Today’s episode of Property Management Brainstorm helps navigate a new proposed California state tax. If you are not aware of the California Split Roll Measure, you will certainly hear more as 2020 draws closer. Former California state senate member and local San Diego politician, Joel Anderson, is an expert on this topic and joins Bob to provide great insights into the proposed measure on this episode. Be sure to listen. For more information about Joel Anderson, click on this link to the Joel Anderson’s website. This episode is always available for listening, sharing, or download at Property Management Brainstorm.
Outline of This Episode
- [2:29] Who Joel is and his history
- [4:14] What is Proposition 13
- [5:45] California Schools and Local Funding Act of 2018
- [7:00] Who is behind it and why it is being proposed
- [9:00] The opposition
- [11:34] Joel’s position
- [14:25] How this legislation could impact the overall economy
- [19:40] What happened to the state lottery funds?
- [24:34] Is this a step to a similar change on residential property tax?
- [27:51] The ability of the state to handle this
- [34:24] Joel’s closing thoughts
Who is Joel Anderson?
Joel Anderson previously represented the 38th senate district and is a member of the American Legislative Exchange Council serving the state of California as a leader. He recently announced that he will be running for the San Diego Board of Supervisors in 2020. The Board of Supervisors addresses quality of life issues for those living in San Diego. He believes that government should be effective, efficient and accountable in its actions. Joel believes that California has failed to deliver on housing and career opportunities, which is causing baby boomers to exit the state and making it so that millennials cannot afford to stay either. Be sure to listen as he explains the new California state tax known as the California Split Roll Measure, why he is against it, and how it may affect California’s economy!
California state tax: Proposition 13
Proposition 13 was legislature introduced during the 1970s during California’s massive growth. It was enacted to help protect those who had purchased homes as well as help the government. When someone purchases or builds a home, it allows a 1% assessment of market value and up to a 2% assessment every year after that. It also said that if you are a local government and want to raise taxes, you need a supermajority of â votes to pass this tax. It kept the government from spending out of control and it also made life in California more predictable for homeowners and government alike on tax revenue.
The California Schools and Local Funding Act of 2018
The California Schools and Local Funding Act of 2018, also known as the California Split Roll Measure, says that corporations and businesses are not paying their fair share. In the past, all properties have been assessed the same.
Bob Preston: 01:10 Welcome, welcome, welcome to the Property Management Brainstorm Podcast I’m Bob Preston, the host of the show, broadcasting from our studio at North County Property Group in Del Mar, California. This is going to be an important podcast today. Not that the others aren’t, but this one in particular because we are dipping our toe into the water of California state politics. If you're not aware of this already, you'll be hearing a lot about uh, more about this as we head into the election time in 2020 as there was a state of California proposal that will be on the ballot and that year 2020 that many refer to as a California Split Role Measure. And I have with me today a former member of the California state senate and a local San Diego politician, Joel Anderson, who is an expert on this topic and will provide us an advance with a lot of great insights. Joel previously represented the 38th Senate district. He's a member of the American Legislative Exchange Council serving the state of California as a leader and last month announced he will be running for the San Diego County Board of Supervisors. Thank you for joining us Joel.
Joel Anderson: 02:18 It's my pleasure to be here.
Bob Preston: 02:19 Great to have you here. And I gave a really brief intro to your background. Probably didn't do it justice. And so maybe you can take a few minutes and expand on that and tell us more about yourself.
Joel Anderson: 02:28 Sure. My wife Kate and I been married 30 years actually, this is our 31st and uh, we have three children, all adults. I grew up for 16 years in Michigan and I finished high school here in San Diego and there's no way I'm leaving. So, I have variety, I'm up for the fight and I want to make sure that we get what we deserve. And we work awfully hard with paying taxes, electing people. They make promises and they need to keep them.
Bob Preston: 02:53 Great. So, you'll be running for the San Diego County Board of Supervisors. I can't let you go without asking you. I mean, what would that entail and when is the election?
Joel Anderson: 03:00 Well, the Board of Supervisors weirdly addressed the quality of life issues. It's your housing, it's transportation, it's parks, libraries, all those types of things, homeless, mental illness, all those things are addressed by the Board of Supervisors. This primary election comes up March 2020, which is just what a stone throw from here. Right. And look, I believe in an effective, efficient and accountable government. And I think that we need more transparency. I think that, uh, when we think in terms of the people we know, Bob, I don't know your age, but I think we're probably close in age. Yup. I checked yours were about the same age. So, the part that bothers me most is over the last couple of years, every time I talk to friends, they have to visit their grand-kids in Arizona because our county failed to deliver on housing and career opportunities. And I just want our kids to grow up with the same opportunities that we had growing up here.
Bob Preston: 03:52 Yes. I mean a lot of baby boomers are exiting the state as they retire and then a lot of the millennial's just can't afford to live here. So, it's an interesting, you know, I can't wait to hear more about it, Joel, and, and listen to you on the campaign trail. That'll be really fun. Okay, so let's dive into the subject today. And you know the California split role measure, that's basically what it's called. I think there's an official name we'll get to here in a minute. But setting the stage properly for this discussion dates back to 1975 I believe it or not, and the implementation of what I'm sure everybody remembers and knows about called Proposition 13 maybe you can give us a quick review of, you know, what that was, what it does for us even today and why that was important for California property owners.
Joel Anderson: 04:31 Well, California hasn't changed much. Even back in the 70s the growth was enormous as far as the cost of housing as it was increasing in the cost of renting businesses. So, what we had a, we had a lot of seniors who would purchase a home and they're, they're literally, their taxes would be doubling every year. And so, what we looked at is a way to protect them and also make it a predictable revenue source for local government. So, what Prop 13 essentially did was it said when you purchased a home or built a home, there'd be a 1% assessment on the market value. And then up to 2% assessment every year after that. It also said that if you're a local government and you wanted to raise taxes or if you're the state legislature and you wanted to raise taxes as you needed a super majority, a two thirds vote in order to pass that tax. And that was just to keep government from spinning out of control.
Bob Preston: 05:24 Okay. So, I get it. So, it made um, life in California more predictable for not only us as homeowners, but also for the state government in terms of tax revenue. Is that kind of the notion of it?
Joel Anderson: 05:36 You got it.
Bob Preston: 05:37 Okay. So, this new split role measure, and I believe, correct me if I'm wrong, but I believe the official name is the California Schools and Local Communities Funding Act of 2018 is that, yes, it is. Okay, good. Okay, I got that right. So, can you tell us a bit about what it is, is being proposed under this measure?
Joel Anderson: 05:52 Well, the split role says that corporations and big business aren't their fair share because under Prop 13 all property is assessed the same way, including commercial property. And agriculture, everything property out there is assessed the 1% and then 2% each additional year. And what this does is it frees it up so that commercial and industrial properties, every three years we'll have a reevaluation at market value. So, you, you own a property, somebody moves in next to you, it increases the value of your property. You could see your taxes a double.
Bob Preston: 06:28 Okay. As an owner of that commercial. Correct? Correct. I got it. All right. So full disclosure here, you're on the opposition side of the split role measure and we'll get back to that here in a minute.
Joel Anderson: 06:39 I prefer to think of the side of the people.
Bob Preston: 06:40 Yeah. Right. Okay. And I want to hear more about that obviously, and we will, but in the spirit of being educational and neutral here for a moment, and by the way, I'm going to remain Switzerland if that's okay with you, but I would love to hear you confirm some of the basic concepts. Is that sound okay?
Joel Anderson: 06:55 Sure. Absolutely.
Bob Preston: 06:56 All right. So, who is behind the split role and why has this been proposed? I mean, if you can sort of put on your bipartisan hat here for a minute.
Joel Anderson: 07:04 Well, having served in the legislature, I can tell you that the super majority of which I'd never served, they have a quench thirst for taxes that cannot be quenched under any circumstances. We've seen our gas tax go up, we've been promised roads and yet roads have not been built. Now we're finding out there's going to be more bike lanes and trolleys. We've seen our income tax go up, we've seen every tax out there go up and then additional fees and our budget over the last decade has gone from 86 billion to over 130 billion, almost doubling in that time frame. Yet I don't believe that any Californians have seen their wages double and yet that's still not enough to fund our schools. And so, their purpose is to say 40% of this money after the cost of collecting it will go back to schools just like they did when we had the lottery. Okay. For money was going to go to schools.
Bob Preston: 07:58 Right. Okay. Well, so who is it though? Who is they? I understand the League of Women Voters, um, social justice groups like the Alliance of California's for Community Empowerment. I don't even know who these people really are. So maybe.
Joel Anderson: 08:11 Well the groups who are supporting are all special interest unions, social justice, environmental justice, progressive groups. Most of it are people that are going to directly benefit from this additional revenue. So, they're going to see an increase in their salaries, they're going to see an increase in the number of jobs. And I'm not saying that job growth is a bad thing, I'm just thinking that there are more productive ways of accomplishing that job growth. That doesn't have to come from my back pocket against my will.
Bob Preston: 08:36 Sure. Okay, that makes a lot of sense. And thanks for clarifying all that. I read a summary of the kind of proponent’s side that says, uh, claims at 11.4 billion will be raised for state and local governments with about 4.5 billion going to schools. On the flip side, who are the primary opponents, who's, who's not for this and who's, you know, kind of fighting it.
Joel Anderson: 08:58 So naturally people that own commercial or industrial property are upset with it, but small businesses are upset too in, in, what's interesting Bob, is that the proponents say that this is going to help small businesses because they're going to be exempt from it. And it also says they won't have to pay property taxes, which are taxes on your desks, computers, all the things I have inside their building and only the big guys are going to have to pay so level, the playing field. But I think that if you look at history, every time there's an increase that sign incorporation, like every time there's an increase in the cost of power, it gets passed on from the power companies to us. Every time your commercial building owner has to pay more in taxes, he's not absorbing it. It's getting passed on to those small businesses and they're absorbing it or they're passing it on to you, the consumer. So those are the folks that are opposing it along with Howard Jarvis Taxpayers Association. Which group was started by Howard Jarvis of Prop 13.
Bob Preston: 09:59 Okay, so you're right. I mean I lease our office space here in this building where we are today. And if the owners of this building, if their taxes were to go up because of this measure, they're not going to just absorb that. And this is in a pretty high rent area. So, the property taxes could potentially go up every three years is what you're saying.
Joel Anderson: 10:19 And there's no limit to the amount that he go up. So, it could be an awful lot. Now I don't want to get personal, but are you triple net or gross? Because there are some people out there that are triple net and that means that these are pass through and you automatically, it goes directly to you.
Bob Preston: 10:33 No, I'm, I'm gross. But there are provisions for special increases if you know something like this might happen. So.
Joel Anderson: 10:43 So really then what we're coming to is, despite all the people that aren't paying the tax, they're the ones that are saying that the small guy won't pay the small business won't. When I think that we all know that if you've ever had a rent, you had to look at whether it was triple net or gross in whether it was a provision to pass on those types of costs. And I think that every small business, if they're renting space from a large corporation or from, uh, uh, industrial property, they're going to be paying those taxes.
Bob Preston: 11:10 Well, even if they're currently were to be frozen, if you will, or are they, you know, with the, when they go down to every time to renew their lease, they're going to be in for a big shock because very likely there their rent rate would go up substantially. Okay. Hey, you've been a great a citizen here, like kind of going along, playing Switzerland for a minute. So, go for it. Feel free to expand on this. Bring us up to speed with your position and why you believe in that position.
Joel Anderson: 11:34 Well, I already spoke about how the revenue to our state has increased every year. I served in the legislature over the last 10 years. Our revenue had unexpected revenue that came in. That means that we projected taxes off of our tax roll and we exceeded those taxes. The lowest year was 2 billion, I think this year it's over 20 billion in additional revenue. And yet this measure is only talking about $11 billion in, that hasn't taken into the account of the cost of collecting it. This is just gross numbers. It's not net numbers. So, we don't know what that number truly is going to be. When I read all the studies and looked at it, it doesn't take in any account for businesses that close or move. And look, it's really easy. It's simple to figure this out. Businesses cannot continue to operate at a loss. They can only operate at a profit. So, when people talk about, well I don't know, maybe they'll stick around, they won't stick around if every year that can't predict the cost of doing business. And so, one of the biggest issues with taxes as you get them at the end of the year and you may not be able to anticipate what that total cost is going to be, you'll see. When I first got elected to the legislature, one of my colleagues said, hey, let's go out of state and let's meet with businesses that left for California and find out why they left. I thought it was a dumb idea. Uh, they left because we have such a horrible environment. But I went along for the, for the ride and I was shocked.
Bob Preston: 13:03 What did your here out of curiosity?
Joel Anderson: 13:05 First of all, there were more people that wanted to testify then we had time because they didn't leave cause they wanted to. They were forced started the state. The number one issue wasn't our high taxes. He was the unpredictability of our regulation. And now under this initiative, this proposition, we're going to add unpredictability to the tax base. Because when you, after you do the course of the year, your assessor could come back in three years and assessed your whole new taxes that are unanticipated that you have no way to pay. Essentially if you have a 10 or 15% margin of profit that could erode the whole amount of putting you out of business or even putting you upside down.
Bob Preston: 13:45 Absolutely. So, you know, one of the interesting things of this measure, we talked about it being split role and focused on commercial properties, which essentially exempts residential homeowners, right? So, a lot of the listeners to this show are likely residential homeowners and investors with properties that are, that are rentals. But I mean actually what you're saying is that if local businesses had to move or go out of business, that's not good for the consumer economy either. Right? I mean prices could go up at the retail and all the places they shop, I mean overall that's not good for kind of the overall economy. Has anyone looked at that and what that might, how that might impact the overall economy?
Joel Anderson: 14:24 There were some studies I went on the web and checked it out with the studies that are old, so, okay, I wouldn't want to quote something from 2014 or 15 but I think it's just good common sense. We've had an increase in labor, minimum wage going up. Sure, we've had an increase in regulation and now we're going to increase the taxes every time you do any of those measures. Some businesses close, we've seen that on the streets that some businesses have closed, and others say, well, that's okay because that makes more room for new businesses. Well, the new business is going to come in and they're going to charge more. And they may not. You know, for the first time ever we see at McDonald's automation, many of the McDonald's now have kiosks and they have narrowed it down to one employee at the counter instead of the 10 employees that they had. And that means nine people no longer have jobs and a job is a job. I think that if a person's employed, if they get up in the morning and they go to work, that's a good thing. And I'm not going to put down with that job is some people would say, well, it's just a McDonald's job. I don't care. It's an entry level to the market.
Bob Preston: 15:28 My first job when I was a teenager. Yes. Where it was, it was McDonald's. So, I've, my kids get a kick out of that, you know, I always tell them all, my first job when I was 15, I worked behind the counter.
Joel Anderson: 15:38 Thirty years ago in college I wrote up a paper on McDonald's and 20% of all employees in the United States worked for McDonald’s.
Bob Preston: 15:47 Oh, that's funny. Yeah, I bet there are some pretty successful people do in that.
Joel Anderson: 15:51 Oh, I’m sure. But it begs the question though, do we need this additional revenue? So, this year we have a $20 billion surplus we've seen over the last 10 years surplus after surplus. And yet the super majority in Sacramento has chosen not to fund our schools. So, this isn't about cash flow. This is about extortion, extorting more money from, from taxpayers because they all want their kids to get a good education. Sure. And if you look at prop 13 alone, and you were to say from 78 to 2018 you would see that the revenue increase in the taxes from prop 13 alone was 6.9% overall. And yet if you looked at the wages of Californians during that same time frame, they only saw increase in their wages by 6.1% so this tax under its current status is still out pacing revenue to ordinary citizens. So how much more should we have to pay to get what we were promised year after year when they've had extra?
Bob Preston: 16:53 Well you brought up a couple of really interesting points and I uh, before we move on, I kind of want to circle back and ask about them a little bit more. So, on the tax front, I mean, California's already faced some of the steepest taxes in the country, right? I mean we pay the highest income and state taxes, I believe among the highest, if not the, and the cost of living here. Is it a record level? Probably the highest in the nation if you kind of spread across the entire state. I know there are lots of micro economies. Tax on gas is now, you know, a lot higher since 2017 utility rates and go on and on and on. But I mean, this notion of cost of living and the overall taxation rate in the state of California, that has to come into play with some of the opinions you're speaking on today, right?
Joel Anderson: 17:35 Absolutely. Yeah. You know, the timing could not be worse. And frequently they like to go state to state comparisons and they'll say that we'll, our gas tax isn't the highest, but states that have higher gas may not have a sales tax. Yeah. So, when we're looking at this, you really need to look at the overall picture. We have the highest or second highest gas income sales tax, and we pay 48% more for the same electricity as other parts of the nation receive. So, when you're looking at are we bleeding? We’re gushing blood. If a blood cell was taxes were gushing blood. So, you have to ask yourself, at what point do we ask for effective, efficient, and accountable government? At what point do we say with these taxes, by the way, this initiative does not tell you there's no cap on how much can you increase every three years and there's no limit on them coming back annually. It says three years, they're mandated to do it, but your assessor could come back annually. So that's built in.
Bob Preston: 18:39 Yeah, all of a sudden we have a robust, you know, real estate market and things go up more than kind of the nominal five to 7%. I mean the, the assessor could come back around.
Joel Anderson: 18:47 Well, who needs to raise? Yeah, I mean, uh, that's what it really comes down to. If I, if I can get more money, that means more raises for everybody. So, you have that issue and then there's no accountability how the money is spent. So, this money face states can go to education, but is it really going to go to education?
Bob Preston: 19:03 Well, that's a good segue if you don't mind me cutting in here. So, because you, you mentioned the lottery earlier and look, I've had four children go through the state of California school system for which I'm incredibly grateful. So, I'm all about funding and keeping our schools, you know, properly equipped with whatever, uh, you know, good teachers, all that. But what about the California state lottery? I mean, I may remember back when that passed, we were all promised, oh, this is going to save our school system and where, what happened to that money, you know?
Joel Anderson: 19:28 Right, right. So, before I got elected, I felt the same way. So as soon as I got up there, I did a lot of inquiry in what I learned was every time that there's a special assessment when Jerry Brown had a special assessment for the taxes and that all these taxes are going to do, go to our colleges and universities is going to be a huge boost. No, these schools are funded from our General Fund and when we earmark another source of those funding’s, they withdraw the money that was there. So, it's net neutral and they're keeping the word the lottery money is going there, but.
Bob Preston: 20:03 But funding from other sources within the reduced being reduced. Interesting.
Joel Anderson: 20:07 So your net neutral overall, and you know that the other part that gets me is over a five year period when I was in the legislature, the, the, the UC’s, we're looking at more increases, increase in tuition. They had a huge tuition spiking in, there's been so many of them, it gets kind of confused. But I went back, and I just did a little quick research and over that five-year period there was a 16% increase in the number of new students. And so, there's a tremendous deed. But what I also learned was there as a 220% increase in administrators, not professors, administrators. Now I could see a 16% increase in administrators to handle the new volume, but 220% look, uh, when you compare the art colleges and universities, they produce an incredible product, but at a cost, that’s at two or three times the cost of educators in other states.
Bob Preston: 21:01 So is the increase in tuition at the UC or state schools, is that, is that kind of that sort of exorbitant rates that people we hear about starting to pay in tuition? Is that more aligned with supporting this level of administrators and kind of, I don't know. You're describing a service bureaucracy within the UC system.
Joel Anderson: 21:14 There's no oversight, there's no accountability and when you look at the big numbers and what people like to do, so they like to get down in the minutiae and then confuse you if you take the total number. I did this with Caltrans. 10 years ago I was really upset with Caltrans because we weren't building any roads, nothing but excuse, excuse after excuse and boondoggle after boondoggle, so I took the total number of Caltrans employees from year to year generates between 20 and 22,000 and I divided by the total amount of wages and benefits that the employees received. The average was 104,000 now I said it was over a hundred because I knew the sac bee would want to fact check me. I'd get a second bite at that apple short. Them having to print that I was actually correct. But when you thought about it, the average Californian was making less than 50,000. Now I'm not saying that everybody out there holding a sign is making 104,000 but there's a lot of people, in fact, there were 2000 employees at Caltrans that hadn't had an assignment over three years. So, they're literally sitting at their desk reading newspapers and those are the costs. That's what's ripping it up. So, when we look at more revenue, I'm not sure that that's the answer, rather than focusing on accountability in making sure that people get what they deserve from government.
Bob Preston: 22:34 So you've mentioned governor Brown and, and uh, what's going on there in Sacramento? What about Governor Newsom? Gavin Newsom, where does he stand on this? Has he yet to release in a position?
Joel Anderson: 22:44 Well, he's put his foot on both sides of the aisle. Newsom is a very interesting guy by the way. I don't think that this would have passed. And Governor Brown was an early and consistent support on prop 13. Uh, I really enjoyed working with Governor Brown.
Bob Preston: 22:58 That’s true because he was very much involved during that period of California politics when the, when it passed, right?
Joel Anderson: 23:03 Oh, absolutely. As soon as he saw that more than 50% of Californians really liked the idea he was on board with both feet. We changed the process. The super majority changed the process of initiatives and every initiative, once it's qualified has to go through the legislature and it's scrutinized and people, they can't stop it from moving, but it's an opportunity for negotiation. Governor Newsom is looking to use that process to negotiate a deal that businesses can support, and they get additional revenue. I don't know how you do that. I think that's like saying I'm a little pregnant. I think that shouldn't you break down prop 13, the dominoes start clicking in. It's not long before we go after grandma's house. Until you control how you spend the money, you'll never going to have enough money to spend. And we've seen that over this last decade of the revenues increasing dramatically to the state. And yet we have failed our schools were failed our roads. We failed on so many levels. And that all has to do with accountability.
Bob Preston: 24:05 That's interesting that you know, because right. I mean there's lots of problems in California and infrastructures, one of them. You sort of mentioned grandma's house here. So right now the split role measure exempts residential property and this is all conjecture, but some of the opponents of the measure, they kind of go out on a limb and suggest that this, this measure, if it passes, the sponsors may use it as kind of a stepping stone to then expand this type of taxation on to residential property. I mean, I know you're not, you don't have a crystal ball, but what are, what are your thoughts about that?
Joel Anderson: 24:38 Well, the arguments are the same arguments, you know? Uh, so somebody buys their home in 1970 it be a hundred grand and maybe their taxes are a $1000, $2,000 a year. Somebody buys the home next to him it happens to be one of these lots that have beautiful views. And so, they put up a mega mansion in there and all of a sudden, their taxes are 10,000 a month. Right. And there's say happens along the coast here and San Diego for sure. That’s not fair cause the guy next to me, he's only paying two grand. How can that be fair? We both have the same size lot. Well the fairness is all the pipes, all the infrastructure was paid for in the 70's, so you really haven't paid in your fair share to level it out. And not only that, but if I buy a home and I pay it off, should I be forced out of my house with unpredictable taxes? So, a couple of years ago, I've lived in my same home for 30 years and I love it. I love, I live in Alpine. It's a great community. I've raised my kids there. It's just a wonderful community. Probably looked at possibly moving, that move then would quadruple my taxes and my taxes would've been higher than my original house payment without taxes. So, I can see how it stops you from making moves. But the problem isn't that we're not taxing enough. I think we should be looking at why are we taxing so much and why do the taxes have to be as high as they are. And you know, you saw from the numbers I shared with you earlier that prop 13 is a 6.9 year over year increase over that decade. So, we're not losing money. It's still appreciating. So why do we need all this extra money, especially when we've seen for the last decade, banner years in tax revenue unanticipated to the state?
Bob Preston: 26:23 Well, it's interesting because I live in a very mixed kind of neighborhood. There are a lot of people that have been there for 30-40 years. Some have inherited homes from their mother and father living here along the coast. And then we also have tear down, right? Lots where people have come in, bought an older home, torn it down, build a mansion. We have some lots where bought two lots and old houses, torn them both down and then, you know, kind of build your mega mansion. So if, I mean if the taxes were to go up and uh, you know, some sort of huge rate for all the residents in my neighborhood in including the older people who are retired across the street, I'm we to them out of the neighborhood, they couldn't stay in there. Right. And that's not fair.
Joel Anderson: 27:03 The other part is, yeah, anticipation. We talked about this earlier. If I know what the cost is, I can make a decision upfront whether I want to pay it or not. In my case, I chose not to move because I didn't want to pay it because I thought that extra five or 10 grand, I could use in other ways to enhance my life rather than moving homes. For those people on fixed incomes, you worked hard, you played by the rules and now these greedy people want to force you out of your home just so that they can get raises. And I don't think that's right.
Bob Preston: 27:34 You mentioned it earlier too, that the state's ability to properly kind of handle this workload if we started appraising commercial properties and assess them every year. I mean, do we have the infrastructure today, have trained appraisers to do that for the state? That seems like that's going to be a lot of work and we're not really ready for that. What's your?
Joel Anderson: 27:54 So there's 58 county assessors and there's the Board of Equalization and according to the Board of Equalization and the county assessors, they'll need a minimum of 900 new positions if it's on a three year cycle, they may need more than that if it's on an annual cycle. And remember once you start down this road, it's a mandatory three-year cycle, but it could be annual cause there's no caps on anything. They can do it sooner and there's no cap on how much it is. The second thing is they said that they thought that the cost would be a from 517 million to 639 million in the first year and then it would go up accordingly once they figured out what the true need was. You know, so when they're talking about $11 billion, well that's true, but you may lose $1 billion in collecting that. Plus, you get somebody in there, they're not trained on the assessment cause right now the assessments are very smooth and easy. But now you're talking about a free market open assessment. We don't have, I mean 900 new people will have to be trained. Let's say a 1% nine people make mistakes. That's going to fill our court system with people suing.
Bob Preston: 29:05 I was just going to say, because you'd have protests in there if the assessment, you know, the owner of didn't believe the assessment was accurate and uh, it just seems like it's kind of, it would take a long time to implement properly.
Joel Anderson: 29:17 Our court systems are a disaster today. If you get a court time, it's like the DMV, it takes forever. So now we're going to fill it up with more cases. When you look at this, you have to look at the ripple effects and are we prepared to handle all this in a year where we have over a $20 billion surplus in revenue to the state?
Bob Preston: 29:39 Yeah. A very, very interesting, I mean it's a lot of interesting points on both sides of this equation. So, you probably track some polls on this issue or are there people being pulled yet and kind of what's the response out in the, you know, among voters?
Joel Anderson: 29:51 Every one of these propositions is one side says it's a cup half full and the other side says it's a cup half empty. So when they put the initiative on the ballot and they're collecting the signatures, they talk about how this is closing corporate loopholes that these people have unfair advantages as if that money's all going to the owner when right now that additional costs could be in most likely will be passed on to the renters. So, when you're looking at that, they collected the signatures without any problem. If you say, I want to do something that hurts politicians or hurts corporations or hurts utilities, everybody wants to sign up because everybody thinks that they're all horrible. People stick it to the man kind of. Yeah man. Absolutely. But when push comes to shove and people start getting educated and they start to realize, well, wait a minute, wait, and that person is going to pass this cost through and all I'm doing is taxing myself and I may actually even cost people jobs. Well then that changes everything.
Bob Preston: 30:56 Absolutely. Okay. That's interesting because I mean, as a voter of myself, obviously I'm not an economist, but I suppose the biggest question for me when I determine which way I'll cast my vote is what the net effect and impact will be on our state economy overall. Kind of from a macro perspective. And then also I have to, I have to think about how it might impact me and if there's a lot of uncertainty in that, then, you know, I'm not sure, uh, you know, it'll be interesting to see what happens. I'm sure much more we'll out on this and then, and the next year or two.
Joel Anderson: 31:25 And these are really difficult things, uh, to measure, right? We can, we can anticipate the way it's going to be, but we don't know for a fact that businesses are going to leave town that maybe they'll stay. Maybe they'll pass it on. Maybe consumers will be happy to pay it. I mean we saw that with surcharges on gas where restaurants were saying, hey, it's going to be, our costs have gone up for electricity and other items, so we have a 10% surcharge on you. And people still went to some of those restaurants. Some of the restaurants went defunct, but others stayed in business. So, I don't know what that predictability is. That's why my focus in why I don't support it is this is filling a need for what, we have had a huge revenue increase over the last 10 years. Even the prop 13 revenue has outpaced wages. So, what are we trying to fix here other than to be greedy? The real problem is politicians who can't keep their work, politicians who promise to fix our schools. And then when we pass the lottery and past other taxes, they under fund from the General Fund what they used to fund. And it's a net neutral. I think that our focus, if this was truly going to be a helpful proposition, it would be focusing on keeping politicians accountable and making sure that when we pay for the gas tax and gas tax was supposed to go to building roads, get only 26% of the money could be used for roads. All the rest of money was going elsewhere. Only 26% may be used on roads.
Bob Preston: 32:53 Wow. Interesting. I mean something's got to give and I know Governor Newsom had his hands full with all those, you know, moving forward.
Joel Anderson: 33:00 Bob, just think about locally here, you know, San Diego came out recently and said, uh, they're not going to build any new roads. They pass bonds, promising us new roads, new infrastructure and now we're going to have grand trolley station. You know, trolleys in trains are old technology. They're linear. You can only go from A to B. Here we are with some of the smartest minds coming out of our colleges and universities and were chastising automated cars, automated green cars, and they can't use any of those tracks. And yet they could pick us up at her house, drop us off at the grocery store, we could fill their trunk with our groceries. We wouldn't have to carry him on a train or worry about being mugged. And yet they're going to put billions upon billions of dollars on infrastructure that only makes the labor unions happy cause they're the only ones that benefit from it. And I want to invest in new technologies, I want to invest in the future, not the past. And so, I'm a big proponent for uh, helping our infrastructure out, increasing our roads and bringing automation.
Bob Preston: 34:02 Yeah. Well God, this is super, this has been super interesting. I could go on all day talking to you Joel. It is Memorial Day. Joel and I came in here on our days off here to record this. And so, we need to wrap up here in the interest of time for the show and also get back home to our families. But kind of in wrapping this up, do you have any closing concepts or topics or anything kind of in, and finally you'd like to say on this?
Joel Anderson: 34:23 Well, Bob, I, first of all, I just want to tell you how much I appreciate being invited on the show. I mean, taking on these tough issues and having in depth conversations. You know, when you listen to, to the press that the hard part is, it's all soundbites and they're not truthful. We really burrow down today on both sides of the issue and looked at some of the pluses and minuses and I hope that when people go to vote they investigate it. You know, Memorial Day, I went to a ceremony this morning to remember those that have given their life, for our liberty and I talked to Californians who won't give their liberty one day a year to investigate who they vote for. They spent more time investigating their next car, then their next president or governor or status state legislator, we owe it to the people who've given their lives in liberty, for our liberty to invest at least one day a year to make sure that we elect the right people.
Bob Preston: 35:18 Well, so on this particular topic, where can people go if they want to learn more? Do you have some reference points that you could give the audience?
Joel Anderson: 35:25 Sure. This issue is super-hot, so if you just Google it, it pops up like crazy.
Bob Preston: 35:29 And what should they google? Split role measure something like this.
Joel Anderson: 35:32 Split Roll will give you a lot of history because they split role taxation, California or schools and community first, which is the advocate and they have a lot of stuff. And it's interesting because as they present their arguments, I always like to put in the argument and then oppose and see who pops up. And Howard Jarvis Taxpayers Association, their website has a whole bunch of information and whatever they say, I'd like to put it in and put a pose. And I like to read both sides because you know, uh, truth isn't, sometimes the truth is a little more difficult to dig up than just a soundbite.
Bob Preston: 36:04 I like what you said earlier because I mean I think it's on us as California voters to really truly investigate this stuff and study both sides so you can reach your own determination of how you want to vote on this order.
Joel Anderson: 36:15 Bob, if people want to know more about me, they type in andersonforsupervisor2020.com. That's my website and I'd love to meet you personally and shake your hand.
Bob Preston: 36:25 Well God I can't wait to hear you on the campaign trail. You've got some great ideas in as part that you mentioned about kind of making life great for people who live here in San Diego County. I mean I'm, I'm all for that. So uh, I'll be listening closely and uh, we'll be tracking your campaign and your candidacy. So good luck in that and I hope to hear good things from you moving forward on that topic. Well that concludes today's episode, the Joel, thank you so much for taking the time to join the show. Very much appreciate it. We know you're really busy guy. And dropping into the studio has been really special for me and I'm sure listeners as well. You know, I would just like to make a quick plug to leave a positive review for Property Management Brainstorm. It would make our day, and it would also encourage more great guests like Joel to come on the show. And so, thank you to all our listeners for joining the Property Management Brainstorm podcast. Until next time, we will be working hard in the field for our clients to maximize their property value and rental income and maintain top to tenant relations. And we'll see you next time.
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