Decades of political wrangling over how Proposition 13, the iconic property tax limit passed by voters in 1978, is applied to commercial property reached a climax of sorts Tuesday in a Capitol hearing room.
During a hearing of the Assembly Revenue and Taxation Committee, long-warring business groups and tax reformers agreed on modest change of law governing the reassessment of commercial property when it changes hands.
The committee chairman and co-author of the revised bill, Assemblyman Raul Bocanegra, D-Pacoima, announced during the hearing that a vote would be postponed, but later, the committee approved it and sent it to the Assembly Appropriations Committee.
The compromise, written into Assembly Bill 2372, would trigger reassessment when at least 90 percent of a property's ownership changes in any three-year period. It would not apply, however, to incremental changes of ownership through stock market trades.
Currently, any property is reassessed to market value when a single buyer acquires at least 50 percent ownership in a single transaction. Critics say that's a loophole that allows businesses to avoid reassessment by clever structuring of sales.
Assemblyman Tom Ammiano, D-San Francisco, had been pushing AB 2372 to tighten up the change of ownership provision of state tax law, but faced stiff opposition from business groups.
The compromise falls somewhere between current law and Ammiano's original measure and wins support from opposing groups such as the California Chamber of Commerce and the California Tax Reform Association.
It's less than the latter wanted, and also falls well short of a full "split roll" which would completely remove Proposition 13's limits from business property, long a goal of liberal groups. A split roll would require a constitutional amendment.
A full split roll would have, it's believed, multi-billion-dollar impacts, while the change that surfaced Tuesday is, those involved said, likely to have much smaller impacts on both business tax bills and local government revenues.
Ammiano said in a statement the revised measure would "bring back some fairness to the tax system in a way that will benefit all Californians."
Updated at 6:12 p.m. to reflect committee approval.
PHOTO: Paul Gann, left, and Howard Jarvis, hold up their hands on the night of June 7, 1978, as their co-authored initiative Proposition 13, took a commanding lead in the California primary. Associated Press file.