When it comes to gathering sufficient property taxes, Prop 13 is no problem at all –except for profligate spenders. Look at the history of my San Diego County – a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 85% of California’s population.
According to the SD County Tax Assessor, in 1977 – the year BEFORE Prop 13 took effect (when everything was working great, according to Prop 13 critics) – our countywide property tax revenue was about $639 million. In the 2011-2012 fiscal year, our county assessor reported real estate property tax revenues of $4.550 BILLION. For every property tax dollar collected in 1977, the county in 2011-12 collected $7.12.
During that time frame, our county population has grown about 85%, and inflation has gone up about 253%. Hence property tax revenues today are substantially higher than the bloated PRE-Prop 13 year, even after adjusting for inflation and population growth.
California in 2009 ranked 15th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per owner-occupied home were the 10th highest in the nation in 2009.
To see how CA ranks numerically against the other states on tax, regulation, litigation and other economic factors (with confirming URL’s), click here and read the latest updated version of my dreary fact sheet “Breaking Bad – CA vs. the other states.”
It turns out that, under Prop 13, property tax revenue is FAR more stable than our other forms of tax revenue. Since the start of the recession, income tax revenue has plunged, and sales tax revenue has tumbled.
But property tax revenue seldom goes down AT ALL. Since the year Prop 13 passed in 1978, San Diego County real estate property tax revenue has ALWAYS gone up – every year – until the 2009-10 fiscal year, when it dropped (drum roll) 1.0%. In 2011 property tax revenue slipped another 1.2%, but this 2011-12 year it’s up 1.1%.
This in the 6th year of California’s real estate meltdown! In 2008-09, real estate property tax revenue was actually up 4.1%. Not one person in a thousand knows about this revenue stability – the press has not covered these amazing facts.
Revenue is up because Prop 13 has the little-known added benefit of smoothing out real estate property tax revenue from year to year. Most properties this past year (generally those purchased prior to 2003) had their property tax go up 2%. Add to that the property resales, property improvements and new structures (all of which establish new tax assessment levels), and the revenue stayed rather constant in the teeth of our economic downturn.
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, San Diego County property tax revenue collection during this period STILL rose 111%. But then in the last four years, dropping property values would have caused a dramatic plummet in property tax revenues – revenues that governments would now be hooked on – just like we see with our volatile sales taxes, and especially with our hugely erratic income tax revenues. Property tax revenues are governments one reliable source of income, thanks to Prop 13.