Negative Inflation for Property Tax

The recession has taken another bite out of California property tax revenue.

The state Board of Equalization announced Monday that it will apply a negative inflation factor to this year’s property tax bills, the first time that has happened since voters passed Proposition 13 in 1978.

Under Proposition 13, the assessed values of properties that don’t change hands during the course of a year cannot increase more than 2% annually.

This year, the BOE has set a negative inflation factor of 0.237%.

Since the passage of Proposition 13, the inflation factor has never before been negative, according to the board, and in all but five years the annual adjustment was the maximum 2%.

The adjustment factor will affect property assessments made during 2010, and apply to the property tax bills due in late 2010 and early 2011.

In addition to the limits of the inflation factor, property assessments are also capped at the actual value of the property. Because of declining property values in much of the state, the 2009 assessed value of all property in California dropped 2.4% from the previous year, the first such decline recorded since the BOE began keeping records in 1933.

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