California Lawmaker Tries to Repeal Prop 13 Caps on Commercial Properties

California Attorney General Xavier Becerra is pushing a ballot measure that would amend the State’s Constitutional protection (aka Proposition 13) which caps increases in property tax bills to only 2 percent per year.

If approved by voters, the measure would repeal the property tax cap on factories, stores and other commercial and industrial properties by requiring their owners to pay a property tax rate based on current market value rather than the value of the property when it was purchased. ​

California voters approved Prop. 13 in 1978, which calculated property tax rates at 1.25 percent of the purchase price of the property and capped annual increases to no more than 2 percent. Proposition 13 has enabled older California property owners to shield themselves from tax rates based on the fair market value of their properties.

Since revenue from property taxes is used to fund public education and other local initiatives, many lawmakers and other citizens have complained that the measure helps major property owners at the expense of the State’s other citizens.

The proposed ballot measure, however, would not touch tax protections for homeowners. 

The 2020 Proposition 13 authorizes the sale of $15 billion in state general obligation bonds for construction and modernization of public education facilities. Fiscal impacts of the proposition include increased state costs to repay bonds estimated at about $740 million per year (including interest) over the next 35 years. This amount is about one-half of 1% of the state’s current General Fund budget.