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BB AMMIANO 027.jpgA controversial bill that would indirectly increase local taxes on commercial property was stalled - perhaps permanently - Monday in the Assembly Revenue and Taxation Committee.

The legislation, Assembly Bill 188, by Assemblyman Tom Ammiano, D-San Francisco, had support from labor unions and liberal groups, which said it would close a loophole that has deprived schools and local governments of much-needed revenue, but was opposed by business and the California Chamber of Commerce labeled it as a "job killer."

Revenue and Taxation Committee chairman Raul Bocanegra announced that the bill would be "on hold" as he went through a list of significant tax bills and declared which would be allowed to proceed to floor votes this year.

AB 188 would need a two-thirds legislative vote and Gov. Jerry Brown's signature to be enacted because it is a tax increase, and has been considered a test of the Democrats' newly minted supermajorities in both legislative houses that would, on paper, allow them to generate two-thirds votes without Republicans.

In prior years, similar bills had died because Republicans would note vote for them. But even though Democrats now have the power to vote for new taxes without GOP support, legislative leaders have been leery of going down that path, and Brown has said he would increase taxes only with voters' support.

In a statement, Ammiano said he was encouraged by new support and had asked that the committee hold it "until I can meet with those newly interested parties to fine tune this bill to recoup tens of millions of dollars for local needs - schools, police, firefighters, fixing streets and whatever local communities need."

AB 188 would have revised the state definition of "change of ownership" for evaluating commercial property for property taxes under Proposition 13, the 1978 property tax limit measure. It was aimed at barring complex transactions that avoid such reevaluation.

Proposition 13 froze property values for taxation purposes, except when it changes ownership, when values were to be upgraded to the sales price. For more than three decades, liberal critics have said labeled that a loophole because business property deals could be fashioned to avoid more than a majority of the property technically changing ownership in a single transaction, thus protecting the property from reassessment. Even some expensive private homes have avoided reassessment through complex transactional details.

However, opponents of the bill said it would discourage business investment in the state and thereby making recovery from recession more difficult.

PHOTO CREDIT: Tom Ammiano, D-San Francisco, in 2009. Sacramento Bee file.

Editor's Note: This post was updated to include Ammiano's statement. Updated at 5:30 p.m. May 13, 2013.



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