Excerpt from Post Democrat
The proposal: Proposition 5 would allow homeowners 55 and older to move to more expensive homes and keep their lower property tax bills from their old homes.
Current law: Older homeowners can keep existing property tax bills if they move within their county to less expensive homes. Ten counties also allow people to move across county lines and keep old property tax rates.
Backers say the initiative would ease the housing crisis by making it more affordable for empty nesters to move out of larger homes, freeing up housing for families:
Opponents cite the Legislative Analyst, which says local government including schools would lose up to $1 billion a year over time. The state would be expected to make up the difference:
“The real estate interests who cynically paid to put Prop. 5 on the ballot have decided to pit some homeowners against others. Why? You’ll have to ask them. But we think it probably has something to do with their profits” – Ballot pamphlet.
Money matters: Realtors have spent $7.2 million on Proposition 5 so far. Unions representing teachers and firefighters oppose it but have spent little to date.
The initiative, sponsored by the California Association of Realtors, represents a significant threat to property tax revenues as well as an erosion of local control, causing the CSAC Board of Directors to adopt an “oppose” position earlier this year.
Currently, the base year value transfer program allows a homeowner, who is either severely disabled or 55 years and older, to apply their original Proposition 13 (1978) property tax bill to a replacement home of equal or lesser value. While counties are required by law to accept prior tax bills for in-county moves, the board of supervisors has decision-making authority on whether the county accepts inter-county transfers. This was established under Proposition 90 (1988) and appropriately recognizes the unique fiscal pressures and local service demands that differ greatly from one county to the next. Unfortunately, Proposition 5 eliminates this essential element of local control by allowing eligible homeowners to take their property tax bills with them anywhere in the state, regardless of local decisions.
Additionally, the initiative offers unlimited transfer opportunities, which represents a massive expansion of current law that otherwise generally allows for only one transfer per homeowner. There are also no caps on the purchase price of the new home. The Legislative Analysts’ Office (LAO) estimates that the sum of these changes would reduce property tax revenues initially by $150 million per year, growing to several billion dollars per year over time (see the LAO’s full analysis for more information).