San Francisco — California's Proposition 13 seems to have as many facets as a diamond - though critics see no sparkle in the landmark 1978 tax-limitation law. The latest flash is that property taxes might be cut by as much as 1 percent in the next fiscal year. Prop. 13 limits annual property tax increases to whichever is lower, 2 percent of valuation or the annual California price index. The state Board of Equalization now estimates that the index could be minus 1 percent by June 30, the end of the fiscal year.
That may be good news to residential and commercial property owners, but city and school district officials throughout the state are appalled. Having cut staff, programs, services, and physical facilities until it hurts and postponed many needed maintenance projects, they have little alternative but to call special elections to try to override the limit. But such elections, requiring an affirmative vote by two-thirds of those casting ballots, have seldom been successful since Prop. 13 was passed in a 1978 referendum.
Meanwhile, residential property owners are becoming increasingly aware of inequities built into Prop. 13. A resident who has bought a house since it went into effect can find himself paying three times the property tax of a neighbor in an identical home. Valuations are reset at the time of sale - at the sale price; since 1978, housing prices have ballooned in California.
There's more: Commercial property owners got a whopping tax cut under Prop. 13, and the relative proportion of local revenues provided by homeowners has steadily increased, since residential property changes hands more often than commercial.