Proposition 13 limited the property tax rate statewide to 1% of each $100 of assessed value. California's original constitution was drafted in both English and Spanish by American pioneers, European settlers, and Californios (Hispanics of California) and adopted at the 1849 Constitutional Convention of Monterey, following the American Conquest of California and the Mexican-American War and in advance of California's Admission to the Union in 1850. Read the code on FindLaw The Constitution of California (Spanish: Constitución del Estado de California) is the primary organizing law for the U.S. state of California, describing the duties, powers, structures and functions of the government of California. [102], According to the California Legislative Analyst's Office (LAO) and the California Assessor's Association, the initiative could potentially generate an additional $6-$10 billion of tax revenue per year, which would go towards additional funding of local governments (60%) and public schools (40%), after reimbursing the State for reductions in personal income tax and corporate tax revenue caused by the deductibility of the property tax under existing law and reimbursing counties for the hiring of up to 900 new assessors statewide at a total cost of $517-$639 million a year. [23] In 2019, WalletHub applied California's statewide effective property tax rate of 0.77% to the state median home market value of $443,400; the annual property taxes of $3,414 on the median home value was the 9th-highest in the United States. [35] Business improvement districts are one means by which property owners have chosen to tax themselves for additional government services. ARTICLE XIII TAXATION [SEC. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be guaranteed in this State; and no person shall be rendered incompetent to be a witness or juror on account of his opinions on While Proposition 13 stabilized the base, governments would adjust the rate annually to counteract changes to the base prior to Proposition 13. 1 - SEC. The Table of Contents includes each Article heading and corresponding section numbers.Table of Contents includes each Article heading and corresponding section numbers. Proposition 193 extended 1986 Proposition 58 by allowing grandparents to transfer to their grandchildren their primary residence and up to $1 million (not indexed to inflation) in other real property without a property tax re-assessment, when both parents of the grandchild are deceased. Cal-Tax Digest: p. 3. Cynicism about the favoritism of the tax system towards the wealthy and well-connected persisted into the 1970s. Proposition 60 allows homeowners over the age of 55 to transfer the assessed value of their present home to a replacement home if the replacement home is located in the same county, is of equal or lesser value, and purchased within 2 years of sale. [100] This measure will appear on the ballot for the 2020 California elections as Proposition 15. and that "Even with Proposition 13 protections, California has higher property taxes than two-thirds of the nation. [21] Both require passage of a California ballot proposition by voters, but they differ in how they may be proposed. . Proponents of split roll have said the intent of Proposition 13 was to protect residential property taxes from spiking and say the broad application of Proposition 13 to commercial property is a loophole[46] while opponents say voters deliberately sought to extend Proposition 13 protections to commercial property by rejecting a split roll promoted by Jerry Brown in 1978 (Proposition 8 on the same ballot), with a vote of 53-47%, and instead voted for Proposition 13 with nearly 65% of the vote. [12][13] These assessors were found rewarding friends and allies with artificially low assessments, with tax bills to match. [69], At the same time, a majority of both Californians (55%) and likely voters (56%) opposed lowering the supermajority threshold for local special taxes.[69]. 2. [62] California K-12 public school teachers earned the second-highest average salaries amongst teachers of all states in 2019. 65% of likely voters say it has been mostly a good thing, as do: 71% of Republicans, 55% of Democrats, and 61% of independents; 54% of people age 18 to 34, 52% of people age 35 to 54, and 66% of people 55 and older; 65% of homeowners and 50% of renters. The LAO report did not provide a modified estimate of foregone tax revenue that considered extra state and federal income tax revenue on inherited rental property conversions.[75]. [30]:20,38 13 remains controversial after a quarter of a century / ECONOMICS: / Budget woes fuel opposition to tax measure", "Cities' lack of resources acts as catalyst for BID formation", "Fiscal Analysis and Land Use Policy in California: A Case Study of the San Jose Employment Land Conversion Analysis", "Proposition 13: The Building-Sized Loopholes Corporations Exploit", https://www.sandiegouniontribune.com/opinion/commentary/sd-utbg-prop13-taxpayers-loopholes-20170525-story.html?_amp=true, https://www.ocregister.com/2020/07/26/just-so-you-know-theres-no-loophole-in-proposition-13/amp/, "Rider v. County of San Diego: Special Districts and Special Taxes under Proposition 13", "The Lock-in Effect of California's Proposition 13", "Proposition 13: Some Unintended Consequences", "Ultimate Test - Who Is Accountable for Education If Everybody Fails? The report said the exemption probably created downward pressure on rents while causing more Californians to be renters rather than homeowners. State of California. [32]:19, According to the California Building Industry Association, construction of a median priced house results in a slight positive fiscal impact, as opposed to the position that housing does not "pay its own way". During the early 1960s, there were several scandals in California involving county assessors. california constitution article 13a (tax limitation) Section 6. 8. On the commercial and industrial side, there seems to be a lot more openness to debate...Of course, it's a difficult time to do that...when you're trying to encourage manufacturing back into your state, and you already have a cost differential between states that border us, you don't want to now increase their burden in terms of property tax on that commercial and industrial space. Sheffrin, Steven, "Re-Thinking the Fairness of Proposition 13," in, This page was last edited on 30 December 2020, at 00:35. In November 2019, a PPIC poll found 46% of likely voters favored the initiative, 45% were against it, and 9% were undecided. Proposition 90 is similar to 1986 Proposition 60 in that it allows homeowners over the age of 55 to transfer the assessed value of their present home to a replacement home if the replacement home is located in a different county, provided the incoming county allows the transfer. 1. [16][17] The property tax in California is an Ad valorem tax meaning that the tax assessed (generally) increases and decreases with the value of the property. Linda Greenhouse, "Petitioning Upheld at Shopping Malls: High Court Says States May Order Access to Back Free Speech,", 1849 Constitutional Convention of Monterey, First Amendment to the United States Constitution, An Act for the Admission of the State of California, California Secretary of State -1849 California Constitution Fact Sheet, "California's Constitution is Not the Longest", "Charter Cities: A Quick Summary for the Press and Researchers", "Equal Rights Amendments: State Provisions", "The Revision of California's Constitution", Official current text of the California Constitution, Records of the Constitutional Convention of 1849, 1878–1879 Constitutional Convention Working Papers, https://en.wikipedia.org/w/index.php?title=Constitution_of_California&oldid=997103328, Amendments to the Constitution of California, Short description is different from Wikidata, Articles containing Spanish-language text, Articles with unsourced statements from April 2010, Articles containing potentially dated statements from 2018, All articles containing potentially dated statements, Creative Commons Attribution-ShareAlike License, This page was last edited on 30 December 2020, at 00:58. [96], It was defeated on November 6, 2018, with approximately 58% of voters not in favor.[97]. During the 1970s, school spending per student was almost equal to the national average. [1] The constitution was amended and ratified on 7 May 1879, following the Sacramento Convention of 1878-79. "Prop. For instance, many California local governments have recently sought voter approval for special taxes such as parcel taxes for public services that used to be paid for entirely or partially from property taxes imposed before Proposition 13 became law. It is important to note that our state Constitution is a living document. In addition to decreasing property taxes and changing the role of the state, Proposition 13 also contained language requiring a two-thirds (2/3) majority in both legislative houses for future increases of any state tax rates or amounts of revenue collected, including income tax rates and sales tax rates. [94], Senate constitutional amendment 5 (SCA-5) would lower the two-thirds vote for local school district parcel taxes to 55%. Proposition 13: Love it or Hate it, its Roots Go Deep, Tax and Expenditure Limitation in California: Proposition 13 & Proposition 4, Full Text of Volume 505 of the United States Reports at www.supremecourt.gov, https://en.wikipedia.org/w/index.php?title=1978_California_Proposition_13&oldid=997099729, Amendments to the Constitution of California, Articles with dead external links from August 2010, Short description is different from Wikidata, All articles with specifically marked weasel-worded phrases, Articles with specifically marked weasel-worded phrases from November 2020, Creative Commons Attribution-ShareAlike License, Marmer, Nancy. [10] While Californians who voted for Proposition 13 were less likely than other voters to support school finance equalization, Proposition 13 supporters were not more likely to oppose the Serrano decision, and on average they were typically supportive of both the Serrano decision and of school finance equalization.[10]. Since its passage in 1978, there have been many attempts to change Proposition 13 through legislation, legal challenges, and additional ballot measures. [116]:1 Proposition 218, called the "Right to Vote on Taxes Act," is an initiative constitutional amendment approved by California voters on November 5, 1996. 13 sought in lawsuit, "Have California Voters Finally Had Enough of Prop 13? As of the approval date, the top contributors to the split roll effort were the unions California Teacher's Association ($6 million) and Service Employees International Union ($4 million) while the contributions of Mark Zuckerberg and Priscilla Chan were $1.9 million. [15] At the time of the change in ownership the low assessed value may be reassessed to complete current market value that will produce a new base year value for the property, but future assessments are likewise restricted to the 2% annual maximum increase of the new base year value. Under Proposition 13, the annual real estate tax on a parcel of property is limited to 1% of its assessed value. Due to severe inflation during the 1970s, reassessments of residential property increased property taxes so much, that some retired people could no longer afford to remain in homes they had purchased long before. After passage, it became article XIII A of the California Constitution. App. [5] The disparity grows when property prices appreciate by more than 2% a year. The report said that while the exemption made it possible for some to live in their parent's house, it likely incentivized the conversion of inherited houses into rental property or other uses. 13 (1978) Property "Change of Ownership, "Opinion: Don't alter California's revered Prop 13 tax initiative", "Local government financing: affordable housing and public infrastructure: voter approval", "Property taxation: change in ownership: inheritance exclusion", "California schools and local communities funding act", https://ballotpedia.org/California_Proposition_15,_Tax_on_Commercial_and_Industrial_Properties_for_Education_and_Local_Government_Funding_Initiative_(2020), "review of proposed constitutional initiative", "That 'split roll' you heard about? Less a Prop. ", "Which States Have the Highest and Lowest Teacher Salaries? The think tank Tax Foundation reported that in 1978, Californians had the third highest tax burden as a proportion of state income (tax-per-capita divided by income-per-capita) of 12.4% ($3,300 tax per capita, inflation adjusted). "[60] Since 1981-1982, California consistently has spent less per student than the rest of the U.S. as demonstrated by data collected by the U.S. Bureau of Economic Analysis and by the Public Policy Institute of California[60] This has resulted in increased pupil-to-teacher ratios in K-12 public schools in California. California Statutes. $7,000 per dwelling homeowner exemption, state subventions reimburse local government. [7], The state has been given the responsibility of distributing the property tax revenues to local agencies.[7]. From a peak of about 4.5% for the nation overall, and 4.0% for California, both peaking in the early 1970s, the nation overall as well as California spent declining percentages on public education in the decade from 1975-1985. The Supreme Court consists of the Chief Justice of California and 6 associate justices. California Constitution Article XIII, §3(k) Revenue and Taxation Code §218 Government Code § 16120-16123 & 29100.6. [30]:4 Proposition 13 reduces property tax revenue for municipalities in California. [10] The Commission ultimately removed about 40,000 words from the constitution. [86], In December 2011, Charles E. Young, former University of California, Los Angeles chancellor, brought a lawsuit with a team of lawyers headed by William Norris, a retired federal judge of the United States 9th Circuit Court of Appeals. 67) during 1978 that amended Proposition 13. [61] Pupil-teacher ratios have decreased since the passage of Proposition 30. SEC. The bill was introduced by state senator Jerry Hill. State and local government revenue may increase by tens of millions of dollars per year. Proposition 39 lowered the required supermajority necessary for voters to impose local school bond acts from two-thirds (2/3) of the votes cast to 55%. This noted that under California's state constitution a stronger protection applies than under the U.S. Constitution's Eighth Amendment; the former prohibits punishments that are "cruel or unusual", while the latter only prohibits punishments that are "cruel and unusual". California Schools and Local Communities Funding Act of 2018, Section 1. An amendment may be placed on the ballot by either a two-thirds vote in the California State Legislature or signatures equal to 8% of the votes cast in the last gubernatorial election, among the lowest thresholds for similar measures of any U.S. [14] The return to market value in the wake of AB 80 could easily represent a mid-double-digit percentage increase in assessment for many homeowners. ), Proposition 13 has been described as California's most famous and influential ballot measure;[2] it received enormous publicity throughout the United States. 4 volumes entitled "Constitution." [104]:2, Some supporters of the initiative say most states in the U.S. assess commercial properties at market value, and that this reform would make it easier for local governments to get the necessary funding for their projects. West's Annotated California Codes. Located in volumes 1, 1A, 1B, 1C, 2, 2A, and 3 entitled "Constitution." The court ruled that because the tax money was targeted towards specific programs rather than general spending, it counted as a "special tax" under Proposition 13 and required two-thirds' voter approval; the tax passed with a simple majority.[49]. The constitution also confers upon women equality of rights in "entering or pursuing a business, profession, vocation, or employment." Proposition 13 has increased the incentive for local governments to attract new commercial developments, such as big box retailers and car dealerships instead of residential housing developments, because of commercial development's ability to generate revenue through sales tax and business licenses tax. Some[56] have disputed the attribution of the decline to Proposition 13's role in the change to state financing of public schools, because schools financed mostly by property taxes were declared unconstitutional (the variances in funding between lower and higher income areas being deemed to violate the Equal Protection Clause of the Fourteenth Amendment to the Constitution) in Serrano vs. It also restricts Proposition 58 and Proposition 193 to solely inherited primary residences, with an exemption cap of $1 million in value at the time of death, and requires the heir to continually live in the residence or face reassessment. [105]:1, County assessors say the measure will lead to an unmanageable workload which will result in expenditures exceeding revenues for many years. It would also restrict the $1 million exempt from reassessment for other real property to nonresidential property only. A Distributional Analysis of the Tax Systems in All 50 States", "Property Tax Limitations and Mobility: The Lock-in Effect of California's Proposition 13", The Housing Bottom Line: Fiscal Impact of New Home Construction on California Governments, "Prop. A Los Angeles Times article dated June 11, 1978, stated the following: "There is no question that the voters knew exactly what they were doing. Justice Harry Blackmun, writing the majority opinion, noted that California had a "legitimate interest in local neighborhood preservation, continuity, and stability" and that it was acceptable to treat owners who have invested for some time in property differently from new owners. Proposition 13 is embodied in Article XIII A of the Constitution of the State of California.[1]. The new initiative required a higher total signature threshold of around 1 million due to the time of its creation.[118][119]. Sales tax rates have also increased from 6% (pre-Proposition 13 level) to 7.25% and higher in some local jurisdictions. [111] Despite this, pro-housing YIMBY groups in California have supported the split roll campaign. [31], A 2016 report from the California Legislative Analyst's Office found that property tax revenue to local governments was similarly volatile before and after the passage of Proposition 13. ", "S&P CoreLogic Case-Shiller Home Price Indices Indices - Real Estate - S&P Dow Jones Indices", "The Future of Proposition 13 in California", "Prop. [17] Two examples include (1) the Pruneyard Shopping Center v. Robins case involving an implied right to free speech in private shopping centers, and (2) the first decision in America in 1972 which found the death penalty unconstitutional, California v. Anderson, 6 Cal. [33] Additionally, due to the higher cost of new homes, the trade association claims that new residents are more affluent and may provide more sales tax revenues and use less social services of the host community. 2. As of 2020, the bill is in the inactive file. [11], Another explanation that has been offered is that spending by California's government had increased dramatically during the years prior to 1978, and voters sought to limit further growth. It also requires a two-thirds vote majority in local elections for local governments wishing to increase special taxes. Proposition 13 disproportionately affects coastal metropolitan areas, such as San Francisco and Los Angeles, where housing prices are higher, relative to inland communities with lower housing prices. The property may be reassessed under certain conditions other than a change of ownership, such as when additions or new construction occur. ... Sec. [101] The measure is opposed by a coalition of current and former elected officials, statewide organizations, regional organizations and businesses. "Proposition 13: Hard Times for the Arts,". In 1992, a legal challenge (Nordlinger v. Hahn) was considered by the United States Supreme Court, which subsequently ruled 8–1 that Proposition 13 was constitutional. 3. For the longer period of 1970-2008, California has always spent a lower percentage than the rest of the nation on education. Government Code sections 13400 through 13407, known as the State Leadership Accountability Act (SLAA), was enacted to reduce the waste of resources and strengthen internal control. The Case–Shiller housing index shows prices in Los Angeles, San Diego, and San Francisco appreciated 170% from 1987 (the start of available data) to 2012 while the 2% cap only allowed a 67% increase in taxes on homes that were not sold during this 26-year period. California Constitution, Article XIII Section 3(k) . Stephanie Nordlinger had purchased a property in the Los Angeles area in 1988 and, under the provisions of Proposition 13, was required to have the property reassessed at a new value. The measure's five largest donors are the California Teachers Association Issues PAC, SEIU California State Council, Chan Zuckerberg Advocacy, the San Francisco Foundation, and the California Federation of Teachers COPE PROP/Ballot Committee. A 2020 study by Joshua Mound published in the Journal of Policy History challenged the idea that wealthy property owners' desire to cap their property taxes was the impetus for enacting Proposition 13, instead saying the "tax revolt" was rooted in lower and middle-income Americans' longstanding frustration with unfair and highly regressive tax distributions during the post-World War II decades. A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Section 4 of, and by adding Section 4.5 to, Article XIII A thereof, by amending Section 2 of Article XIII C thereof, and by amending Section 3 of Article XIII D thereof, relating to taxation. An 2006 study published in Law & Society Review supported this explanation, reporting that older voters, homeowners, and voters expecting a tax increase were more likely to vote for Proposition 13.[10]. It said that a revenue-neutral Los Angeles County reform which raises all assessments to true market value and lowers the property tax rate would harm elderly and low-income households. [40], The application to commercial and rental property can lead to an advantage and profit margin for incumbent individuals or corporations who purchased property at a time when prices were low. It was rewritten from scratch several times before the drafting of the current 1879 constitution, which has itself been amended or revised (see below). They say a "split rate" initiative that raises the property tax rate on business properties rather than requiring regular assessment would be simple to implement and would avoid costly litigation associated with assessment appeals by large businesses. If any section, part, clause, or phrase hereof is for any reason held to be invalid or unconstitutional, the remaining sections shall not be affected but will remain in full force and effect. (b). CALIFORNIA CONSTITUTION ARTICLE 13C (VOTER APPROVAL FOR LOCAL TAX LEVIES) SEC. KFC30.5.W4. The updated measure would not apply to all residential and agricultural property as well as any commercial property holdings of a common owner with a combined market value under $3 million, while also exempting $500,000 of combined tangible small business personal property and fixtures. Representing the District of San Francisco, Representing the District of San Luis Obispo, Representing the District of Santa Barbara, Principles, institutions and law of political governance in the U.S. state of California. California's Support for Schools Lags the Nation", "Sorting Out Proposition 13's Impact On Education", "For Better or For Worse? It was sponsored by the California Association of Realtors. Proposition 13 implementing statutes were adopted by the California Legislature and are not part of the actual constitutional provisions of Proposition 13. [51] The Economist argued in 2011 that "for all its small government pretensions, Proposition 13 ended up centralizing California's finances, shifting them from local to state government. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties. Filed yesterday, California Cannabis Coalition v.City of Upland et al. [27], The think tank Institute on Taxation and Economic Policy (ITEP) considers property tax caps like Proposition 13 poorly targeted and instead advocates for "circuit breaker" caps or homestead exemptions to levy property taxes based on ability to pay;[28] yet in 2018, ITEP ranked California's tax code as the most progressive in the United States, in part due to its marginal income and capital gains rates. It is true that California's government had grown. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). The judicial power of this State is vested in the Supreme Court, courts of appeal, and superior courts, all of which are courts of record. [5][51] In terms of public services, office and retail development are further incentivized because they do not cost the local governments as much as residential developments. The Legislature could close this loophole with a 2/3 vote. [44]:5 In 2018, the California Board of Equalization estimated that closing this loophole would raise up to $269 million annually in new tax revenue.[45]. Title pages of the original English (left) and Spanish (right) versions of the 1849 Constitution of California. The most significant portion of the act is the first paragraph, which limits the tax rate for real estate: Section 1. Proposition 13 was advertised as a stronger tax relief measure than Proposition 8. (k) $7,000 of the full value of a dwelling, as defined by the Legislature, when occupied by an owner as his principal residence, unless the dwelling is receiving another real property exemption. The California Farm Bureau also opposes the measure. [87][88], The property transfer loophole was almost closed in 2014 by a bipartisan coalition in the state legislature but the effort died after progressive politicians, organized labor, and community groups refused to support the effort. CALIFORNIA CONSTITUTION and population. California Statutes are Chaptered Bills. Many of the individual rights clauses in the state constitution have been construed as protecting rights even broader than the United States Bill of Rights in the Federal Constitution. 3d 585 (June 1987), the California Court of Appeal for the Second District determined that the two-thirds (2/3) voter approval requirement for special taxes under Proposition 13 applied to citizens initiatives.[9]. [citation needed], In response to widespread public disgust with the powerful railroads that controlled California's politics and economy at the start of the 20th century, Progressive Era politicians pioneered the concept of aggressively amending the state constitution by initiative in order to remedy perceived evils. [80] It also constitutionally reserves to local voters the right to use the initiative power to reduce or repeal any local tax, assessment, fee or charge, including provision for a significantly reduced petition signature requirement to qualify a measure on the ballot.[81]. The site, hosted by the State of California Office of Legislative Counsel, provides access to the Constitution through Keyword and Table of Contents searc… "[71], Gavin Newsom, when asked about the fairness of Proposition 13 in a 2010 interview with The Bay Citizen, said: "The political realities are such that Democrats, not just Republicans and Independents, are overwhelmingly opposed to making adjustments in terms of the residential side of Prop. [63], In addition to the Serrano v. Priest decision, in 2013, California lawmakers created the Local Control Funding Formula (LCFF), which provides greater resources to school districts with student populations having higher needs, being determined by the rate of children in poverty or foster care and the rate of English language learners in the district. [67], Proposition 13 is consistently popular among California's likely voters, 64% of whom were homeowners as of 2017. [68] A 2018 survey from the Public Policy Institute of California found that 57% of Californians say that Proposition 13 is mostly a good thing, while 23% say it is mostly a bad thing. Proposition 13 (officially named the People's Initiative to Limit Property Taxation) is an amendment of the Constitution of California enacted during 1978, by means of the initiative process. Proposition 13 is often considered the "third rail" of California politics, which means that politicians avoid discussions of changing it. They also estimated that this effect was more pronounced in the coastal cities, with the increase in tenancy by owner-occupiers in the Bay Area being predicted at 28% (3.0 years), Los Angeles 21% (2.3 years), and Fresno 7% (0.77 years). And former elected officials, statewide organizations, regional organizations and businesses California.. The ongoing evolution of our core principles of representative democracy of distributing the property be. They could choose not to buy to Clarify Prop whom were homeowners as of 2020, the … state California! Impose special taxes Arts, '' Justice of California politics, pro-housing YIMBY groups in California involving county.. Adopted by the howard Jarvis Taxpayers Association as a result of that case of housing... 13 and the California Constitution. tenure in renting can be found in the world. 1! 'S original 1849 Constitution of the California Legislature is privileged to present this compilation of documents. 1 of the state of California politics California politics, which means that politicians avoid discussions of it! Close the loophole was made in 2020 heading and Section numbers public school spending is the earliest state grounds... Patricia Bates Authors measure to Clarify Prop Code § 16120-16123 & 29100.6 provision on record [ 35 ] improvement! System towards the wealthy and well-connected persisted into the 1970s, school spending is the first,! May lose autonomy and control around two-thirds of the amendments to the Bottom special taxes and special districts to special. State has been given the responsibility of distributing the property tax rate for real estate, and! ] Both require passage of Proposition 13 may not be the most significant portion of the nation 36 (. 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