If Proposition 15 passes in November, Sal’s Mexican Restaurants co-owner Lorraine Salazar predicts the restaurant industry would be devastated, especially given the operating struggles caused by the coronavirus pandemic.
Proposition 15 is a split-roll tax that would increase property taxes on commercial properties valued at over $3 million.
It is a partial repeal of Proposition 13, which was passed in 1978 and set property taxes to be based on the purchase price. Proposition 15 would change it so commercial properties were taxed at the current market value.
Revenue generated by the tax increase – estimated by the state to be $6.5-11 billion – would go to increase funding for K-12 public schools, community colleges and local governments.
In a press conference Wednesday, Salazar said the restaurant had to furlough 120 employees at the three locations in Fresno, Madera and Selma when Gov. Gavin Newsom closed down restaurants because of the coronavirus pandemic.
The pandemic-related economic downturn, coupled with the state’s rising minimum wage and potential property tax increases, has created a storm that Salazar fears her restaurants will not be able to weather.
“Every time there is an increase in anything yearly, we are paying on that increase,” Salazar said. “Can we pass it on to our consumers? We have no choice to increase prices, but you can’t increase prices quick enough to cover all the expenses that are happening during this pandemic time.”
Salazar’s family owns one of the locations, which would see a tax increase under Proposition 15, and they lease the other two locations, both of which would have their rents increased, Salazar said.
“We are the job creators,” Salazar said. “The restaurant industry is the No. 1 generator of sales tax in our area, and we fund public safety. We fund education. We fund transportation. We are the first-time job providers, so adding additional expense through this property tax increase is going to close many businesses.
“We expect in the restaurant industry that we’re going to see a loss of 35 percent of restaurants.”