Property Tax Panic. Will a Deal be Cut?

Now that the Local Taxpayer Protection Act to Save Proposition 13 has qualified for this November’s General Election ballot, opponents of it are starting to panic.

The ballot initiative is no small matter for small businesses. According to NFIB’s last Tax Survey, 73% of NFIB members own the building or property where their business is located.

The initiative, according to the secretary of state’s website, “Limits voters’ ability to pass voter-proposed local special taxes by raising the vote approval threshold requirement for such ballot measures from a simple majority (over 50%) to two-thirds. In charter cities, prohibits voters from approving real estate transfer taxes other than the existing 0.11% transfer tax authorized by Revenue and Taxation Code section 11911.”

Slanted? “Limits voters’ ability to pass voter-proposed …” Not our attorney general’s office. Who would dare make such an accusation? Wow! That many hands raised.

Why the need for the ballot initiative?

According to Jon Coupal of the Howard Jarvis Taxpayers Association, the main sponsor of the initiative, “The Local Taxpayer Protection Act to Save Proposition 13 … will reverse the court-created loophole in the two-thirds vote requirement and revive this important taxpayer protection. But there’s more.

“In addition to restoring the two-thirds vote for local special taxes, the Act will also restore the limitation on equity-stealing real estate transfer taxes. For decades, even before Prop. 13, taxes on the sale or transfer of real property were limited to $1.10 per $1,000 of property value. However, following Prop. 13’s passage, many cities began imposing real estate transfer taxes in excess of $45 per $1,000 of value. Even worse, because of the Upland decision [California Cannabis Coalition v. City of Upland], local governments operating behind the front of ‘citizen groups’ can propose ‘special taxes’ by initiative, evading the requirement of a two-thirds vote of the electorate to pass.”

In a guest editorial published by CalMatters, Brian Hanlon, co-founder and CEO of California YIMBY, concedes the problem but worries if the ballot initiative is overkill.

“San Francisco’s Prop. I, which taxes up to 6% on the largest transactions, has stunted housing production and sales so significantly that city leadership is now pursuing an effort to cut the tax in half. When the officials closest to a measure move to revise it, the lesson is worth taking seriously.

“The measure now on the November ballot would partially fix this problem by limiting transfer taxes to 0.11% statewide. But it would create a more significant problem by raising the threshold for voter-approved taxes from a simple majority to two-thirds — threatening local government finances across California and compromising funding for schools, roads, housing and public safety.

“The governor and the Legislature have until June 25 to strike a deal that would prompt proponents to pull the measure from the ballot.”

NFIB is part of a coalition to Save Proposition 13. We encourage our members and all small business owners to join it. Click here to join the coalition.

The Legislature

Not much more to add to last week’s Main Street Minute on the progress of legislation. The reason is all eyes and attention are on the state budget, which must be approved by Monday of next week (June 15). After that date, legislative action on bills will increase at warp speed ahead of the August 31 adjournment date.

Don’t worry about the strain the calendar is putting on your assembly member and senator. They’re taking July 2 through August 3 off for a summer recess.

NFIB California in the News

State Director John Kabateck’s comments on last Thursday’s (June 4) release of NFIB’s latest monthly Jobs Report were published by Golden State Today among other media outlets.

“One month’s dip in the Small Business Employment Index is no reason to be alarmed, but three consecutive months of slippage does raise concerns. To help reverse this trend, it would be nice to see the California Legislature do its part by passing small-business-helpful policies, such as Assembly Bill 649 and Senate Bill 84. Its treatment of them, however, shows fat chance of that happening. Meanwhile, Congress can build on the success it had in making the 20% Small Business Deduction permanent by permanently repealing the unconstitutional beneficial ownership reporting mandate.”

The Regulatory World

From Nielsen Merksamer’s Weekly Report

— June 4, the Governor announced that the Department of Food and Agriculture and the California Environmental Protection Agency released the final version of a regulatory alignment study making recommendations to make agricultural food safer and water quality regulations clearer, more coordinated, and easier to navigate.

— June 2, the President signed an executive order directing the federal government to develop a voluntary framework under which artificial intelligence developers would provide the government with early access to certain frontier AI models. The New York Times reported the order may represent a policy shift for the Trump Administration. OpenAI has proposed an alternative approach.

— May 29, following two days of deliberations, the California Air Resources Board approved amendments to its cap-and-invest regulation. While the regulatory text was unchanged during the hearing, the Board amended the 18-page adopting resolution. Staff have not yet posted the revised resolution. KQED reported on the Board’s deliberations.

Our Neighbor to the North

It takes a special kind of ridiculousness to draw near-universal, bipartisan opposition, and Oregon occasionally gets the prickly heat urge to show it’s that special kind of place where silliness can blossom.

“A sweeping new initiative potentially headed for the November ballot targets the legality of farming, hunting, fishing, ranching, animal sciences, or even killing a mouse that has scurried in your house,” reports The Spectator. “Initiative Petition 28 (IP28) would make Oregon the first state in the US to ban such practices.”

In Oregon Live’s telling, “A controversial Oregon ballot initiative that would effectively criminalize hunting and fishing is one step closer to landing on the November ballot. The backers of Initiative Petition 28, which would expand Oregon’s animal cruelty laws, have now collected and submitted more than 120,000 signatures to the state — slightly above the roughly 117,000 signatures required to get the measure on the ballot.”

Calendar

— June 15: Deadline (by midnight) to pass new state budget

— July 2-August 3: Legislature on Summer Recess

— August 31: Legislature adjourns its 2026 session

— September 30: Last day for governor to sign or veto bills sent to him.

National

Highlights from Federal Government Relations Principal Louis Bertolotti’s weekly report

— NFIB released a letter of support for the CLEAN Act, which passed the House of Representatives by unanimous consent. Principal of Federal Government Relations Louis Bertolotti said, “Increased diversification of our energy portfolio will only help to strengthen America’s status as a rising energy superpower.”

— NFIB released a letter of support for the ETHIC Act. Principal of Federal Government Relations Tyler Dever said, “Increased competition would help lower prescription drug costs, expand access to affordable treatments, and reduce overall healthcare spending.”

— NFIB Principal of Federal Government Relations Mary Alex Hamby wrote an op-ed published by the Washington Examiner on the need to protect small businesses from exploitative, predatory lawsuits: “Small businesses already tackle many challenges every day, all while doing their best to comply with numerous government regulations and compliance requirements. Congress can help Main Street business owners spend their time on making payroll, hiring employees, or giving back to their communities by protecting small businesses from abusive lawsuits.”

Next Main Street Minute: June 15. All Main Street Minutes can be found on the NFIB website here. Pull down the California tab in the upper-right-hand corner, or, to get right to it here, www.nfib.com/california.