Oakland’s modest model of fairness

Measure H would cover such changes of corporate ownership. Given the fiscal straits in which cities like Oakland find themselves, that’s hardly a superhighway to prosperity. But as Oakland City Councilmember Rebecca Kaplan put it, it helps start the conversation about the much larger inequities – and, more important yet, the craziness -- of the Proposition 13 tax structure.

Not surprisingly there’s been increasing talk lately about revising Proposition 13 to help reduce the state’s reliance on the volatile swings of the income tax and increase local revenues and responsibility.

The most likely way to do that, and probably the only one with a chance of getting voter approval, is a split roll which doesn’t change the residential property protections but taxes commercial property on a different basis to yield a higher (and fairer) return and a more level playing field in commerce generally.

Measure H, which affects only the property transfer tax, would have no direct effect on the regular property tax. But it addresses precisely the same problem that Proposition 13 reformers like Lenny Goldberg of the California Tax Reform Association have been working on for the better part of twenty years.

When ownership of a business changes hands, either through merger or acquisition, or when one set of partners sells to another, or through the gradual, routine turnover of stock, its real property – oil refineries, power plants, railroad tracks, manufacturing plants – rarely get reassessed as a home would be when it’s sold.

The result is that the growth in business property values is rarely reflected on the tax rolls. And so Proposition 13, which was promoted in 1978 as a way of protecting homeowners, has generated a windfall for corporations. It’s shifted the tax burden, says San Francisco Assessor Phil Ting, one of the leaders in the campaign to rewrite Proposition13, “from corporations and onto the backs of residential property owners.”

Goldberg and others believe the only hope of success on the split roll campaign is to get voters to understand how much the tax breaks bestowed by Proposition 13 on the local Chevron refinery or the PGE power plant or the diesel-fume-spewing train yards in the Alameda corridor are costing them every day in lost revenues for their schools, their police protection and the maintenance of their parks.

Pollster Mark DiCamillo points out that support for a split roll, which had been growing in recent years has fallen off during the recession of the past year because voters fear that higher taxes will drive jobs away. The Oakland Metropolitan Chamber of Commerce has been using the same argument in its campaign against Measure H. But Chevron can’t move its refinery or PGE its generators or the railroads their yards, no matter what the tax.

For a number of legal and political reasons, the passage of Measure H has no direct link to the split roll campaign. And because only the state’s 100 or so charter cities have the constitutional authority to do what Oakland hops to do later this month, eliminating one set of loopholes won’t be much more than a patch even for the cities that could follow suit.
But Oakland’s proposal is eerily close to what the split roll advocates are thinking about for Proposition 13. More important, it would be a small signal that the terms of the thirty-year-old tax revolt, much as politicians and journalists sometimes seem to think differently, are not set in concrete.

Peter Schrag, who will be writing every Wednesday for the California Progress Report, is the former editorial page editor and columnist of the Sacramento Bee. He is the author of Paradise Lost: California’s Experience, America’s Future and California: America’s High Stakes Experiment. His new book, Not Fit for Our Society: Nativism, Eugenics, Immigration will be published early in 2010.