Lenny Goldberg, who represents the California Tax Reform Association, praised the bill, which would alter the circumstances under which commercial property could be reassessed for tax purposes, as a "step forward."
"I get a little nervous sitting here with Rex Hime," Goldberg told the Assembly committee considering Assembly Bill 2372, referring to the president of the California Business Properties Association. "He and I have been at it for many, many years." Hime nodded in agreement.
However, when the bill, having passed the Assembly, reached the Senate Governance and Finance Committee on Wednesday, Goldberg pulled his support, saying in a letter to the measure's author, Assemblyman Tom Ammiano, D-San Francisco, that it "does not provide real reform" and would allow business owners to escape reassessment with "slightly more sophisticated steps."
Under current law, adopted after Proposition 13 passed in 1978, business property is reassessed only when it changes ownership in one transaction. Goldberg and other critics have argued that it allows business deals to be structured in ways that avoid reassessment, mostly by never having more than 50 percent to be changed in any one transaction.
AB 2372, hammered out in weeks of private negotiations, says that property can be revalued for taxation when 90 percent changes ownership in a three-year period. It's backed by many business organizations as a way of staving off a long-threatened ballot measure that would create a complete "split roll" that treats business and residential property differently for tax purposes.
"We supported it as a means of opening up the discussion which we have always sought," Goldberg said in an email after Wednesday's hearing and committee approval, "but not as meaningful reform.
"Our concern is that, like many bills in the legislature, it projects the image of reform, allowing business to say, 'we closed the loopholes,' rather than the substance, since it in effect grandfathers in the thousands of properties which have changed ownership without reassessment."
Goldberg complained in his letter to Ammiano that his bill's change should apply retroactively to previous transactions that met its qualifications for reassessment. He also complained about amendments on the Assembly floor made after the hearing at which he appeared with Hime.
Goldberg's pullback drives a wedge between him and Ammiano, who has also been a long-standing champion of changing tax assessments on business property. Whether the split is fatal will depend on what happens when the bill hits the Senate Appropriations Committee and, perhaps, the Senate floor.
Were it to fail in those two venues, back in the Assembly or at Gov. Jerry Brown's hands, the long-pending issue might, indeed, find its way onto the ballot in a split roll initiative.
In a related action, the Assembly Revenue and Tax Committee rejected another business property tax bill, one aimed at making it easier to impose higher parcel taxes on commercial property.
The measure, Senate Bill 1021, would allow local school districts to impose higher parcel taxes on business than it did on residential property. Under current law, parcel taxes must be equal amounts on each parcel regardless of size or value.
SB 1021, carried by Sen. Lois Wolk, D-Davis, won Senate approval but faced stiff opposition from theCalifornia Chamber of Commerce, which labeled it a "job killer," and other business groups, leading to rejection in the Assembly committee.
Wolk introduced the bill after a court ruled a differential parcel tax imposed by one school district to be illegal.
PHOTO: Lenny Goldberg is the executive director of the California Tax Reform Association. Photo courtesy of Lenny Goldberg
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