RECOMMENDATION(S): (CONT'D)
2. Proposition 22: Changes Employment Classification Rules for App-Based Transportation and Delivery Drivers. Initiative Statute.
The Legislation Committee (Mitchoff/Burgis) considered these measures at their July 13, 2020 meeting. There was no Committee recommendation on these measures; staff was directed to send them to the Board of Supervisors for consideration. The Board of Supervisors may adopt a position of support, oppose, neutral or "no position."
FISCAL IMPACT:
The Legislative Analyst's Office estimate of net state and local government fiscal impact from Proposition 19:
- Local governments could gain tens of millions of dollars of property tax revenue per year. These gains could grow over time to a few hundred million dollars per year.
- Schools could gain tens of millions of dollars of property tax revenue per year. These gains could grow over time to a few hundred million dollars per year.
- Revenue from other taxes could increase by tens of millions of dollars per year for both the state and local governments. Most of this new state revenue would be spent on fire protection.
- Counties would need to hire new staff and make computer upgrades to carry out the measure. This would increase costs for counties by tens of millions of dollars per year.
The Legislative Analyst's Office estimate of net state and local government fiscal impact from Proposition 22:
- Minor increase in state income taxes paid by rideshare and delivery company drivers and investors.
BACKGROUND:
The Legislation Committee (Chair Mitchoff/Vice Chair Burgis) considered the 12 measures that have qualified for the November 3, 2020 General Election ballot. The Committee did not make a recommendation on Propositions 19 and 22 but, instead, directed staff to send these measures to the full Board of Supervisors for consideration.
Proposition 19:The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disaster Act
Prop. 19 began as an initiative of the California Association of Realtors. After the requisite number of signatures had been gathered to qualify the initiative for the ballot, an alternative measure was proposed and passed by the Legislature, ACA 11. Consequently, the initiative from the Realtors was withdrawn.
This measure would make changes to the special rules surrounding property tax assessment transfers for certain existing homeowners (homeowners over 55 or severely disabled or whose property has been impacted by a natural disaster or contamination--"eligible homeowners") and inherited properties. Prop. 19 would require the State to calculate the net benefit to the State’s General Fund resulting from those changes, if any, and transfer a similar amount of funding mostly to local fire protection districts, with a portion of the remainder going to any local agencies that experience reduced revenue as a result of the measure’s tax changes.
If passed, the measure would expand the special rules for eligible homeowners, such that starting on April 1, 2021, the measure:
- Allows Moves Anywhere in the State: Eligible homeowners could keep their lower property tax bill when moving to another home anywhere in the state.
- Allows the Purchase of a More Expensive Home: Eligible homeowners could use the new rules to move to a more expensive home. Their property tax bill would still go up but not by as much as it would be for other homebuyers.
- Increases Number of Times a Homeowner Can Use the Special Rules: Homeowners who are over 55 or severely disabled could use the special rules three times in their lifetime.
Starting on February 16, 2021, the measure, if passed, narrows the special rules for inherited properties as follows:
- Ends Special Rules for Properties Not Used as a Home or for Farming. The special rules would apply only to two kinds of inherited property. First, the rules would apply to properties used as a primary home by the child or grandchild. Second, the rules would apply to farms. Properties used for other purposes could no longer use the special rules.
- Requires Tax Bill to Go Up for High Value Inherited Homes and Farms. The property tax bill for an inherited home or farm would go up if the price the property could be sold for exceeds the property’s taxable value by more than $1 million (adjusted for inflation every two years). In this case, the tax bill would go up but not as much as it would if the property were sold to someone else.
Prop. 19 would create two funds at the state: the California Fire Response Fund and the County Revenue Protection Fund. The measure would require the state Director of Finance to calculate increased revenues and net savings to the state resulting from the tax revenue changes, if any. 75 percent of the increased revenues and net savings would be transferred to the California Fire Response Fund, and 15 percent would be transferred to the County Revenue Protection Fund.
An analysis of the measure by the CSAC Legislative Representative Geoff Neill is Attachment A. Included in Attachment A is the full text of the ballot measure, the LAO analysis of a similar measure, and the Senate analysis of ACA 11.
Attachment B is the Legislative Analyst's Office analysis of the measure.
Additional information on the measure is available at: https://ballotpedia.org/California_Proposition_19,_Property_Tax_Transfers,_Exemptions,_and_Revenue_for_Wildfire_Agencies_and_Counties_Amendment_(2020)
CSAC's Government Finance & Administration Committee (GFA) recommended an "oppose" position to the CSAC Executive Committee. A recent Mercury News editorial on the measure is also in opposition:https://www.mercurynews.com/2020/08/01/editorial-prop-19-perpetuates-california-property-tax-inequity
Proposition 22: Changes Employment Classification Rules for App-Based Transportation and Delivery Drivers. Initiative Statute.
"Establishes different criteria for determining whether app-based transportation (rideshare) and delivery drivers are “employees” or “independent contractors.” Independent contractors are not entitled to certain state-law protections afforded employees—including minimum wage, overtime, unemployment insurance, and workers’ compensation. Instead, companies with independent-contractor drivers will be required to provide specified alternative benefits, including: minimum compensation and healthcare subsidies based on engaged driving time, vehicle insurance, safety training, and sexual harassment policies. Restricts local regulation of app-based drivers; criminalizes impersonation of such drivers; requires background checks." (19-0026A1)
This measure makes app-based rideshare and delivery drivers independent contractors and not employees or agents. The state law that limits the ability of companies to hire independent contractors (AB 5) would not apply to drivers.
The measure requires rideshare and delivery companies to provide benefits including
- Earnings Minimum. This measure requires companies to pay 120 percent of the local minimum wage for each hour a driver spends driving, but not time spent waiting.
- Health Insurance Stipend. For drivers who normally work more than 15 hours per week (not including waiting time), this measure requires that companies help pay for health insurance.
- Pay For Costs When a Driver Gets Hurt on the Job. This measure requires that companies pay medical costs and replace some lost income when a driver is injured while driving or waiting.
- Rest Policy. This measure prohibits drivers from working more than 12 hours in a 24-hour period for a single rideshare or delivery company.
- Other Requirements. This measure prohibits workplace discrimination and requires that companies: (1) develop sexual harassment policies, (2) conduct criminal background checks, and (3) mandate safety training for drivers.
The measure limits the ability of cities and counties to place additional rules on rideshare and delivery companies.
The LAO analysis of Prop. 22 is Attachment C.
Additional information about the measure may be found at: https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020)
CONSEQUENCE OF NEGATIVE ACTION:
The Board of Supervisors will not have an official position on these two measures.
CLERK'S ADDENDUM
Speaker: Adam Nieman.
Written commentary provided by: Sandee Weidemann, Howard Jarvis Taxpayers Association.
Proposition 19: by unanimous vote, The Board TAKES NO POSITION
Proposition 22: by unanimous vote, the Board TAKES NO POSITION