Proposition 13--Is It Due for Refurbishing?

We may very well have a Proposition 13-A in the making.

The “A” would stand for adjustments in the revolutionary, trend-starting 1978 state legislation which reduced property taxes by about 50%.

It saved thousands of California homeowners from being taxed out of their homes and was soon duplicated elsewhere throughout the nation, reducing the effects of spiraling inflation.

That political coup and its then-welcome, last-ditch relief stabilized the property tax picture in the immediate years that followed.

But now, Alexander H. Pope, Los Angeles County assessor who was instrumental earlier in the week in “closing” a loophole in Propositon 13 that was worth $1.6 million in only one case, is concerned about existing and unfair differences in assessed values of neighboring homeowners.

New Majority

In the wake of Proposition 13, those who have purchased homes since 1978 are now the majority (52.1%) of more than 1.6 million residential property owners throughout Los Angeles county. Generally, that is the situation also in counties throughout the state.

Meanwhile, in houses where there has been no change in ownership, owners are taxed on a 1975 base and their assessments and taxes are far less. The proposition mandated reappraisal of property during changes of ownership.

Thus, Pope says, those in the majority are now paying three, four and even five times as much in property taxes as those who have not been involved in a change of ownership of their homes since 1978.

The latter, for instance, a contented, stay-put kind of family, is still being taxed at a maximum of 2% inflation adjustment yearly and the owner, all things considered, is obviously quite satisfied about the much lower tax rate.

But this uneveness puts the state’s property taxes out of kilter, Pope declares, calling for state legislation to repair the system and make it more equitable and efficient.

The minority, made up of those stay-put home owners, who may have already paid off the mortgage on the old homestead by now or are still enjoying mortgage payments considerably under the prevailing 12% rate for conventional loans, certainly aren’t going to rock the boat. But they know too that the current tax system stymies first-time buyers--sons and daughters--of both the majority and minority home owners, striving for affordable homes.

Taxation Hearing

Pope spoke at a special hearing of the Assembly Revenue and Taxation Committee to stress inequities in the tax structure.

“Recent purchasers are beginning to express resentment over this difference in treatment . . . post-1978 home buyers now are the majority and it will be only a matter of time before they demand a new property tax relief plan,” he said. “I am particularly concerned about the damaging effect this has on young families trying to buy their first homes.”

He cited taxes paid on two houses in Lakewood, built in the same block in 1944, both with three bedrooms, one bath.

One property has been occupied by the same owner since 1975. The house’s assessed value was $29,600 in 1975. Its 1985 taxable value, including the added maximum 2% inflation adjustment per year, is $35,716, reduced by the $7,000 homeowner’s exemption to a taxable value of $28,716. That amounts to a $297 tax bill.

The other house, sold in October, 1984, for $106,000, is now assessed at $106,000, reduced by the $7,000 homeowner’s exemption to a taxable value of $99,000. That amounts to a $1,025 tax bill.

Who ever said taxes were fair?