California Property Tax Primer

Everything you wanted to know about California Proposition 13, and then some

This article touches on California’s Proposition 13. McDowall Cotter, APC is a law firm located in the San Francisco Area in  California.

If you are interested in learning about California Proposition 13, read below a detailed write up on the subject, including a brief history. The California Proposition 13 affected all Californians including East Bay and San Mateo residents.

It was a different world in 1978 when the voters of the state of California passed Proposition 13. Strangely enough, Jerry Brown was governor and the political establishment, including the governor, was solidly opposed to the passage of California Proposition 13. Some say the ‘revolt’ started with a 1966 scandal where certain County Assessors were found to be accepting bribes for keeping certain property taxes lower than others. As a result of that scandal, the Legislature enacted a reform bill to keep assessments at a uniform percentage of market value. As a result, during the 1970s, when real estate values escalated rapidly, so did home assessments including in the San Mateo and East Bay area. The property owners grew restless.

By 1978, with home ownership threatened by escalating property tax bills, the fate of California Proposition 13 was sealed. The tax revolt born in the 1960’s had become full blown, aided in part by the release of new assessments just prior to the election showing large increases in assessed value for many taxpayers. Advocates of California Proposition 13 argued that fluctuating property taxes hurt homeowners, especially elderly homeowners on fixed incomes, who might be ill-prepared to deal with a sudden rise in their tax rate. This also effected San Mateo,Bay Area, home owners. They also suggested that high tax rates in expensive areas essentially subsidized communities with lower tax rates.

On June 6, 1978, voters selected California Proposition 13 over Proposition 8, an alternative proposal to lower and stabilize tax rates. The latter, placed on the ballot by the Legislature, had no control on rising assessments. It garnered 47 percent of the vote; California Proposition 13 was approved by 65 percent of the voters.

The California Proposition, officially named the People’s Initiative to Limit Property Taxation, amended the Constitution of California by means of the initiative process. It was approved by California voters on June 6, 1978.

California Proposition 13 had three significant provisions. The first limited the tax rate for real estate such that the maximum amount of any ad valorem tax on real property would not exceed 1% of the full cash value of such property. In fact, the proposition actually decreased property taxes by assessing property values at their 1975 value.

California Proposition 13 also restricted the annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year. It also prohibited reassessment of the property except when there was a ‘change in ownership’ or completion of new construction which affected the East Bay and San Mateo residents just as much as the rest of California.

Moreover, in addition to decreasing property taxes, the initiative also contained language requiring 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 requires a two-thirds vote majority in local elections for local governments including East Bay and San Mateo residents wishing to increase special taxes.

To watch an informative video on the history of Prop 13 please click here.

If you want to learn more on California Proposition 13 or other Propositions contact us at:

2070 Pioneer Court
San Mateo, CA 94403
Tel 650-572-7933
Fax 650-572-0834

McDowall Cotter provides comprehensive legal services in three areas of practice: civil litigation; business; and wealth preservation. To learn more visit us at http://www.mcdlawyers.net. We are a San Mateo based law firm and for more than 50 years, McDowall Cotter’s chief objective has been to deliver exemplary legal services that are personalized, effective and efficient.