Proposition 13 has probably had a greater impact on California taxpayers than any other single piece of legislation in the state’s history. Yet, it is also perhaps the most misunderstood legislation ever passed in the state. Since its passage in 1978, it has been subject to seemingly nonstop efforts to change or repeal it by those Californians who favor increased taxation.
A recent commentary by Jon Coupal, executive director of the Howard Jarvis Taxpayers Association, provides detailed information about the history and significance of Prop. 13.
Following is just some of the information gleaned from Coupal’s “Frequently Asked Questions About Proposition 13”:
Q: Why was Proposition 13 supported by such a large majority of voters?
A: Prior to Proposition 13, property taxes were out of control. The tax rate in California averaged almost 3 percent of market value, and there were no limits on increases either for the tax rate or property value assessments. Some properties were reassessed 50 percent to 100 percent higher in just one year, so their owners’ tax bills skyrocketed, often beyond the homeowners’ ability to pay their property taxes.
Q: Which taxpayer protections are provided by Proposition 13?
A: Under the tax-cut measure, the property tax rate is set at a uniform 1 percent throughout the state, and property tax increases are limited to no more than 2 percent a year as long as the property is not sold.
Q: Is Proposition 13 to blame for a shortage of funds for schools and other important government functions?
A: No! Despite what many politicians say, total property tax revenues to local governments in California have increased at a rate exceeding inflation and, in fact, state and local governments have much more money today than before Proposition 13 passed, even considering inflation and population growth.
Q: When I move to a new home, can I take along my Proposition 13 tax base?
A: Probably not, if you are not over 55 years old and staying within the same county. Maybe, if you are moving across county lines.
Q: Can we leave our property to our children or our grandchildren without them having to pay higher taxes?
A: Yes. Proposition 58, adopted by California voters in November 1986, allows the transfer of certain property between parents and children without reassessment.
Q: I’ve been retired for many years. My only income is Social Security, but the tax on my home is still going up and it’s harder each year for me to pay it. Is there anything I can do to lower my tax bill?
A: No. Because of the budget deficit, the state has suspended the Property Tax Assistance and Property Tax Postponement programs. If your annual income is $24,000 or less, you may have the option of having the state pay all or part of your property taxes. This deferred payment is a lien on the property that becomes due upon sale, change of residence or death.
Q: We’ve owned our home for a few years and want to add a room to our home. Will our taxes go up?
A: An improvement such as adding a bedroom to an existing home will be assessed at its current value, which will add to your taxes. However, the entire property and existing improvements will not be reassessed.
Q: I just got my property tax bill, and I think the assessor has increased it more than the 2 percent allowed by Proposition 13. What can I do about this?
A: Your property tax bill consists of three separate categories of levies: General Tax Levy, Voter Approved Indebtedness and Direct Assessments. Compare your current bill to last year’s bill and determine where the change is. It may be that a new bond or assessment appears on the bill this year that was not on the bill last year.
Q: I have just bought a new home, and it looks like the assessor has given it a value that is higher than Proposition 13 allows. What should I do?
A: What you most likely received was a notice of intent to form an assessment district. Thanks to Proposition 218, California property owners are better protected against assessments, fees and other tricks used to raised taxes by calling them something else. Prop. 218 requires that an agency seeking to establish an assessment district notify the owners of all property within the proposed district by mail. The notice of the proposed assessment must include a ballot, which the property owner completes and returns to the agency or its designated agent.
Click here for much more information about Proposition 13 from the Howard Jarvis Taxpayers Association.
— Harris Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital. Click here to read previous columns. The opinions expressed are his own.