If you have owned a home in Los Angeles County since 1978 and still hold title to said property, you are among the few who have benefited from Proposition 13, according to Tony Salvado, an LA resident. But new homebuyers aren't so fond of the initiative.

Prior to 1980, (at least in Los Angeles County) properties were assessed at 25% of full market value and taxed at the rate of 4%. So, essentially, if you owned a house valued at $100,000 your assessed value would have had been $25,000 and your tax rate would have been $1,000.

But after the passing of Proposition 13, the tax rate was lowered from 4% to 1.1%, but the caveat is that your home is assessed at full market value, not an advantage in an increasingly expensive market. Where is the benefit of Prop 13? asks Salvado.

Twenty years ago, Proposition 13 launched a revolution across the country with residents fed up with out-of-control property tax bills. At the time the initiative was launched, California was sitting on a huge budget surplus--more than $10 billion in today's dollars. According to one report then, the economy was strong, income tax receipts were high and unemployment and welfare costs were low. In addition, the Legislature had refused to enact meaningful property tax reform. Instead the state had required local governments, particularly counties, to provide services but hadn't provided the money to pay for them, and property owners tired of bearing the brunt.

Proposition 13 made the following amendments to the California state constitution: that property tax cannot exceed 1% of assessed value; property is taxed based on its 1975 assessment; the assessed value cannot increase more than 2% per year; property can be reassessed when sold; no governmental body can impose additional taxes based on a property's assessed value; special taxes imposed by local government require a two-thirds vote of its citizens; and state taxes require a two-thirds vote of the legislature.

But California is no longer in the same position, and neither are the counties who bear the costs of services to their residents, or their resident property owners. Property values have escalated, welfare roles have increased, and numerous natural disasters have taken their toll on the once surplused government coffers. And now newer homeowners feel they are bearing more than their fair share of taxes. In Los Angeles County, the percentage of single family properties that are still being taxed on the 1975 assessment number more than 26.7%.

This has led to many inequities. New neighbors pay as much as two to three times in taxes what longtime homeowners pay, and with little chance for recourse. Salvado, a former broker, bought his property in 1978 just after Prop 13 had been put into effect. He is presently being assessed $1028.52 (1% of net taxable value of $102,852 plus some additional charges for a total tax levy of $1380.30. His neighbor has the same model home, approximately the same size lot, improvements and his assessment is only $64,486. He purchased his home in 1970, prior to Prop 13, making his tax liability approximately significantly less than Salvado's. That wouldn't have bothered Salvado so much except that he found out that another home which was transacted in 1993 is taxed at a yearly rate of only $1095.44 although it was purchased for much more than Salvado paid for his home.

Adding insult to injury was the way he felt he was treated at the tax office when he went to complain. "In talking to an appraiser of the Los Angeles County assessors' office, I was told that the 25% assessment of full value never existed and that I was wrong if I compared the values of other homes in my neighborhood. He claimed the results would not be the same. The gentlemen quite frankly told me that I was wasting my time if I requested a new re-assessment of my property, that if they did do a re-assessment, I would probably end up paying higher taxes because my property is worth much more now," Salvado claims.

And what about new homeowners in Salvado's neighborhood? Homeowners who have purchased in 1997 and 1998 are paying taxes based on an assessment of approximately $165,00 by the price of homes recently sold.

The sad part is that while residents are paying fewer dollars in property tax compared to twenty years ago, they are seeing less in the way of the city services. Proposition 13 was designed to force politicians to cut the fat and provide services with less taxation, but it hasn't met its goal.

Twenty years later, Proposition 13 is as controversial as it was when it was passed. A recent L.A. Times poll revealed that 32% of respondents felt the initiative has had a bad effect on public services. Several studies have shown that Prop 13 has done little to curtail state and local spending. Although Prop 13 capped property taxes, it created all kinds of opportunities for politicians to tax property owners in other ways through such avenues as higher utility taxes or special tax districts to fund public services, many without voter approval. Fees from insect control to a 911 fund have been added to yearly assessments to make up the difference in tax revenues. Meanwhile in L.A., the potholes in the roads grow wider....

Published: June 11, 1998

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