Prop 13 Facts

When Proposition 13 passed in 1978 it was originally sold to voters as a protection for homeowners, helping ensure lower taxes for average Californians. But because of a tax loophole, commercial property can avoid reassessment - even though there's a change in ownership. The biggest beneficiaries of Prop 13 are large companies and corporate landowners who use tax loopholes to avoid paying property taxes. And because property taxes fund education and public services, California residents have been directly short-changed by the current system.

What is Prop 13?

When Prop 13 passed, it altered the way property values in California were assessed in five ways:

  1. It rolled back assessed property values to what they were worth in 1975.
  2. Property values cannot increase more than 2% per year.
  3. Property tax is capped at 1%.
  4. Property is only reassessed upon change of ownership or new construction.
  5. It mandated that all local and state taxes need a two-thirds majority vote.

Prop 13 triggered short-term tax breaks - but has had serious long-term consequences.

How Did Prop 13 Affect Taxpayers?

The passage of Prop 13 resulted in a devastating ripple effect of catastrophic consquences. By rolling back property taxes, revenue dropped nearly 60% and funding to county and city governments dramatically declined. County governments and our schools (especially!) had to rely on the state's general fund, correlating directly to a shift in power -- the state now had the authority to allocate local property tax.

So how did this affect you? While the state received a boom in property tax revenue, the general fund surplus increased, while local funding remained stagnant. And to cope with the steep decline in funding, cities and counties raised local fees and taxes -- ultimately raising your taxes. So homeowners thought they were paying less, but in fact they were paying more.

How Did Prop 13 Hurt Education?

According to the California Budget Project, “immediately prior to the passage of Proposition 13, local revenues provided nearly half (47.1 percent) of the funding for California’s public schools.” Today, with Prop 13 in place, our schools are forced to rely on Sacramento for most of their funding and our revenue-starved state has not kept up with its obligations.

California School Spending is at a Historic Low

Prop 13 has had a direct effect on reduced education funding. And in case you have any doubt, here are some figures on education in California today:

  • School spending in California is at a 40-year low.
  • Since 1981-1982 California has consistently spent less on education than the rest of the US. Today, we now spend about half as much as New York or New Jersey.
  • 16 of California’s largest school districts are reducing the number of school days this year because they can’t afford to stay open.
  • Per pupil property tax revenue reduced by more than half.
  • California now ranks 44th in per-pupil spending among all the states (2009-10).
  • California ranks 50th in the ratio of students to teachers (2009-10)
California’s educational system is in a race to the bottom. Isn’t it time we united to reform an obvious broken system?

Click here to learn how we can Close the Loophole.