The Property Tax after Proposition 13 Public Budgeting and Finance March 13, 2001

The Property Tax in California  Property Tax Basics  Dysfunctional System: Issues for Reform

Property Tax Basics  Proposition 13 (1978) Limits Rate to 1 Percent, Plus Voter-Approved Debt  Acquisition-based Assessment With Inflation Factor  Allocation to Local Jurisdictions, But Never Outside of County  State Controls Allocation Formulas (AB 8, 1979)

Property Tax Represents Nearly A Third of City and County Tax Revenues Other Taxes Vehicle License Fee Optional Sales Taxes Property Taxes Bradley Burns Sales Taxes

Property Taxes Are Distributed to Many Entities Within a County Distribution of Revenues To Local Governments Property Owner County Tax Collection $22.7 Billion Schools Counties Other Local Entities Cities

Issues for Local Government Reform  Lack of Taxpayer Knowledge  Lack of Local Control  Outdated Allocation of Property Tax Revenues  Influence of Sales Tax on Land Use Decisions  Residential vs. Business Share of Property Tax

Lack of Information on a Property Tax Bill

State Controls Allocation Among Entities

Property Tax Allocation: Like Anything Left in the Freezer Too Long…  Frozen Tax Preferences of the 1970s  Local Residents Have No Control Over Allocation of Local Tax

Allocation of Property Taxes Varies

The Power of the Sales Tax  Small Share of Property Tax  1 Percent Bradley Burns Sales Tax Rate  Competition for Large Retailers

Primary Residences’ Share of Total Assessed Value On the Rise

Why No Reform?  Countless Commissions, Task Forces, and Reports  General Consensus on the Problems  Attempts at Revenue Neutral Reform  Inherent Policy Tradeoffs