This story is about a voter initiative called Proposition 8. No, not that Proposition 8. We’re talking about the one passed back in 1978 – just months after Prop 13 shook up California’s property tax system. It allows a property’s tax bill to be reduced when its market value sinks. During the recent recession, that was great news for homeowners struggling to make their mortgage payments.
“Over the last four years, we’ve seen market values decline, and we’ve seen some of our assessments drop by as much as 50 percent during that time frame,” Yolo County Assessor Joel Butler told Capital Public Radio's Insight. “But now as we see the market conditions starting to recover – and in some cases recovering fairly quickly as a percentage – those houses are going to come up.”
And for some homeowners, this year’s property tax bills could jump by 20 or 30 percent. On the flip side, cities, counties and school districts will see their property tax revenues soar – bringing some welcome relief. H.D. Palmer with the governor’s Department of Finance says the state’s budget will also benefit. “To the extent that you have more local property tax coming in, that means that there’s less state general fund that’s necessary in order to meet the constitutional guarantee for schools in any given year,” Palmer says.
The new state budget projects property tax revenues will jump nearly four percent. That’s not all from Prop 8 reassessments – but they do help quite a bit.