May 14 (Bloomberg) -- A group named for the architect of California’s Proposition 13, which has been copied and criticized since voters approved it in 1978, has signed on to the first changes in the tax-limiting law.
The Howard Jarvis Taxpayers Association has withdrawn opposition to a bill that would make it harder for owners of commercial properties to avoid higher taxes when transferring ownership, according to its president, Jon Coupal, and the bill’s author, Democratic Assemblyman Tom Ammiano of San Francisco.
Ammiano’s bill would raise $73 million a year by disallowing commercial property owners from avoiding reassessment by dividing ownership so that no person or company has a 50 percent stake, according to a legislative analysis of the bill. Proposition 13 caps real estate taxes at 1 percent of a property’s assessed value and limits increases on assessed value to 2 percent a year unless it changes hands.
“This is not an attack on Proposition 13,” Coupal said in a telephone interview from Sacramento. “In fact, it is an attempt to restore the intent of Proposition 13, which is that when a property changes hands, it needs to be reassessed.”
Nearly two-thirds of California voters approved Proposition 13, the start of a tax revolt that presaged the election of Ronald Reagan as president two years later. The measure inspired similar property tax caps in New York and New Jersey. The Jarvis group credits Proposition 13 for establishing “predictable, manageable, and fair” property tax rates that kept homeowners from losing their property. Opponents blame the caps for diminishing tax revenue to public schools and universities.
Democrat Jerry Brown, then in his first term as California governor, opposed Proposition 13 in 1978 but won praise from Howard Jarvis himself for implementing it. Jarvis, who died in 1986, appeared in a 1978 Brown campaign commercial saying, “I knew Governor Brown was the man who could make it work.”
Brown, now 76 and in his third term of leading the most-populous state, hasn’t moved to amend Proposition 13. His spokesmen, Evan Westrup and Jim Evans, didn’t immediately respond to an e-mailed inquiry about the governor’s position on Ammiano’s bill.
The legislation would need a two-thirds vote in both chambers of the legislature and Brown’s signature to become law.
Brown on Tuesday proposed a record $107.8 billion in general-fund spending, buoyed by a recovering economy that has generated taxes exceeding projections by Brown’s budget office.
Coupal noted that Ammiano’s bill wouldn’t change the language of Proposition 13 itself, merely the legislation that spells out how the measure should be applied. He said the change would take away an argument by Proposition 13 opponents that wealthy property owners dodge higher taxes through ownership manuevers.
Ammiano spokesman Carlos Alcala said the assemblyman continues to back broader changes in Proposition 13, such as exempting commercial property from the assessment caps. Ammiano wanted to tackle the most “egregious” abuse in the law before he leaves office this year due to term limits, Alcala said by telephone.
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