Proposition 13 was an amendment to the California Constitution (embodied in Article 13A) by means of the initiative process and approved overwhelmingly by California voters on June 6, 1978.  Prop. 13 did several things:

  • Mandated      that the maximum amount of any ad valorem tax on real property could not      exceed 1% of the property’s full cash value.
  • Decreased      property taxes by assessing property values at their 1975 value and      restricted annual increases of assessed value of real property to an      inflation factor not to exceed 2% per year.
  • Prohibited      reassessment of a new base year value except for in cases of change in      ownership or completion of new construction.
  • Required      a two-thirds majority in both Senate and Assembly for future increases of      any state tax rates or amounts of revenue collected, including income tax rates.
  • Required      a two-thirds vote majority in local elections for local governments      seeking to increase special taxes.

Prop. 39 Chips Away at Prop. 13

Proposition 39, passed in 2000, was successful in starting  to chip away at Prop.13 by reducing the two-thirds voter majority requirement for special taxes to just 55% for certain school bonds, bonds that local school districts, community college districts, or county offices of education use for construction, rehabilitation or replacement of school facilities.  Prior to Prop.39, districts needed two-thirds majority approval to pass local general obligation bond measures.  As a result, more than 40% of local school bond ballot questions failed.  Since its passage, school districts have had the choice of seeking two-thirds or 55% approval.  80% of local school bond ballots that rely on the 44% approval have succeeded.

More Prop. 13 Amendments Looming

Now that a 55% voter majority has been established for passage of school bonds, new constitutional amendments are being proposed that would reduce from two-thirds to 55% the threshold required for construction of education, special taxes on transportation, construction of libraries and community development activities.

A state constitutional amendment may be placed on the ballot by either a two-thirds vote in the legislature or signatures equal to 8% (807,615) of the votes cast in the last gubernatorial election.

With a supermajority of one political party inSacramento, it should be fairly easy to place at least one of the five pending constitutional amendments on the ballot.  If any of them make it to the ballot and gain voter approval, property owners would likely see quite a few more new property tax measures in their future.

Who Pays the Increased Taxes?

The state legislature wants to broaden the two-thirds rule on special taxes in order to get more money for various education and development projects.  Two issues arise:

  1. Are      new taxes required?
  2. If      they are required, who should pay them?       Proposed amendments SCA 4, 7, 8 and 9 would lower the voter      approval level to 55%, whether the form of taxation is a property tax or      sales tax.  SCA 3, however, places      the burden squarely on property owners.

In our view, all Californians should be required to pay for increased taxes, not just property owners.

Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org  or call (415) 647-2419.

 

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