CFBF opposes split-roll measure on property taxes

Issue Date: February 26, 2020
By Dave Kranz

Warning of higher taxes on barns, dairies, wineries, processing plants, vineyards and orchards, the California Farm Bureau Federation has voted to oppose a state ballot initiative on property taxes that appears headed for the November ballot.

Known as Initiative 19-0008, the measure would establish a split-roll property tax that would reassess commercial and industrial property, including agricultural facilities. Backers are collecting signatures to qualify the initiative, and expect to submit enough signatures before the April 14 deadline.

"It's unusual for Farm Bureau to oppose a measure at this early stage, but our board of directors is very concerned about the impact this initiative would have on rural California," CFBF President Jamie Johansson said.

Under the title "California Schools and Local Communities Funding Act of 2020," the initiative would eliminate the cap on assessed value of commercial and industrial property that has been in place since the passage of Proposition 13 in 1978. Beginning in the 2022-23 fiscal year, the measure would require commercial and industrial real property not otherwise exempt under current law to be reassessed at the fair market value of the property.

The initiative would exempt residential property and real property used for commercial agricultural production—Schools and Communities First, the group sponsoring the measure, says it provides "broad and explicit" language to exempt agriculture.

But CFBF policy advocate Robert Spiegel said the exemption applies only to land, not to agricultural improvements or fixtures.

"Current law defines real property as lands, improvements and fixtures," Spiegel said. "What the initiative actually does is redefine real property for all California agriculture by removing from the definition improvements such as agricultural buildings and fixtures. Dairy barns, processing facilities, machinery garages, crush facilities, henhouses and other such facilities would be considered commercial and industrial property, and be reassessed."

Under existing law, he said, grapevines and fruit and nut trees are exempt from taxation until considered mature: three years for vineyards and four years for orchards. Under the initiative, Spiegel said, orchards and vineyards would be designated improvements of real property and reassessed to fair market value once they reach maturity—though the land under the crops would not be reassessed.

Noting that Farm Bureau was an early supporter of the 1978 Proposition 13 tax reform, Johansson said CFBF opposes efforts to weaken the law.

"Proposition 13 protects California farmers by giving them certainty about their property tax bills," he said. "The split-roll measure would increase the tax burden on California farmers at a time when family farms and ranches already face threats to their water supplies and rising costs to comply with the state's employment and environmental regulations."

Spiegel said the initiative, if passed, will create a "powerful incentive" for local governments to rezone agricultural land as commercial or industrial property, and to deny variances for agricultural use of land in such rezoned areas, in order to maximize property tax revenue.

Although the initiative would not change the Williamson Act land-conservation law affecting agricultural property taxes, Spiegel said the measure would likely encourage local governments to begin non-renewals of Williamson Act contracts and terminate their participation in the program.

He said California farmers already pay the highest property tax rates in the nation, an average of $17,299 per farm, according to the latest U.S. Census of Agriculture.

Californians to Stop Higher Property Taxes, the coalition formed to oppose the split-roll initiative, said the measure would lead to higher food prices by increasing taxes on processing facilities, packinghouses and other facilities.

"Whether on a tree or vine, at a dairy or at a processing facility, every fresh fruit, vegetable and gallon of milk we buy at the grocery store will cost more under this property tax initiative," said California Business Roundtable President Rob Lapsley, a co-chair of the coalition.

Johansson said measures such as the split-roll initiative that increase costs for family farmers and ranchers undermine their ability to supply jobs, especially in rural California, and their ability to supply food and farm products for customers in California and worldwide.

"The split-roll tax initiative would add more economic pressure on rural areas that are already under strain, and that's why we oppose it," he said.

(Dave Kranz is editor of Ag Alert. He may be contacted at dkranz@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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