California state senators to propose overhaul of Prop. 13

Two Democratic state senators plan to introduce legislation Wednesday to overhaul Proposition 13, the state’s landmark restrictions on property taxes, so local governments can raise more revenue from commercial and industrial properties.

The measure would allow for regular reassessments of offices, factories and other buildings, ensuring that they are taxed at closer to current market value. Currently they’re reassessed only when there’s a change in ownership.

The change would not apply to residences or agricultural property, and there would be new tax breaks to help small businesses.

If approved by the Legislature, the measure would be placed on the ballot in November 2016. The measure is authored by Sens. Loni Hancock (D-Berkeley) and Holly Mitchell (D-Los Angeles), and is backed by the Make it Fair campaign, a coalition of unions and activists who have pushed for changes to Proposition 13.

Supporters say the change could raise $9 billion for schools and local governments, helping to reduce classroom sizes, hire more cops and patch potholes.

“I don’t think there’s anyone in California that can’t look around their local community and see how great the need is,” Mitchell said.

However, the senators and their supporters face an uphill climb to get the issue on the ballot.

First, it would require a two-thirds vote in the Legislature, which means it would need at least a handful of Republican votes.

Hancock said she and Mitchell would build support with “member-by-member conversations.”

She added: “That is the only way that we’re going to do it. This is a conversation that needs to happen.”

If the issue reaches the ballot, it could be an expensive campaign, pitting unions who desire additional government funding against businesses that fear extra taxes cutting into their bottom lines.

A recent poll from the Public Policy Institute of California found that 50% of likely voters supported the idea, down from 60% in January 2012. The poll was conducted by phone from May 17 through May 25. It included responses from 1,706 California residents and had a margin of sampling error of plus or minus 3.6 percentage points.

The controversial proposal would arrive less than a year after a narrower measure died in the Legislature. That bill, from Assembly members Tom Ammiano (D-San Francisco) and Raul Bocanegra (D-Pacoima), would have curbed the ability of businesses to divvy up property ownership in a manner that helps avoid tax reassessments when a building changes hands.

“It dealt with some very specific abuses,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which is named after the activist behind Proposition 13. The new measure being pushed by Hancock and Mitchell is “way, way beyond that,” and the group would oppose it.

If the measure isn’t approved by the Legislature, supporters could still collect petition signatures to place it on the ballot.

“I would certainly hope that the groups that are supporting this would stand up to the plate and do that,” Hancock said.

chris.megerian@latimes.com

Twitter: @chrismegerian