More California taxes

The superintendent, the teachers union president, and Los Angeles Mayor Eric Garcetti have all agreed as part of the strike-ending settlement to endorse the “California Schools and Communities First” ballot initiative.
That measure, for which proponents have submitted enough signatures to appear on the November 2020 ballot, would gut Proposition 13 and impose a split-roll property tax system on commercial property. If passed, a split roll property tax scheme would impose an estimated $11 billion annual tax increase on commercial property.
As Joel Fox aptly called it in a Sacramento Bee column – split roll “is a tax to fund public employee pensions and health care costs.” It also may not generate the revenue one might imagine. Fox writes that, “relying on commercial property tax in an era when brick and mortar buildings are facing the revolution of digital commerce is an additional mistake as some commercial property value could stagnate and retail business, already reeling, would take another hit.”

not in Fresno where about 30% of commercial property is unused or under utilized with churches, thrift chops and AA meeting housing constitute  our commercial property demand.  This is also a last stand issue, empty malls will become empty lots.  Retail entry jobs will collapse.

Look at reserve rtio

Commercial property vacancies run 15%, residential vacancies run 5%.  Those are fixed ratios in suburban California.  So commercial property values have to drop in price, as the consumer is not likely increasing its marginal spending.

The ratio is fixed, unless over taken by technology change.  As long as we have consumers making shopping trips, paying rent and driving to work; those ratios will be fixed.  What can change consumer technology? Packing them into denser housing projects so that the local store gets economies of scale.

The whole debate is about citizen's unable to pay for their government purchases, shifting the payment sequence around is simply shifting the collection method, but the whole consumer housing complex still pays the bill.

Nor am I convinced of the short term gains, home buyers and commercial developers have been playing this game for ages, matching home values to local shopping access. Once the likely outcome of the debate is known, both parties immediately change behavior to accommodate the required reserve ratio.  Local government may just get expensive turbulence, like Chicago today, any tax or spending change  will likely have more transaction costs than gain at this point.

California economists like it because hey need a short term injection, we are almost broke. So economists are perfectly willing to be deceptive about equilibrium conditions, do not listen to them. Listen to the reserve ratios, what is the stable relationship.  Economists will be fraudulent in this issue, from both sides.  Instead, ask yourself, how much do I rely on the local store and how much am I willing to change, perhaps doing more online.