It was a tight race, but Californians ultimately voted against approving Proposition 15. California’s ballot referenda are known as propositions.
Overall, the election results for California’s ballot measures proved to be disappointing for progressives. Between the rent control measure failing and Prop 22 (the Uber-backed referendum to overturn labor laws) passing, the election wasn’t the rousing endorsement of progressiveness many Californians wanted.
For decades, progressives have been fighting to overturn 1978’s Prop 13, the so-called “third rail” of California politics. Prop 15 is the closest they’ve gotten, but the effort fell short.
While the final results haven’t been certified, the Associated Press determined the ballot measure’s failure one week after the election ended. With 90% of votes tallied, the ‘No’ votes led 51.8% to 48.2%. It was enough for the Associated Press to call it.
Prop 15, also known as the Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative, would have amended the California State Constitution to require commercial and industrial properties to be taxed based on their market value.
This would have been a reversal from Prop 13, which capped property taxes based on the property’s last purchase price. Under Prop 13, properties are only reassessed when a person or legal entity acquires more than 50% of the ownership.
Spearheaded by Republican businessman Howard Jarvis, Prop 13 was initially billed as an attempt to protect aging homeowners from losing their homes. The amendment, however, made no distinction between residential, commercial, industrial and agricultural properties, which allowed companies to use this as a loophole to avoid reassessment by selling a maximum of 49% to any person or group. Disneyland, for example, currently pays taxes based on the real estate’s value in the 1970s, which is significantly lower than it would be valued today.
Prop 15 would have ended this.
Rather than assessing taxes on all real estate properties based on the purchase price, Prop 15 called for market value taxes on commercial and industrial properties valued at more than $3 million, while residential properties and commercial properties valued at less than $3 million would continue to be taxed based on the purchase price. This is known as a “split roll.”
The Fiscal Impact of Prop 15
According to a report published by the Legislative Analyst’s Office—a nonpartisan government agency that provides fiscal and policy advice for legislators—Prop 15 was expected to generate between $6.5 billion to $11.5 billion per year in new taxes.
Approximately 60% of the money would have gone to cities, counties and special districts, while the remaining 40% would have increased funding for schools and community colleges, with the amount allocated to each school depending on the number of students enrolled.
Unsurprisingly, many education leaders and teachers unions throughout the state supported the measure.
The California Federation of Teachers (CFT), which is one of the two major teachers unions in the state and which is affiliated with the AFL-CIO, was part of the coalition that supported Prop 15.
Following Prop 15’s defeat, CFT stated on its website, “This campaign has allowed the CFT and its allies to build a strong coalition for future efforts, and it will not give up on this important reform that will bring billions to our public schools and colleges.”
CFT also supported Prop 16 and Prop 22, both of which failed to pass.
“While we may have lost those individual propositions, we will continue to fight for equity and fairness,” said CFT President Jeff Freitas.
Who Funded Prop 15?
Placed on the ballot by petition signatures, Prop 15 received overwhelming support from labor groups.
The Yes on 15 campaign boasted that more than “1,600 grassroots organizations, elected officials, frontline and essential workers, interfaith and business leaders” support Prop 15. These include the California Teachers Association, SEIU California, California Labor Federation, AFL-CIO, United Teachers of Los Angeles (UTLA), the California Nurses Association and the California State Firefighters Association.
Opponents of Prop 15 included real estate and business companies and leaders, including AMERCO, Boston Properties, NextEra Energy, the California Chamber of Commerce, the California Business Roundtable and the California Small Business Association.
As of October 17, 2020, total contributions in support of Prop 15 amounted to approximately $63.4 million, according to Ballotpedia. Some of the top donors included the California Teachers Association Issues PAC, which donated a little over $17 million, the SEIU, which gave more than $11 million, and the Chan-Zuckerberg Initiative (CZI), which gave $11.6 million.
At first glance, this coalition appeared to be, as Vox called it, “a stereotypical business-versus-labor streetfight.”
However, the significant involvement of a key player threw a wrench in the works.
Mark Zuckerberg and Prop 15
As mentioned above, the Chan-Zuckerberg Initiative (CZI) was one of the top donors behind Prop 15. CZI is the charitable organization run by Facebook’s Mark Zuckerberg and his wife, Priscilla Chan.
Michael Trancoso, head of justice and opportunity at CZI, explained in a press release why CZI backed Prop 15.
“Even before COVID-19, Black and brown communities have lacked the resources needed to sustain adequate local healthcare systems, protect essential workers and support our schools,” said Trancoso. “This systematic disinvestment was built into the law, and we now have the historical opportunity, through Proposition 15, to correct it and get our communities the support they need.”
However, Zuckerberg’s involvement in the push behind Prop 15 raised a lot of questions and doubts.
While this certainly wasn’t Zuckerberg’s first foray into politics, it was one of his biggest investments so far. Vox’s Theodore Schleifer called Zuckerberg’s move “the most expensive electoral play of the billionaire’s career.”
Perhaps unsurprisingly, Zuckerberg’s involvement drew sharp criticism from some.
In an op-ed published in the Los Angeles Daily News, California NAACP President Alice Huffman and California State National Action Network President Tecoy Porter, who both opposed Prop 15, wrote, “We read with open mouths that the world’s fourth-richest person, Mark Zuckerberg, made another contribution to the Yes on Proposition 15 campaign.”
Huffman and Porter argued that Prop 15 would’ve increased gentrification and implied that Zuckerberg may see gentrification as progress. Additionally, they made the argument that Zuckerberg was using his wealth to punish small businesses.
Zuckerberg did not publicly comment on Prop 15 nor did any of the other major Silicon Valley tech CEOs who supported the measure.
However, Salesforce’s Marc Benioff came out in support of Prop 15 in October. Salesforce contributed $400,000 to the campaign, according to Vox’s reporting.
Still, questions persist as to why CZI would back a measure that would increase real estate taxes when it would ostensibly mean Facebook would stand to lose a fair amount of money.
Well, not quite.
Since Facebook didn’t exist in 1978 back when Prop 13 was passed, it wouldn’t have lost as much money as, say, Disneyland. It’s unclear just how much Facebook’s real estate taxes would have increased, but it’s unlikely it would have been as much as older companies that historically benefited from Prop 13.
Ultimately, CZI’s involvement represented the at-times uneasy partnership between labor and tech. While it’s difficult to ascertain just how much Zuckerberg’s involvement influenced the election results, it is nevertheless an intriguing situation where two groups who usually butt heads worked together for a common goal.
(Prop 22 is, of course, another story.)
