Unions and big real estate companies are locked in an expensive fight over proposed changes to California property tax rules, each dropping tens of millions of dollars on ads to persuade voters in the final stretch before Election Day.
If it passes Nov. 3, Proposition 15 would overhaul the state’s property tax system by taxing commercial property owned by large businesses based on current market value instead of purchase price. The change would result in a big tax increase for many businesses and billions more in revenue for schools and local governments.
Independent polls have found voters are closely divided on the issue with just days to go before voting ends.
Proposition 15 supporters have raised more than $62 million this year, mostly from unions and the Chan Zuckerberg Initiative, the philanthropic organization of Facebook founder Mark Zuckerberg and his wife, pediatrician Priscilla Chan.
Opponents have reported raising roughly $69 million, mostly from the California Business Roundtable, which is primarily funded by real estate companies.
The California Teachers Association is the measure’s biggest backer, having contributed nearly $20 million. Service Employees International Union, which represents many state and local government workers, and several of its local chapters have contributed more than $16 million combined to support the measure.
By 2025, the nonpartisan Legislative Analyst’s Office estimates the measure could bring in as much as $11.5 billion per year for schools and local governments.
The Chan Zuckerberg Initiative has contributed more than $11 million to the measure because it “has the potential to stabilize funding for vulnerable communities across California,” according to a press release from the organization.
Groups backing Proposition 15 have reported spending more than $50 million as of mid-October, mostly on television and web ads.
Many of the supporters’ ads focus on who will benefit, namely public services support by tax revenue.
“Prop. 15 closes corporate loopholes, and invests in our schools, health care and public safety,” nurse Jennifer Esteen says in one ad.
Backers argue many big corporations don’t pay their fair share in taxes under the current system, which benefits companies that purchased land decades ago when property values were lower.
Large businesses that stand to see higher taxes are spending big against Proposition 15, with $38 million coming from the corporate-funded Business Roundtable.
The real estate arm of private equity firm Blackstone and Kilroy Realty have spent millions against the measure, directing the money through the Business Roundtable. Real estate companies Western National Group, Douglas Emmett Properties, Cypress Property Management and Hudson Pacific Properties are also top donors to defeat Prop 15 through their contributions to the Business Roundtable, which has dropped $38 million to defeat the measure.
Opponents have reported spending more than $50 million this year, primarily on television ads.
Much of their advertising focuses on costs they say will be borne by small businesses and consumers. Although economists say there will likely be some higher costs passed on to small businesses and consumers, how much will vary widely depending on market forces.
Proposition 15 opponents argue raising taxes during a recession will further hurt businesses that are already struggling.
“Our worst recession isn’t the time for the biggest property tax hike ever,” people say in several of the opposition ads.