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November 3, 2020 Ballot <br /> <br />Page 1 of 3 <br /> <br /> <br />Proposition 15 <br />INCREASES FUNDING SOURCES FOR PUBLIC SCHOOLS, COMMUNITY <br />COLLEGES, AND LOCAL GOVERNMENT SERVICES BY CHANGING TAX <br />ASSESSMENT OF COMMERCIAL AND INDUSTRIAL PROPERTY. <br />INITIATIVE CONSTITUTIONAL AMENDMENT. <br /> <br />ANALYSIS OF MEASURE <br />Background <br />Local Governments Tax Property. California cities, counties, schools, and special districts (such as <br />a fire protection district) collect property taxes from property owners based on the value of their <br />property. Property taxes raise around $65 billion each year for these local governments. Overall, about <br />60 percent of property taxes go to cities, counties, and special districts. The other 40 percent goes to <br />schools and community colleges. These shares are different in different counties. <br />Property Includes Land, Buildings, Machinery, and Equipment. Property taxes apply to many <br />kinds of property. Land and buildings are taxed. Businesses also pay property taxes on most other <br />things they own. This includes equipment, machinery, computers, and furniture. We call these things <br />“business equipment.” <br />How Is a Property Tax Bill Calculated? Each property owner’s annual property tax bill is equal to <br />the taxable value of their property multiplied by their property tax rate. The typical property owner’s <br />property tax rate is 1.1 percent. <br />Taxable Value of Land and Buildings Is Based on Original Purchase Price. In the year a piece of <br />land or a building is purchased, its taxable value typically is its purchase price. Each year after that, the <br />property’s taxable value is adjusted for inflation by up to 2 percent. When a property is sold again, its <br />taxable value is reset to its new purchase price. The taxable value of most land and buildings is less <br />than what they could be sold for. This is because the price most properties could be sold for grows <br />faster than 2 percent per year. <br />Taxable Value of Business Equipment Is Based on How Much It Could Be Sold for. Unlike land <br />and buildings, business equipment is taxed based on how much it could be sold for today. <br />Counties Manage the Property Tax. County assessors determine the taxable value of property. <br />County tax collectors bill property owners. County auditors distribute tax revenue to local <br />governments. Statewide, counties spend about $800 million each year on these activities. <br />Proposal <br />Tax Commercial and Industrial Land and Buildings Based on How Much They Could Be Sold <br />for. The measure requires commercial and industrial (after this referred to simply as “commercial”) <br />land and buildings to be taxed based on how much they could be sold for instead of their original <br />149