California’s shrinking property tax revenues

Proposition 13, the 1978 law that caps property taxes in California at 1 percent of a home’s value and, “forbids major tax increases unless a home is sold or rebuilt,” has left counties with a revenue problem. While falling home values usually lead local governments in other states to increase property tax rates, California counties can only watch as property tax revenues fall with the housing market.

According to the Wall Street Journal, Stanislaus County’s assessed property tax values fell 21 percent over the past four years and 4.7 percent this year. This year’s property tax collection of $447 million is 11.6 percent lower than two years ago. The debate over whether Proposition 13 has worked as intended – protecting the elderly and those on fixed incomes from rapidly rising property tax increases or whether it has led to fiscal distortion and centralization continues.