A proposed 2018 statewide initiative to extend Proposition 13’s property tax breaks from older to younger homeowners ultimately will cost local governments and the state billions of dollars a year, according to a financial analysis of the measure released Friday.
The measure, proposed by the California Assn. of Realtors, would allow any California homeowner to sell a house and apply a portion of its existing property tax rate — which is capped under Proposition 13 — to a new home. Similar benefits are already available in some cases to homeowners older than 55.
The fiscal analysis from the nonpartisan Legislative Analyst’s Office found that cities and counties would receive less money because the measure would reduce the increase in property taxes that often accompanies the purchase of a new home. Similarly, state costs would grow because of constitutional requirements to replace any lost property tax dollars that would otherwise have helped fund K-12 schools.
The analysis also found that home sales could increase by tens of thousands a year, but that the ultimate effect on home prices was unclear.
The California Assn. of Realtors also has proposed two ballot measures that are less expansive, one that would extend the rules for older homeowners to apply property tax breaks to new homes and the other to all homeowners moving within specified counties. Financial analyses for those measures found local and state government costs would be lower, but would still require more state tax revenue to fund schools.
Alex Creel, senior vice president and chief lobbyist for the California Assn. of Realtors, said his organization planned to review the financial analyses, the forthcoming title and summary of the ballot initiatives written by the attorney general’s office and potentially conduct polling before deciding whether to mount a campaign for the November 2018 ballot.
“Without the full picture, at this point it’s too early to say exactly what path we’ll take,” Creel said in a statement.