmers. The broad schematic here is that Proposition 15 will increase the cost of living in California.”

A key message to convey is that if farmers, ranchers and wineries pay higher taxes, the costs will trickle down in the economy to staples and increase food prices, affecting vulnerable populations such as low-income earners and seniors, Wigglesworth said.

Michael Zimmerman, a political affairs director at the California Farm Bureau Federation, said persuasive messages are being targeted to heavy agriculture counties in the state. He said constituents there are being pressured to vote in favor of Prop. 15 as a way to generate revenue for local governments and schools.

“We didn’t want the impact on agriculture to go unnoticed,” Zimmerman said. “The effect will be different depending on the circumstances — what type of farm it is, the size and the improvements.”

For more information, visit the website cafarmersagainstprop15.com.