America’s annual display of pyrotechnics has come and gone, but there’s an easy way to see political fireworks in California any time of the year: just strike up a discussion about the legacy of the state’s property tax revolt, Proposition 13.
Within a few minutes, the sparks will be flying.
Either revered or reviled, no ballot initiative changed California’s politics more than the 1978 law written by activists Howard Jarvis and Paul Gann. Nor has any ballot measure had a more lasting impact on government operations, cutting billions of dollars in taxes that would otherwise have gone to local governments and schools.
Its wording remains the same, but Proposition 13’s impact is about to change — thanks to aging baby boomers.
The law uses purchase price to set the base rate for property taxes. That rate can’t increase more than 2% a year until the home changes hands. Over time, Proposition 13 has shielded longtime property owners from much of the impact of four decades of rising real estate values.
The independent Legislative Analyst’s Office dug deep into the law’s impacts over the past year in Los Angeles and Bay Area communities. And there was ample evidence to show even next-door neighbors — with homes of roughly equal value were they to be sold — can have wildly different property tax bills.
That helps explain why a number of properties simply don’t go on the market. In a report last month, the analysts noted while 16% of properties statewide were sold in 1977-78, just 5% were sold in 2014-15. Less turnover means tax rates don’t get recalibrated, resulting in less revenue for government services.
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