On June 6th 1978, 62.6% of California voters passed Proposition 13, People's Initiative to Limit Property Taxation, also known as the Jarvis-Gann Amendment. It amended the Constitution of California changing how taxes were assessed on real property and how taxes are raised in the state.
The most significant portion of the act is the first paragraph, which limited the tax rate for real estate: “ Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.”
The proposition decreased property taxes by assessing property values at their 1976 value and restricted annual increases of the assessed value of real property to an inflation factor, not to exceed 2 percent per year. It also prohibited reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction. These rules apply to all real estate, residential and commercial—whether owned by individuals or corporations.
Prior to Prop 13, real estate taxes in some areas could double in one year if property values increased. Some people were losing their homes being unable to pay their taxes as the government reassessed their property to raise more revenue.
The other significant aspect of the amendment is that it required a two-thirds majority in both legislative houses for future increases of any state tax rates or amounts of revenue collected, including income tax rates. It also required a two-thirds vote majority in local elections for local governments wishing to increase special taxes. (A "special tax" is a tax devoted specifically to a purpose: e.g. homelessness, public safety, road repair; money that does not go into a general fund.)
So, how much difference did Prop 13 make? For example, a house purchased in Yuba County in 1987 that owes $670 today in property taxes before bonds and other assessments are added would instead pay $6100 without Prop 13, more than 9 times as much. That increased amount would drive many older people on fixed incomes from their homes.
You can discover how much you would owe by going to HJTA.org (Howard Jarvis Taxpayers Organization) and click on “see your shocking tax bill if WE LOST Prop 13.” Then fill-in your homes current market value and your “without Prop 13” tax will be shown. It is obvious how losing Prop 13 protections could mean losing your residence.
Prop 13 makes property taxes predictable, affordable and stable so homeowners can budget and keep their homes. Renters also benefit from steady lower rents. Lower property taxes also increase the chances of home ownership for renters.
Business owners are helped by predictable and lower taxes allowing them to invest more capital to expand their operations. This creates jobs and improves the economy.
Local government and schools benefit because Proposition 13 provides a reliable, stable and growing revenue source. Even when real property values drop, property tax revenues continue to grow.
Proposition 13 stabilizes neighborhoods as residents are no longer driven out by unaffordable tax increases. (Keeping neighborhoods intact was one of the reasons cited by the U.S. Supreme Court in its 1992 decision upholding Proposition 13.)
All taxpayers benefit because Proposition 13 guarantees their right to vote on new local taxes, and it requires a two-thirds vote of the Legislature to increase state taxes.
Meanwhile, the democrats who have a super majority in the California Senate and Assembly are doing their best to remove the 2/3s vote provision to raise taxes. Their initial target is to attack the Prop 13 protection for commercial real estate. Then, once that is accomplished a full reversal of Prop 13 benefits on residential property will be next.
Remember the $54 billion SB1 road tax and DMV fee increase that voters failed to repeal? Only about 50% of those revenues are being used for roads. Now, politicians say $54 billion is not nearly enough to pay for deferred transportation costs and they want $136 billion more.
Removing Prop 13 tax restrictions will allow a 50% plus 1 vote to add parcel taxes and more bond repayments onto your tax bill below your property taxes figure where levee, utility, Mello Roos and school bond assessments are currently listed.
All Californians should go to HJTA.org to become a member and then vote to resist politicians plundering our wealth to create a socialist state.
(Get Lou’s podcast at “No Hostages Radio” and his articles at nohostagesradio.com)
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