Jun 3, 2019
What is Prop. 13?
Proposition 13, or the People’s Initiative to Limit Property Taxation, was passed in 1978, stemming from concern over soaring property values and resulting in rising property taxes. It was championed by anti-tax activists Howard Jarvis and Paul Gann. Proposition 13 ensures valuations of property may not grow by more than 2% annually, and market value reassessment may only occur with a change of ownership. Additionally, Proposition 13 created the requirement that all state and local tax increases be approved by a two-thirds vote of the legislature or the voting public.
Isn’t Prop. 13 just for homeowners?
No. Most voters are unaware of this, but Prop. 13 applies to commercial property as well. This aspect of the law has led to significant unintended consequences. For example, Chevron alone is saving over $100 million a year by benefiting from Prop. 13’s Corporate Loophole. On average homes change hands in California every 10 years while some large commercial properties rarely change hands, so are rarely reassessed. Because of this, the property tax burden in California has shifted onto residential property owners. Before Prop.13, residential accounted for 55% of the property tax and commercial paid 45%. Now residential shoulders 72% of the tax burden while commercial only pay 28%.
Will reforming Prop. 13 affect homeowners?
This initiative will NOT change Prop. 13 for any residential property. Voters passed Prop. 13 to protect people, not corporate landowners.
What about apartments?
Apartments will not be affected either, nor residential renters of any kind. In mixed-use buildings, only the commercial part of the property will be reassessed at fair market value.
Where will the new revenue from this reform go?
This will be local money that will stay local, and will not go to Sacramento. This is revenue that will fund our local schools, cities, counties, and special districts for services that we all rely on like health clinics, parks, and roads.
In the 1970s, California was tied with New York for 5th in the nation in per-pupil education funding. Today New York spends twice what we do for education and we have the most crowded classrooms in the country. 40% of this revenue will go directly to our public schools.
The rest will go to our local governments that currently have no other choice than to levy regressive taxes and fees on individuals and small businesses just to make ends meet. Closing the Prop. 13 Corporate Loophole is the only way to restore over $11 billion a year to our schools and community services without increasing taxes on homeowners or renters.
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