Court Rules, Problems Remain : With Proposition 13 found valid, efforts for reform must be redoubled

The U.S. Supreme Court has upheld Proposition 13, resolving the longstanding uncertainty over the validity of California’s novel property tax system. But the high court’s ruling does not solve problems of tax equity and how to raise new government revenues--issues that have evolved since 1978, when 13 was passed.

The sharp rise in home prices since then has resulted in a property tax system that, though noble in intent, is unfair to new homeowners and has drained local governments. For those who owned their homes before 1978, taxes are based on 1% of the property’s 1975 value. Homeowners who bought since then pay 1% of the purchase price.

Los Angeles resident Stephanie Nordlinger sued to challenge this so-called “welcome stranger” provision. She pays $1,700 in taxes on a home purchased in 1988 for $170,000, while one of her neighbors pays as little as $358 for a comparable home.

In the 8-1 ruling, the high court said the California law “is not palpably arbitrary,” although it may seen unfair to younger prospective buyers. The huge discrepancies are the result of rigid Proposition 13 provisions written into the state Constitution that did not anticipate the meteoric run-up in housing prices.

Changing the tax assessment procedure takes a constitutional amendment; that requires two-thirds of the Legislature voting to put the matter before the voters.

Needless to say, Proposition 13 is a hot potato, especially in an election year.

But though it’s unlikely Sacramento will go near 13 this year, the dialogue about reform should begin immediately.