Dan Walters shares news a report by the California Legislative Analyst's Office that predicts big increases for property taxes as the state's real estate market improves—at percentages much higher than the Proposition 13 would typically allow.
Writes Walters: "Proposition 13, passed by voters in 1978, limits annual increases in taxable values to 2 percent, but state tax law also allows temporary decreases in those values to be fully recovered later if the market increases. Increases of up to 20 percent were reported during the 2013-14 fiscal year, based on the 2012 market rise."
An article by Cate Long, has more details on Proposition 8, the state legislation that allowed the reduction of property tax values—reducing property tax revenues by $7 billion. "After the housing crash, a California state law, Proposition 8, allowed temporary property tax reductions for 3.2 million properties — about 2.6 million homes and 600,000 other properties. Under Prop 8, property assessments were allowed to be lowered to match the market value of the property. According to a recent legislative report, these reductions dragged down local government revenues by approximately 15 percent."
The increase in property tax revenues will come as especially good news for state spending on schools, reports Walters: "The $7 billion reduction in local property tax revenues also affected the state budget because the state was required to make up the schools' losses of about $3.2 billion. Therefore, the increases in property values and property taxes not only are increasing revenues to local governments but reducing the state's constitutionally required level of education spending."