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Tree nut growers fear tax hikes from Prop. 15

The initiative’s critics argue it would create some $12 billion in new taxes. The UFW's Huerta supports the measure.

Lee Allen, Contributing Writer

October 23, 2020

4 Min Read
Prop. 15 on the Nov. 3 ballot
Proposition 15, a proposed constitutional amendment on the Nov. 3 ballot, would partially repeal California’s historic 1978 property tax reform law.Tim Hearden

Some things, like oil and water, don’t mix well. Same thing for politics and pistachios -- really not a good combination in this specific case.

The problem lies in a thing called Proposition 15, an initiative that growers say threatens agriculture in general, including tree nut growers, hullers, and processors.

“This proposed tax hike, the largest in California’s history, is the one thing I’ve seen in the last few years where ALL of agriculture is on the same page,” said Roger Isom, President/CEO of the Western Agricultural Processors Association in Fresno. 

“The industry is throwing everything we have against this,” he said. “We’re part of a coalition raising millions of dollars to fight it.”

Partial Prop. 13 rollback

“It” in this case is a proposed constitutional amendment on the Nov. 3 ballot that would require commercial and industrial properties to be taxed based on their market value rather than their purchase price, Ballotpedia explains.

The initiative would amount to a partial rollback of 1978’s Proposition 13, which set the property tax at 1% at the time of purchase and limited the annual adjustments to the rate of inflation or 2%, whichever is lower. The initiative applied to commercial and industrial properties as well as residential.

Related:Prop. 15’s property tax provisions prompt debate

Supporters of Prop. 15, which include United Farm Workers co-founder Dolores Huerta, argue that large companies like Disney and Chevron shouldn’t enjoy the same tax breaks as the retired homeowners for whom Prop. 13 was mainly intended.

While proponents say the new measure would exempt properties zoned for commercial agriculture, groups including the California Farm Bureau Federation, Western Growers and the Agricultural Council of California have been voicing their opposition.

The initiative’s critics within agriculture argue it would create some $12 billion in new taxes by eliminating the 1% cap on property taxes for businesses and that includes those in the agricultural chain. It would also trigger annual reassessments for fixtures, things like irrigation or solar systems, all the way down to permanent crop trees.

“It’s just one more added cost, and in this case a significant one, that our guys can’t handle on top of all the other escalating costs we have,” Isom said. “It would be the proverbial straw that broke the camel’s back in some cases because our guys can’t absorb it.

“I’ve talked to a couple of gins that say if it passes, they’ll have to close or start charging more,” he said. “If you take a small facility paying $50,000 in property taxes right now, increasing that bill to over $100,000 would seal their doom. For our guys, that’s more than the market. They can’t do it on top of all the other escalating costs they already have.”

Related:CFBF takes positions on California ballot measures

Grower fears ‘impact’

On the grower side is Jim Zion of Meridian Growers in Clovis: “I’m urging a 'no' vote on it because of its impact on our livelihood,” he said. “It’s the wrong solution and agriculture is getting caught up in it. They say family farms won’t be affected, well, the land may not, but everything else on that land will be considered an improvement and will get hit with an increase.

“We’re in the midst of building a new pistachio processing facility and we’re concerned about the impact that proposition might have on those plans,” he said. “And if they decide to go forward and start taxing trees and vines along with dairy barns and processing facilities at commercial rates, it’s going to get very ugly.”

Among many groups, the state Farm Bureau has expressed its opposition at the ballot initiative which would establish a split-roll property tax that would reassess and raise taxes on properties like agricultural facilities.

“Our farmers have enjoyed predictability via a 42-year-old decision (previous Proposition 13) that ensured stable annual taxes assessed on a property’s sales price that established value,” the group states. “Prop 15 is a replacement tax scheme that reassesses property at fair market value every three years…not just land, but improvements and fixtures right down to fruit and nut trees once they reach maturity.”

Writing for the Fresno County Farm Bureau, taxpayer advocate Ted Gaines noted: “Bad as it would be for the economy overall, split-roll takes special aim at the $50 billion state agriculture industry and would sweep across our farms and ranches like a wildfire.”

A ’pipe dream’

KSEE-TV in Fresno reported its County Assessor Paul Dictos as saying of Prop. 15: “It won’t work. It’s a pipe dream.” He added that reassessing properties at least once every three years under the measure would require an overhaul of his office.

“In the small counties, it will be bad,” he told the NBC affiliate. “The big counties will have a hard time retooling and getting the people to do the work. It takes five years for me to train a commercial appraiser.”

Dictos has contended Prop. 15 will make things worse by removing existing protections for California farmers who provide more than a third of the country’s vegetables and two thirds of its fruit and nuts.

“The state continues to look to industry, including agriculture, to solve its financial problems and pick up the costs of social programs,” said WAPA’s Isom. “With our costs going up and commodity prices static, where’s this going to go?  It’s scary.”

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