CC Resolution No. 20-102 Supporting Proposition 15, Which Increases Funding for Public Schools, Community Colleges, and Local Government Services by Changing TRESOLUTION NO. 20‐102
A RESOLUTION OF THE CUPERTINO CITY COUNCIL
SUPPORTING PROPOSITION 15, WHICH INCREASES FUNDING FOR
PUBLIC SCHOOLS, COMMUNITY COLLEGES, AND LOCAL
GOVERNMENT SERVICES BY CHANGING TAX ASSESSMENT OF
COMMERCIAL AND INDUSTRIAL PROPERTY THROUGH AN
INITIATIVE CONSTITUTIONAL AMENDMENT
WHEREAS, California local governments—cities, counties, schools, and
special districts—levy property taxes on property owners based on the value of
their property. Taxed properties include real property—land and buildings—and
business personal property—machinery, computers, and office equipment.
Property taxes raise around $65 billion annually for local governments, about $2
billion of which is attributable to business personal property. Statewide, about 60
percent of property tax revenue is allocated to cities, counties, and special districts,
while the remaining 40 percent is allocated to schools and community colleges;
and
WHEREAS, County assessors determine the taxable value of property,
county tax collectors bill property owners, and county auditors distribute the
revenue among local governments. Statewide, county spending for property tax
administration exceeds $600 million each year; and
WHEREAS, Each property owner’s annual property tax bill is equal to the
taxable value of their property multiplied by their property tax rate. Property tax
rates are capped at 1 percent plus smaller voter‐approved rates to finance local
infrastructure. A property’s taxable value generally is based on its purchase price.
When a property is purchased, the county assessor assigns a value to the
property—often its purchase price. Each year thereafter, the property’s taxable
value increases by 2 percent or the rate of inflation, whichever is lower. This
process continues until the property is sold and again is taxed at its purchase price.
In most years, the market value of most properties grows faster than 2 percent per
year. As a result, under this system the taxable value of most properties is less than
their market value; and
WHEREAS, California levies a personal income tax (PIT) on the income of
state residents, as well as the income of nonresidents derived from California
sources. California also levies a corporation tax on the profits of corporations; and
Resolution No. 20‐102
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WHEREAS, State law allows property owners to deduct property tax
payments from their taxable income for the purposes of calculating PIT and
corporation tax payments. This reduces their tax bills; and
WHEREAS, The State Constitution requires the state to provide a minimum
amount of annual funding for schools and community colleges, known as the
“minimum guarantee.” The minimum guarantee tends to grow with the economy
and number of students; and
WHEREAS, A statewide initiative measure titled The California Schools
and Local Communities Funding Act of 2020 qualified for the November 3, 2020
ballot and will appear on the ballot as Proposition 15; and
WHEREAS, Proposition 15 increases funding for K‐12 public schools,
community colleges, and local governments by requiring that commercial and
industrial real property be taxed based on current market value. Exempts from
this change: residential properties; agricultural properties; and owners of
commercial and industrial properties with combined value of $3 million or less.
Increased education funding will supplement existing school funding guarantees.
Exempts small businesses from personal property tax; for other businesses,
exempts $500,000 worth of personal property; and
WHEREAS, The Legislative Analyst and Director of Finance summarized
the fiscal effects of Proposition 15 as follows: Net increase in annual property tax
revenues of $7.5 billion to $12 billion in most years, depending on the strength of
real estate markets. After backfilling state income tax losses related to the measure
and paying for county administrative costs, the remaining $6.5 billion to $11.5
billion would be allocated to schools (40 percent) and other local governments (60
percent); and
WHEREAS, a May 4, 2020 report by Blue Sky Consulting Group estimates
that the amount of additional property taxes from Proposition 15 for the City of
Cupertino would be $4,914,000 in the first year.
NOW, THEREFORE, BE IT RESOLVED that the City Council does hereby
support Proposition 15 on the November 3, 2020 ballot.
Resolution No. 20‐102
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PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 21 day of July, 2020, by the following vote:
Vote Members of the City Council
AYES: Scharf, Paul, Sinks, Willey
NOES: None
ABSENT: None
ABSTAIN: Chao
SIGNED:
__________________ ________
Steven Scharf, Mayor
City of Cupertino
_________________________
Date
ATTEST:
________________________________
Kirsten Squarcia, City Clerk
_________________________
Date
7/29/2020
7/29/2020