SAN FRANCISCO -- Proposition 15, a ballot measure that seeks to increase commercial property taxes to fund education in California, failed Tuesday night, the Associated Press reports. See the latest election results in California and the Bay Area here.
Prop 15 would have amended the California constitution to allow commercial and industrial properties to be taxed at their market value rather than their purchase price.
What does this mean in practice? The proposition would have revised part of 1978's Prop 13, which requires all California properties (residential and commercial) to be taxed at their purchase price with an annual increase of 2% or inflation, whichever is lower. That means companies like Chevron and Disneyland are sitting on very valuable land, since their market value has gone up significantly since the year they purchased those parcels, but their tax rate hasn't gone up at the same rate.
RELATED: Results for all the California propositions here
Prop 15 hoped to change that and would have allowed those commercial properties to be taxed at market value.
This proposition would not have affected residential properties, like homes and apartments. Those still fall under the old Prop 13 rules.
There were also exceptions in this measure for properties zoned as commercial agriculture and smaller companies valued under $3 million.
The state was expected to raise an estimated $8 billion to $12.5 billion a year in new tax revenue. Of that new funding, 60% would have gone to local governments and 40% to school districts and community colleges.
The new rules would have been phased in over the next three years.