A Defense of Proposition 13 Revenues
by Richard Rider, Chairman, San Diego Tax Fighters
When it comes to gathering sufficient property taxes, Prop 13 is no problem at all — except for profligate spenders.
Look at the history of our own San Diego County — a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 90% of California’s population.
According to the SD County Tax Assessor, in 1977 — the year BEFORE Prop 13 took effect — our countywide property tax revenue was about $639 million. For this past 30 June concluding 2008-2009 fiscal year, our county assessor is projecting revenues of $4.656 BILLION. For every property tax dollar collected in 1977, the county today collects $7.29.
During that time frame, our county population has grown about 83%, and inflation has gone up about 260%. Hence property tax revenues today are substantially higher than the bloated PRE-Prop 13 year, even after adjusting for inflation and population growth.
It turns out that, under Prop 13, property tax revenue is FAR more stable than our other forms of tax revenue. Income tax revenue is plunging, and sales tax revenue is dropping.
But property tax revenue seldom goes down AT ALL. Since Prop 13, San Diego County property tax revenue has ALWAYS gone up – every year.
Even this year. The SD County Assessor reports that total property tax revenue for this fiscal year ending June 30, 2009 is UP 0.9%. If you look at just the pure real estate property tax revenue (ignoring the “supplemental property tax” revenue which is not subject to Prop 13 limitations), real estate property tax revenue this year is up 4.1%. Not one person in a thousand knows this – the press has not (yet) covered this amazing fact.
Revenue is up because the structure or Prop 13 has the little-known added benefit of smoothing out real estate property tax revenue from year to year. Most properties this year (generally those purchased prior to 2003) had their property tax go up 2%. Add to that the resales, property improvements and new structures (which establish new tax assessment levels), and the revenue grew in spite of the downturn.
Next year, in this real estate collapse, a mild drop in the order of 2%-4% in total property tax revenue is projected by our county assessor. Given our dramatic economic decline, this is an incredibly small drop, coming in the fourth year of a real estate meltdown.
Consider what happens without Prop 13 protection: In the real estate boom years from 1998 through 2005, property taxes would have SOARED. (Even WITH the Prop 13 limitations, county property tax revenue collection during this period STILL rose 111%.) But then in the last three years, dropping property values would have caused a dramatic plummet in property tax revenues – revenues that government would be hooked on – just like we see now with our volatile income tax revenues.