Local governments in California are feeling the pinch of rising home foreclosures, falling home values, and delinquent property tax payments, but government finance officers have found an unlikely protector in the current downturn — their old nemesis, Proposition 13.
That was the conclusion of local government officials and municipal analysts who spoke at The Bond Buyer’s 18th Annual California Public Finance Conference earlier this week. Proposition 13 was passed in 1978. It limits local governments’ ability to raise taxes and sets property taxes at 1% of assessed valuation at the time of sale with a 2% maximum annual increase. Homes are reassessed to market prices only when they are sold.