CSAC-Opposed Property Tax Initiative Is Now Proposition 5
July 5, 2018
The ballot measure that would drain local resources through a Prop 13 property tax program expansion has officially qualified for the November ballot and will appear as Proposition 5. The initiative, sponsored by the California Association of Realtors, represents a significant threat to property tax revenues as well as an erosion of local control, causing the CSAC Board of Directors to adopt an “oppose” position earlier this year.
Currently, the base year value transfer program allows a homeowner, who is either severely disabled or 55 years and older, to apply their original Proposition 13 (1978) property tax bill to a replacement home of equal or lesser value. While counties are required by law to accept prior tax bills for in-county moves, the board of supervisors has decision-making authority on whether the county accepts inter-county transfers. This was established under Proposition 90 (1988) and appropriately recognizes the unique fiscal pressures and local service demands that differ greatly from one county to the next. Unfortunately, Proposition 5 eliminates this essential element of local control by allowing eligible homeowners to take their property tax bills with them anywhere in the state, regardless of local decisions.
Additionally, the initiative offers unlimited transfer opportunities, which represents a massive expansion of current law that otherwise generally allows for only one transfer per homeowner. There are also no caps on the purchase price of the new home. The Legislative Analysts’ Office (LAO) estimates that the sum of these changes would reduce property tax revenues initially by $150 million per year, growing to several billion dollars per year over time (see the LAO’s full analysis for more information). To view a full list of all 12 propositions on the November ballot, click here.