With the failure of Proposition 15, the $140 million campaign to hike property taxes on businesses across the state finally comes to a close.

Now begins a new statewide competition to explain what the results really mean. 

For opponents, which include large business groups, commercial landlords and low-tax advocates, the lesson is clear: Forty years after California voters passed Proposition 13 — capping property taxes and hamstringing state and local governments’ ability to raise new revenue — the “tax revolt” is live and well.

The state’s voters may routinely elect and then re-elect Democrats, said Rob Lapsley, president of the California Business Roundtable, a coalition of large businesses that opposed the measure. But that doesn’t mean they want to weaken what he called the state’s “last remaining tax protection.”

“This was the most favorable political climate they could have asked for,” he said. “An anti-Trump climate driving a high-turnout election, a pandemic with deficits at cities and school districts across the state.”

That the measure failed despite all that “sends very clear signals that we are not going to see this again.”

But supporters of the initiative say the down-to-the-wire margin sends the opposite message.

“This was the most favorable political climate they could have asked for. An anti-Trump climate driving a high-turnout election, a pandemic with deficits at cities and school districts across the state.”

Rob Lapsley, president of the California Business Roundtable

With some 2 million ballots left to count, Prop. 15 was losing by 3.6% when the Associated Press called the race late today.

“We’re really close to having a majority of California voters agreeing with us,” said Ben Grieff, spokesperson for Evolve California, a nonprofit that advocates for Prop. 13 reform. “It took us 42 years to get this point and so if it takes another two to four years to get where we want to be, then that’s what it is.”

“This will happen,” he vowed. “It just will. It has to.”

History is not on his side. In the four decades since voters passed Prop. 13 in 1978, Californians have backed 24 tweaks, additions and rewrites to the landmark tax measure. Of those 24, only four ran against the ideological grain of the tax revolt, raising the odd tax or making it slightly easier for state and local governments to do so. 

“Prop. 13 has special status in California,” said Kimberly Nalder, director of the Project for an Informed Electorate at Sacramento State University. “Poll questions have been asked about this and consistently they’ve shown that people are very protective of it.”

Prop. 15 was the biggest challenge yet.

An enduring cliché of California politics is that the landmark tax measure represents an electoral “third rail” that politicians and advocates monkey with at their own peril. 

“Prop. 13 has almost mythical powers against those who would assail it,” Jon Coupal, president of the Howard Jarvis Taxpayers Association crowed in an op-ed before the race was called. The association exists solely to protect the legacy of the tax revolt. “And the apparent defeat of the (Prop. 15) proposal is only the most recent example of special interests getting burned by the ‘third rail’ of California politics.”

Mark DiCamillo, director of the Berkeley Institute of Governmental Studies Poll, said Prop. 15’s demise was largely thanks to the electorate’s distrust of the “yes” campaign’s intentions — a fear that if commercial properties lost Prop. 13’s protections, homes would be next. 

In an October survey, he found that 56% of likely voters believed that the measure was “only the first step to making other similar changes to the way residential properties are taxed in the future.” That included the vast majority of respondents who opposed the measure, but also nearly half of supporters and a third of those who were undecided. 

Homes in the Berkeley hills are seen behind signage for large, corporate stores at the East Bay Bridge shopping center in Emeryville on Oct. 31, 2020. Prop. 15 would have increased property taxes for corporate landowners in California to create additional funding schools as well as cities and counties. Photo by Anne Wernikoff for CalMatters

“There was this nagging suspicion among voters who take a very cynical view of taxes…that really took hold,” he said. That view was shared “by just about every subgroup of the electorate.”

If Proposition 15 had passed, the new tax assessments would have only applied to business properties.  

“Obviously that was a baldfaced lie,” said Catherine Bracy, director of the TechEquity Collaborative, who spent the last year lobbying Bay Area tech luminaries to support the campaign. 

In August, the opposing campaign went to court over the issue after the No campaign argued in its opposition statement in the state voter guide that the measure would allow the Legislature to hike taxes on homeowners. A judge ruled that the argument was “misleading if not outright false” and ordered the section nixed. 

But a week out from Election Day, Bracy also said that Prop. 15’s failure belies the popular image of California as a reliable bastion of left-leaning policy. 

“California isn’t nearly as progressive or liberal as people make it out to be. It’s a superficial, performative liberalism in many ways,” she said. “People love to have a ‘Black Lives Matter’ sign on their front lawn while opposing affordable housing in their neighborhood.”

The fate of Prop. 15 was one of many disappointments for California progressives. An attempt to repeal a statewide ban on affirmative action also failed, as did the labor-backed campaign to force gig-economy titans like Uber and Lyft to abide by state labor law. 

Daraka Larimore-Hall, vice chair of the state Democratic Party, is one of those disappointed progressives. “It sucks. There’s no way to sugar coat that,” he said.

But he too pointed to the narrow margin as reason to hope a future version of the campaign will succeed. In 2008, California voters passed Proposition 8, banning same-sex marriage by a 4-point margin and once again belying the state’s left-leaning reputation. 

“We got Prop. 8-ed on a bunch of measures this year,” he said. “But go find me the majority of voters now who are like, ‘no to gay marriage.’”

Why do we keep voting on this? Exploring Prop. 13’s ‘Tax Revolt Family Tree’

The tax revolt started in California in 1978, but it never really ended. Four decades ago mad-as-hell voters banded together to pass Proposition 13, capping property taxes, slapping a constitutional muzzle on state government and wringing local budgets like a washcloth. The electorate’s anti-tax fever may have broken in the years since, but the legacy […]

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Ben Christopher

Ben covers California politics and elections. Prior to that, he was a contributing writer for CalMatters reporting on the state's economy and budget. Based out of the San Francisco Bay Area, he has written...