California Property Taxes

[74-911]

Hugh R posted the following in another thread:
"
At least we have Prop 13 here which limits the taxes to 1.25% of purchase value with an allowance to raise it 1% in tax amount/year. Liberals here blame Prop 13 for loss of revenue and fiscal crisis here. BS, you should only spend what you get, and the property values here are correctiing, but still high relative to the rest of the country. I have neighbors who have been in their homes for 25 years and pay something like $1500/year, and others across the street with the same house who bought last year that pay closer to $10K."

This seems incredibly unfair to me. Identical houses should pay the same property tax, regardless of when the house was purchased. Here in the Great State of TX we have some of the highest property taxes and sales taxes in the country (because we have no state income tax). Property taxes are supposedly based on current market value of the house (and yes, current market value can be a very contentious point when you protest your valuation) and are adjusted annually. The annual taxable value can only be increased 10% per year - such a deal that is.

I just paid $4200 in property tax (2/3 of that was school taxes) and I suspect my property is valued nowhere near what Hugh's is. I pay no city taxes. I would certainly like to see the taxes go down as would everyone else but if my next door neighbor's taxes are 1/3 of mine just because he bought his house 15 years ago? I would be a very unhappy camper? I just do not understand the logic or illogic of that taxes based on when you bought your house...

[m21sniper]

Parf.

[Jim Richards]

Jack, my property tax used to be around $5k per year, but it has dropped down to around $4.5k with the overall weakening of housing prices. Wash DC area. Like you, I'm not a fan of taxation based on when you bought, as opposed to what the property is valued at.

[grudk]

Agree that Prop 13 is not 'fair' but it's here for the forseeable future. It's a political '3rd rail' in CA. Then again, if the money inflow for CA govt gets even more desperate, anything is possible.

[Hugh R]

I never said it was fair. I just said that given the value of housing here, especially a year or two ago, the state shouldn't use Prop 13 to justify budget woes. It was enacted because of two reasons, 1) Businesses, and 2) old people who bought a house in the 1950's for $30K and the house was now worth a million were being forced out of their homes in retirement, due to taxes.

Many, many businesses make out on this. For example, my employer, Disney pays property taxes on Disneyland based on it's value in 1978 (I believe) and only pays incremental tax increases as it expands/remodels, based on the improvements. Is it "fair" I don't know. What it has done however, it get the state to find all kinds of other ways to enact "fees".

[Porsche-O-Phile]

It's part of the CA Constitution and was a direct result of the "Taxpayer Revolution" in the 1970s. IIRC it was passed in 1978.

Like most legislation, it has some good aspects and some bad aspects and some unintended consequences. On the upside, it does tend to keep property taxes reasonable - there was a big problem in the 1970s with older people being priced out of their homes because the taxes were simply getting ridiculous (all those new liberal programs that the hippies demanded cost money ya know). The downside is it creates an incentive for overvaluation and for governments to simply invent new fees that they just don't call "property tax" per se - and to invent all sorts of new taxes to make up their "need" to spend like drunken sailors (with apologies to any drunken sailors here).

The taxpayers of CA need to do (IMHO) more things like Prop. 13. We obviously can't trust the state Assembly to rein in its own spending and control things from that side of the equation, so the only way to try and control government spending is by "starving the beast". However, there are two problems with this: (1) the current crop of voters is stupid. They've bought into the hype and BS (spun by bureaucrats, unions and other individuals addicted to and dependent on the public dole) that "taxes" only come from those evil, selfish rich people out there. The fools in LA voted to actually RAISE their own sales tax this past election in order to supposedly fund road repair and traffic studies (things that arguably should have been paid for with local/state/federal gasoline taxes - already among the highest in the nation). Typical example of government wasting money on god-knows-what and then crying about having "shortfalls". And the current bunch of pseudo-socialist fools out there in S.F. and Hollywood and west LA laps it right up. (2) too many people dependent on public money - including illegals (lots of them). A lot of people on the left cry and whine about "equality" and "greater good", but vote very selfishly and very much AGAINST the greater good when it comes to demanding more government taxation/spending/programs that will simply put more public dollars in their own pockets personally. It's the height of hypocrisy. (3) Government is INTENSELY motivated to tax and spend like crazy in this state. Hundreds of thousands of bureaucrats, all convinced that society will come to a screeching halt if they're cut. Completely unrealistic self-importance. These folks are (to their credit, I suppose) EXTREMELY creative at inventing new fees, surcharges, taxes, assessments and penalties as ways of sucking more money out of the shrinking population of this state that continues to dare to be (1) independent and (2) successful. It is the ultimate manifestation of "hurting others to justify one's own continued existence". In nature, this is known as "parasitism".

That's CA for you in a nutshell. There are a lot of voters in this state that are furious about how things are, but they're either too lazy or apathetic to do anything about it and in any case, they're outnumbered by the socialist liberals in the urban centers - most notably LA and SF.

[Jim Richards]

Please don't be so timid with your personal opinions, Jeff. Open up a little.

[Danimal16]

Originally Posted by Hugh R

I never said it was fair. I just said that given the value of housing here, especially a year or two ago, the state shouldn't use Prop 13 to justify budget woes. It was enacted because of two reasons, 1) Businesses, and 2) old people who bought a house in the 1950's for $30K and the house was now worth a million were being forced out of their homes in retirement, due to taxes.

Actually Hugh, Jarvis was not that benevolent. He owned rental property and this was a way for him and other property owners to fix the expense. As far as Business benefits, I do not see it. Most lease and therefore it comes down to the rental or commercial property owner. Prop 13, IMHO was in response to the State's inability to satiate its thirst for our money. This was post 1975 when many of the give aways started. The State still gives it away and wants the citizens to feel guilty. F" em.

[Danimal16]

Originally Posted by Porsche-O-Phile

It's part of the CA Constitution and was a direct result of the "Taxpayer Revolution" in the 1970s. IIRC it was passed in 1978.

Like most legislation, it has some good aspects and some bad aspects and some unintended consequences. On the upside, it does tend to keep property taxes reasonable - there was a big problem in the 1970s with older people being priced out of their homes because the taxes were simply getting ridiculous (all those new liberal programs that the hippies demanded cost money ya know). The downside is it creates an incentive for overvaluation and for governments to simply invent new fees that they just don't call "property tax" per se - and to invent all sorts of new taxes to make up their "need" to spend like drunken sailors (with apologies to any drunken sailors here).

The taxpayers of CA need to do (IMHO) more things like Prop. 13. We obviously can't trust the state Assembly to rein in its own spending and control things from that side of the equation, so the only way to try and control government spending is by "starving the beast". However, there are two problems with this: (1) the current crop of voters is stupid. They've bought into the hype and BS (spun by bureaucrats, unions and other individuals addicted to and dependent on the public dole) that "taxes" only come from those evil, selfish rich people out there. The fools in LA voted to actually RAISE their own sales tax this past election in order to supposedly fund road repair and traffic studies (things that arguably should have been paid for with local/state/federal gasoline taxes - already among the highest in the nation). Typical example of government wasting money on god-knows-what and then crying about having "shortfalls". And the current bunch of pseudo-socialist fools out there in S.F. and Hollywood and west LA laps it right up. (2) too many people dependent on public money - including illegals (lots of them). A lot of people on the left cry and whine about "equality" and "greater good", but vote very selfishly and very much AGAINST the greater good when it comes to demanding more government taxation/spending/programs that will simply put more public dollars in their own pockets personally. It's the height of hypocrisy. (3) Government is INTENSELY motivated to tax and spend like crazy in this state. Hundreds of thousands of bureaucrats, all convinced that society will come to a screeching halt if they're cut. Completely unrealistic self-importance. These folks are (to their credit, I suppose) EXTREMELY creative at inventing new fees, surcharges, taxes, assessments and penalties as ways of sucking more money out of the shrinking population of this state that continues to dare to be (1) independent and (2) successful. It is the ultimate manifestation of "hurting others to justify one's own continued existence". In nature, this is known as "parasitism".

That's CA for you in a nutshell. There are a lot of voters in this state that are furious about how things are, but they're either too lazy or apathetic to do anything about it and in any case, they're outnumbered by the socialist liberals in the urban centers - most notably LA and SF.

Jeff,

The stuff that is bankrupting the state is a wide variety. I looked at the budget and was amazed at the number of land conservancies? WTFO???? These are due to the voter approved initiatives. Initiatives are a cop out as are referendums. They allow the legislature to pass the buck and the number of ill-advised and costly initiatives have resulted in these expensive land conservancies. The government of California has been broken for a long time. It is now catching up to them in ways that will be difficult to continue with business as usual.

[sammyg2]

Careful, you're treading on sacred ground.

Prop 13 is a very good thing, it is supposed to keep the politicians in Sacramento from raising taxes in an uncontrolled manner and taxing us (and spending) into the ground. Prop 13 allows property taxes to increase but at a reasonable, controlled rate. It keeps old ladies and people on fixed income from losing their houses due to property taxes doubling every few years, which is what was happening. It also helped Ronald Reagan (God rest his soul) to get elected as governor, one of the last really good Governors we've had.

Do some homework on Howard Jarvis and Paul Gann before making judgment. They are both considered heros by many Califoriians.

Prop 13 does much more than control property tax increases, it requires a 2/3rds majority vote to increase taxes so the democrats can't use a simple majority to take away every stinking penny we have.

In 2000, the libs convinced the weak-minded to pass prop 39, which allowed a 55% majority instead of the 2/3rds majority to pass local bond increases for public schools and the libs ran with it and increased education spening like drunk sailors on leave, contributing significantly to thebudget problems we are having now. In 2008, California spent almost $54 BILLION on education, and the teachers still threaten to go on strike every other week. That is out of control and could easily be fixed if we just stopped educating illegal aliens and their litters.
Can you imagine what the libs would do if we lifted all tax restrictions on them?
Recently they have cheated and gone around it by calling tax increases "fees" but we'll fight that one in court and they will lose.

[sammyg2]

Originally Posted by Danimal16

Actually Hugh Jarvis was not that benevolent. .

His first name was Howard and he was a blessing.

[Hugh R]

Dan, I agree 100% that Howard Jarvis had his own personal reasons as a landlord. The landlord and the tenant still benefit to this day. If the landlord has his property taxes increased, he passes it on to the tenant. Agree 100% with those posting after me on the "fee" issue.

[red-beard]

The problem we have here in Texas with our property taxes is that the rate is fixed. With the fixed rate, as the value of your home goes up, more tax revenue is generated. The good news is that out property values are only going at about the rate of inflation.

What should be done is set the budget, keeping in mind that the budget shouldn't increase any faster than inflation. Take the value of the properties, divide A by B and you have the tax rate, spread across everyone. This is what was done in upstate NY, except I'm not sure if the budget increases were kept to inflation or not.

We all agree that the government needs to be cut down to the essentials. The problem, not many agree on what the essentials are...

[74-911]

Originally Posted by red-beard

We all agree that the government needs to be cut down to the essentials. The problem, not many agree on what the essentials are...

Truer words were never spoken. It all depends on whose ox is getting gored.

I can certainly understand property tax protection for retired persons (being one)as Prop 13 does and this is definitely a problem here also. As Red Beard said, when your valuation goes up, your taxes go up automatically with it. What more and more cities and counties here are doing is freezing your taxes when you reach age 65.

Of course as politicians usually do, they managed to screew it up. When the laws were passed to freeze taxes on those over 65, initially there was no provision to lower the taxes if valuations fell...

[Danimal16]

Originally Posted by sammyg2

His first name was Howard and he was a blessing.

Added the comma for clarity.

[p911dad]

The NY System: Our little NY town recently had a full re-valuation of all parcels in the town. The town hired an outside appraisal firm(by bid) to do the work. Each and every parcel was appraised at 100% of market value. The town assessor accepted the package(after review of protests by various individuals) and then forwarded it to the State agency that oversees the process. As a result our equalization rate is now 100%. The total of the value of all the parcels is then divided by the tax levy(approved by the town board-all elected officials). From that you get the tax rate per $1000. of assessed valuation. This is supposed to clear up inequities that build up over the years.
Our property fmv was raised over 100%, but only resulted in small(less than 10%) tax increase. Some others saw their tax levy decrease. The reval is only done when things get out of whack, and ususually many years separate the reval process. The good part of this process is it is fair, and the tax levy is not controlled by the state, but by your neighbors who need to get re-elected if they want the job. It sure isn't perfect, but it seems to work most of the time.
The taxes affected are the school tax(local school board), town and county tax and city tax if there is a city involved. They are all levied separately, but use the same assessment data. Adding to this is the STAR exemption, which the state kicks in $ to lower the school tax(always the biggest tax) for each parcel.
This system sounds radically different from the California system and clears up the problem of having neighbors paying radically different taxes for very similar houses.

[Danimal16]

Originally Posted by sammyg2

Careful, you're treading on sacred ground.

Prop 13 is a very good thing, it is supposed to keep the politicians in Sacramento from raising taxes in an uncontrolled manner and taxing us (and spending) into the ground. Prop 13 allows property taxes to increase but at a reasonable, controlled rate. It keeps old ladies and people on fixed income from losing their houses due to property taxes doubling every few years, which is what was happening. It also helped Ronald Reagan (God rest his soul) to get elected as governor, one of the last really good Governors we've had.

Do some homework on Howard Jarvis and Paul Gann before making judgment. They are both considered heros by many Califoriians.

Prop 13 does much more than control property tax increases, it requires a 2/3rds majority vote to increase taxes so the democrats can't use a simple majority to take away every stinking penny we have.

In 2000, the libs convinced the weak-minded to pass prop 39, which allowed a 55% majority instead of the 2/3rds majority to pass local bond increases for public schools and the libs ran with it and increased education spening like drunk sailors on leave, contributing significantly to thebudget problems we are having now. In 2008, California spent almost $54 BILLION on education, and the teachers still threaten to go on strike every other week. That is out of control and could easily be fixed if we just stopped educating illegal aliens and their litters.
Can you imagine what the libs would do if we lifted all tax restrictions on them?
Recently they have cheated and gone around it by calling tax increases "fees" but we'll fight that one in court and they will lose.

Nothing is sacred in politics or to politicians. But I get your point.

The issue of controlled government spending has not always been the problem that it became in California. 1978 was a watershed year, culminating in the Jarvis led taxpayers revolution. This coupled with the state and federal government failing to consider the "General Welfare" of the citizens of this country the Jarvis/Gann initiative was a great success. Subsequent spending controls have been put into place that are not grounded on sound management, such as PORTIONs of prop 315 and its recent court findings that significantly limit the raising of utility rates to cover the fair cost of doing business (this does not include improvement district formation or capital expansions). This will be a significant cause of further deterioration of our state infrastructure. The ability of the ratepayers to cancel needed O&M rate increases will lead to some (not all) instances that utilities, especially public utilities to make choices as to level of service that can be provided. It is also a method to stop development.

I am curious as to what the disproportionate cost of the governmental services are not being paid by those that most benefit from Prop 13? Remember, that was 1978 and this is now.

The problem is that we have spent so much on CRAP feel good stuff in this state. Much of this has absolutely not return on investment. The give away to criminal foreigners is inexcusable and must stop. The other issue is no legacy babies. The abuses by foreigners to stay in the country by having a child here needs to stop. The cost of such a policy far outweighs any benefit (if there remains any) and the cost of these services spent to reward abusive behavior is taken away from middle class and lower class American Citizens.

It is a complicated mess and I am very concerned that this state will not recover from it. Maybe Hollywood can fix it with a really neat propaganda piece on California. It ain't what it once was.

[red-beard]

Gmeteer, the system I described was in Albany, NY. I found it to be quite fair, and would prevent an older person from getting a huge tax increase on valuation, since the tax rates are changed, based on equal evaluation.

[Danimal16]

Originally Posted by sammyg2

Careful, you're treading on sacred ground.

Do some homework on Howard Jarvis and Paul Gann before making judgment. They are both considered heros by many Califoriians.

Sammy,

I lived it and I continue to live it. Granted, I even thought that it was a great move at the time. The issues that you bring up were not my point. Granted the current move to get rid of the 2/3rds majority for budget approval does not bide well with me, but the cost of services for LLCs and other long term developments, especially commercial and apartments MAY be more disproportionate than one thinks.

I do my research, but I also look at what it takes to get things done and the cost for ligitimate government services in a non-socialist society that benefits all CITIZENS and promotes commerce and safety is not being paid by all beneficiaries in an equitable manner. The cost of construction and maintenance has what???? gone up by 5 - 10 times? Whereas for some BUSINESSes there has been no significant increase in the overhead costs since 1978?

[jyl]

Protecting elderly people with little income but million dollar houses from losing their homes to property tax is a dumb reason for prop 13, because the problem is so easily solved. Simply assess the normal tax on the actual house value (e.g. 1.25% x $1MM) but defer collection until the property is transferred, by sale or inheritance. Grandma gets to stay in her $1MM home and the young couple struggling to afford their $300K house doesn't have to bear a disproportionate share of the property tax burden.