# "California's day of reckoning is here." **URL:** \ **Category:** Great Debates\ **Created:** [June 5, 2009, 5:37am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785 "2009-06-05T05:37:03Z")\ **Posts on this page:** 12\ **Page:** 8
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 13, 2009, 1:21am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/141 "2009-06-13T01:21:44Z")
> [@Hyperelastic](#): > > There is an exemption (or at least there was in LA County) that if you were over 55 you could sell your house and buy one of equal or lesser value and keep your old property tax rate. That was meant to allow empty-nesters to downsize without getting killed on property tax, thereby encouraging housing to turn over faster. > > One thing they should have done with Prop 13 is to use the amount outstanding on the mortgage(s) as the assessed value, not the amount paid for the house. In other words, if you bought a house for $200k with an interest-only loan and then after a couple years of bubble-era appreciation took out a HELOC for another $200k, your property tax would double. That would have put the damper on the ridiculous second mortgages and HELOCs that caused the bulk of the foreclosures and short sales. It also would have generated more tax revenue in a fair manner and helped keep down real estate prices. But now it’s too late. The mortgage companies would hate that one! I don’t owe that much, so it sounds good to me. But I fear it does not increase equity at all, since rich people who can and would pay off their mortgages would wind up paying less than the middle class who couldn’t. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 13, 2009, 1:53am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/142 "2009-06-13T01:53:27Z")
> [@Voyager](#): > > The problem was that assessments were increasing linearly with property values. Were they doubling and tripling every year? If not, then I think your claim is less than accurate. > I already gave the answer to this problem - set tax rates according to the budget, not increase the budget if tax rates increase. Other states do this with few problems. > The goal wasn’t to find the best way to solve the problem, it was to cripple government - and they succeeded, quite nicely, given that the state has often been in trouble ever since. The property that I grew up in Monterey countey assessed value was increasing three years in a row by 300 to 400% each year. That is an accurate claim. My new home in Santa Clara county assessed value increased by 200% the year before prop 13 was passed with another probable increase of 200% the year it was passed. Your answer was somewhat proposed by Gov Reagan, but the legislature blocked him, and gave us the home owner’s excemption. The goal was not to cripple government, but to save the majority of home owners from loosing their houses. I wish I could find those old tax records. Every tax district had their own tax rate, there was no limit on the rate or the amount the assessor could increase your assessment. ``` If I can remember right my share of the ranch was assessed around $7,000 in 1974. And the taxes were around $400 per year. That is a tax rate around $8.50 per hundred. Deduct the home owner's exception from your house value then apply that rate and that would be what you would be paying for taxes with out prop 13. Prop 13 was a badly written law, but it sure is better than what we would have. ``` ---
**Author:** ![DSYoungEsq](https://avatars.discourse-cdn.com/v4/letter/d/c6cbf5/32.png) [@DSYoungEsq](https://boards.straightdope.com/u/DSYoungEsq)\ **Post date:** [June 13, 2009, 3:34am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/143 "2009-06-13T03:34:10Z")
I challenge you to back those claims up with hard figures. I find it quite unbelievable that the property tax rate for ANY county in the state of California was 8%. Most people saw reductions post Proposition 13 of around 50%, which resulted from a combination of reduced rate (to 1% of valuation) and reduced valuation (the proposition required that assessed values return to those of 1976 or 1977, IIRC). The vast majority of property tax increases were coming from the increases in assessed valuation caused by the increasing demand for housing in the California market. IIRC, there had also been a California Supreme Court case that had affected how certain lands were valued (on the basis of their potential rather than their actual use, IIRC). This, for example, caused golf courses to raise their fees dramatically, since they were no longer taxed on the basis of being open fields, but rather on the basis of potentially being housing or businesses. This had a dramatic effect upon some property valuations (I could see this being the issue with your ranch lands in Monterey Countey, for example). As for your last assertion, I cannot say for certain that, absent Proposition 13, the state would be worse off. Proposition 13 forced a massive redirection of the flow of funds. Instead of local districts (like schools, fire districts, park districts, etc.) getting the majority of their funds from the local property taxes, they had to get their funding from the state (since the taxation levels from property taxes were cut so dramatically after the proposition). This has resulted in exactly the current sort of difficulty that the state faces. Property taxes are a relatively stable source of government income; they fluctuate very little during recessions, etc. For an entity like schools, whos budgets need to be stable, that makes them a good source of revenue. When schools end up depending upon income taxes, or sales taxes, to cover their budgets, they end up in trouble during recessions; their budgeted expenses don’t go down (kids don’t stop coming to school because of recessions!), but their incomes get cut significantly, unless the state can find some other stopgap method of meeting their needs. Sadly, the state has started running out of stopgap methods. And because so much funding runs through Sacramento now, the ability to find remedies for local issues has decreased. A county parks district cannot simply go to the residents of the county to see if they will provide the money for a needed increase (damn near impossible to get 67% of the people to vote for an increase in taxes!), so it has to head to Sacto with hat in hand, begging for the money. No, I don’t think Proposition 13, or any of the other Jarvis-Gann initiatives, did California any favors. But you are right about one thing: the Legislature had ample opportunity to solve the perceived problem, and did nothing about it but fiddle while Rome burned. That’s quite typical for California, really. That’s why they almost always solve their major issues (or try to) with initiatives. :sigh: God am I glad I moved out. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 13, 2009, 3:52pm UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/144 "2009-06-13T15:52:03Z")
No the tax rates were in that rate. But each county had its own ratio of assessed value to true value. When I paid for my new house in 1976 I think the assessed value was something like $12,000 but I paid $42,000. And a year later the same model was selling for $100,000. In some counties the assesors stated that they were going to keep assessing the property up until the value was at the market value. Did you own property in California from 1976 to 1980? If you did then you lived through this and should be able to remember. Prop 13 rolled the assesed value back to the 1978 assessed value and llimited the tax rate to 1%, plus any bond rates. Most counties the rate is around 1.25% the last time I really looked. That 0.25% was just for the bonds that were passed in the tax district. And bonds have always been a small part of the property tax bill. The problem is each year there are fewer and fewer people who remember what caused prop 13 to pass. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 13, 2009, 4:00pm UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/145 "2009-06-13T16:00:52Z")
> [@DSYoungEsq](#): > > This had a dramatic effect upon some property valuations (I could see this being the issue with your ranch lands in Monterey Countey, for example). > > . The ranch land is not sutable to put a houding tract on it. Too many hills, and not enough water to suport. But even after prop 13 was passed the assessor raised my assessed value to a level that was more than what I could sell the land for. If it was not for Jarvis’s group suporting a leagal action for the assessor to assess acording to prop 13 I would have just let the county take over the land because I would not have been able to sell it. Right now that land is still undelevoped. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 13, 2009, 4:14pm UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/146 "2009-06-13T16:14:38Z")
> [@DSYoungEsq](#): > > As for your last assertion, I cannot say for certain that, absent Proposition 13, the state would be worse off. Proposition 13 forced a massive redirection of the flow of funds. Instead of local districts (like schools, fire districts, park districts, etc.) getting the majority of their funds from the local property taxes, they had to get their funding from the state (since the taxation levels from property taxes were cut so dramatically after the proposition). This has resulted in exactly the current sort of difficulty that the state faces. Property taxes are a relatively stable source of government income; they fluctuate very little during recessions, etc. For an entity like schools, whos budgets need to be stable, that makes them a good source of revenue. When schools end up depending upon income taxes, or sales taxes, to cover their budgets, they end up in trouble during recessions; their budgeted expenses don’t go down (kids don’t stop coming to school because of recessions!), but their incomes get cut significantly, unless the state can find some other stopgap method of meeting their needs. Sadly, the state has started running out of stopgap methods. > > And because so much funding runs through Sacramento now, the ability to find remedies for local issues has decreased. A county parks district cannot simply go to the residents of the county to see if they will provide the money for a needed increase (damn near impossible to get 67% of the people to vote for an increase in taxes!), so it has to head to Sacto with hat in hand, begging for the money. > > . This is one of the reasons why I say prop 13 is a bad law. The shifting of funding was and is harmful. But they needed to be funded in a way that was local, stable and not at the whims of the county assesor. Before the grab for money property taxes were a stable form of taxation. Business were valued mear market value homes at a ratio. In times like these if property values went down taxes did not because usually the assessed value was still more than the market value. Not true today. Two years ago I know of a house that was valued at #585.000, it sold in March for $250,000. I had a sister who worked for a school district when taxes were going up and the school was realllly spending the money. Almost every class in the district had a field trip every week. And some of the places they were taking the kids had little education value. Movies, field trips to shopping malls, baseball games multiple times in a year. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 13, 2009, 8:43pm UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/147 "2009-06-13T20:43:00Z")
> [@Snnipe\_70E](#): > > The ranch land is not sutable to put a houding tract on it. Too many hills, and not enough water to suport. But even after prop 13 was passed the assessor raised my assessed value to a level that was more than what I could sell the land for. If it was not for Jarvis’s group suporting a leagal action for the assessor to assess acording to prop 13 I would have just let the county take over the land because I would not have been able to sell it. > > Right now that land is still undelevoped. New Jersey has an exemption for farmlands, since they wanted to encourage farming and recognized that nearly any farmland would be worth a lot more split into lots. This could be gamed. A friend of ours owned a lot of land, and they got sheep on their property to qualify as a farm. I’m not sure she felt it was worth it. ---
**Author:** ![zagloba](https://avatars.discourse-cdn.com/v4/letter/z/977dab/32.png) [@zagloba](https://boards.straightdope.com/u/zagloba)\ **Post date:** [June 14, 2009, 5:10am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/148 "2009-06-14T05:10:49Z")
> [@Snnipe\_70E](#): > > The ranch land is not sutable to put a houding tract on it. Too many hills, and not enough water to suport. But even after prop 13 was passed the assessor raised my assessed value to a level that was more than what I could sell the land for. If it was not for Jarvis’s group suporting a leagal action for the assessor to assess acording to prop 13 I would have just let the county take over the land because I would not have been able to sell it. > > Right now that land is still undelevoped. Just out of curiosity, is this land eligible for Williamson Act treatment? ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 14, 2009, 6:10am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/149 "2009-06-14T06:10:06Z")
> [@zagloba](#): > > Just out of curiosity, is this land eligible for Williamson Act treatment? Williamson Act? ---
**Author:** ![zagloba](https://avatars.discourse-cdn.com/v4/letter/z/977dab/32.png) [@zagloba](https://boards.straightdope.com/u/zagloba)\ **Post date:** [June 14, 2009, 6:14am UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/150 "2009-06-14T06:14:51Z")
[Williamson Act](http://www.conservation.ca.gov/DLRP/lca/Pages/Index.aspx) ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 14, 2009, 3:56pm UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/151 "2009-06-14T15:56:05Z")
Thanks, That was what I thought it would be. No the restrictions in the act made it not worth checking into. ---
**Author:** ![jsc1953](https://avatars.discourse-cdn.com/v4/letter/j/5daacb/32.png) [@jsc1953](https://boards.straightdope.com/u/jsc1953)\ **Post date:** [June 14, 2009, 4:35pm UTC](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785/152 "2009-06-14T16:35:11Z")
Today’s San Jose Mercury-News had a Budget Crisis for Dummies graphic that was pretty enlightening. > **[California Budget 101: Making sense of the state’s financial meltdown](https://www.mercurynews.com/2009/06/13/california-budget-101-making-sense-of-the-states-financial-meltdown/)** > > California Budget 101: Making sense of the state’s financial meltdown [Previous page](https://boards.straightdope.com/t/californias-day-of-reckoning-is-here/498785.md?page=7)