If California businesses find themselves looking down the barrel of a massive, multibillion-dollar tax increase next year, they can thank--of all curious things--a pair of wealthy Orange County land developers.
And what's more, the two Dana Point developers contend that such a tax bite is in the long-term best interests of businessmen throughout the state, even though business leaders believe strongly otherwise.
Campaign spending reports and interviews with the principals show that David Stein and his partner, Barry Brief, provided about 80% of the money used to gather signatures for the proposed "split-roll" business property-tax increase ballot proposition.
The initiative is sponsored by Voter Revolt, the activist group that became prominent with Proposition 103, its 1988 ballot proposal to roll back insurance rates.
The new measure would split the property tax roll into two parts. Business property taxes would more than double from 1% of assessed value to 2.2%. Residential property taxes would remain at 1%, although homeowners and renters would receive the equivalent of a $500-per-family tax break as part of the package.
Stein, 41, and Brief, 48, are in the top ranks of Orange County developers, best known for their 550-acre Monarch Beach project between Laguna Beach and Dana Point.
This property was among the last coastal tracts of Orange County to be developed. The partially completed project, some of which is independently owned, is composed of 2,500 homes, three hotels, a golf course, beach club and an offering of some of the choicest ocean-front lots in California--lots that sell for up to $3 million for 70 by 150 feet of beach front.
Currently, Stein and Brief are processing the plan to build a splashy, Dana Point corporate headquarters building designed by celebrated architect Helmut Jahn.
In an interview, Stein said he and Brief provided $385,000 to try to qualify the proposition for the 1990 election because anti-tax, short-term profit motives of businesses have led to vast deterioration of governmental services in California.
This, he said, means that business itself has soured the business climate in the state and now must make a "fair sacrifice" to rebuild it.
"Reversing the deterioration we see around us requires substantial investment," Stein warned.
"In the business world, the concern with next quarter's profit-and-loss statement, rather than with sound, long-term investment policy, has become a national mania and a national disgrace," he said.
Stein is a liberal activist and major backer of the 1988 presidential campaign of former Sen. Gary Hart. After that campaign, federal officials investigated Stein to see whether he exceeded or skirted contribution limits set by law. Nothing has come of the investigation to date, and Stein said he assumes that it is over.
Voter Revolt and its political strategist, Bill Zimmerman, submitted what they said were 842,119 signatures last month to qualify the property tax proposal for the ballot.
Officials will now determine if 594,485 of the signatures are valid. This number is needed to qualify it for a vote. Depending on how long the verification takes, the measure could wind up on either the June or November ballot.
Stein spoke in an interview just as campaign-contributor statements for the period ending Oct. 30 arrived in the secretary of state's office. He said he wanted a chance to explain in detail why developers would provide so much money to a cause that is not in their direct financial interest. In fact, he argued that since the Stein-Brief Group builds "mostly" non-residential properties, "it is adverse to our current business interests."
The campaign-spending reports list Stein-Brief's financial help as loans to the campaign. But Zimmerman said the chances of repayment are "all but nil," meaning that the money will later be accounted for as a direct contribution. When it comes to ballot propositions, there are no limits on individual or corporate donations under California law.
By one early estimate, the proposal would raise $8 billion in taxes the first year and increasing amounts each year thereafter.
Under the terms of the measure, about half of the proceeds would be returned to renters and homeowners. Then, $2 billion would be appropriated for housing programs for low- and middle-income Californians. Finally, whatever money is left over from the tax increase would be shared among local governments for general programs.
The state Chamber of Commerce, the California Farm Bureau Federation and a coalition of other allies, anticipating qualification of the proposition, formed an early opposition group. Opening statements indicated a fierce campaign.
"This initiative is not only an attack on businesses but an attack on consumers as well," said Kirk West, co-chair of the Taxpayers United campaign and president of the California Chamber of Commerce. "Consumers, local governments, small businesses--anyone who is a purchaser of goods and services--will feel the impact of this $8-billion property-tax increase through higher prices."
Stein and Brief are not the only high-flying bankrollers behind the qualification effort. Josh Mailman, whom the campaign described as a New York philanthropist and 1988 backer of Proposition 103, provided a loan of $50,000.
Besides these major contributions, Zimmerman said, Voter Revolt raised less than $65,000 in other small contributions. Most of the money that the organization raised in recent months, he said, was spent in the protracted fight over insurance reform promised by Proposition 103.