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Health care groups dive into California property tax ballot fight, eyeing public health money

By Angela Hart, Kaiser Health News on

Published in Health & Fitness

SACRAMENTO, Calif. - A November ballot initiative to raise property taxes on big-business owners in California is drawing unconventional political support from health care power players and public health leaders.

They see Proposition 15 as a potential savior for chronically underfunded local health departments struggling to respond to the worst public health crisis in more than a century. The initiative would change California's property tax system to tax some commercial properties higher than residential properties, which backers say could generate billions to help local governments pay for critical public health infrastructure and staffing.

Without such additional state or federal funding, local governments could be forced to make deeper budget cuts in health and other departments next year as the COVID-19 pandemic continues to strain city and county finances.

"When you're talking about health care, you're talking about money," said Anthony Wright, executive director of Health Access California, a Sacramento-based consumer advocacy group. "This is the major revenue measure on the ballot this year, and it's an opportunity to fund public health at the place where the main responsibility for public health lies - at the county level."

At least that's how health care advocates are casting the tax hike. But there's no guarantee that if the measure passes counties would use new revenue to address COVID-19 or other health care needs. And some rural counties fear they would lose money if the ballot measure passes, which could undercut public health efforts.

Support within the health care and local government worlds is not unanimous. The powerful California Hospital Association opposes the measure because it would result in higher taxes on private and investor-owned hospitals, said spokesperson Jan Emerson-Shea. Nonprofit hospitals, including those run by Sutter Health, Kaiser Permanente and Dignity Health, are exempt from paying property taxes despite their regular high revenue. They would remain exempt under the initiative. (KHN, which produces California Healthline, is not affiliated with Kaiser Permanente.)

 

"This new tax will mean millions of dollars will be taken away from patient care, in perpetuity," Emerson-Shea said.

Proposition 15 would amend California's landmark 1978 property tax initiative, Proposition 13, which capped commercial and residential property tax rates at 1% of assessed value at the time of purchase, and limited annual increases thereafter to 2%. The drop in property taxes as a result of the initiative decimated a major revenue source for public schools and social welfare programs, leaving many underfunded.

Voters are now being asked to allow higher taxes for business owners with commercial holdings valued at more than $3 million. If passed, the measure could generate up to $11.5 billion a year, according to the nonpartisan state Legislative Analyst's Office. It would not apply to residential properties.

Forty percent of annual revenue would be distributed to K-12 schools and community colleges, with 60% sent to cities and counties. Nothing in the measure would require new local revenue to be spent on health care, but supporters say it's their best hope after losing $134 million in state public health money this year as one-time funding for specific programs expired. At the same time, slammed by a projected $54 billion deficit, Gov. Gavin Newsom and state lawmakers declined this year to increase funding for local health departments to combat COVID-19 and rebuild public health infrastructure.

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