Proposition 117 would amend the State Constitution to limit the amount by which the assessed value of real property can be increased from one year to the next. It was proposed by the Legislature to replace the current valuation method, which uses two values—one uncapped and one capped at a higher percentage than the new proposal. Specifically, this proposal would cap increases in property valuation at 5% annually.
Supporters would have you believe that it would actually keep the amount of tax you pay down. This claim is dubious. The proposal makes no additional restrictions on the amount of the tax rate, only on the valuation of the property being taxed. If a jurisdiction wants to increase tax revenue, but can’t do it by increasing tax valuation, they can just increase the tax rate.
If the proposal did function as advertised and actually kept tax revenues down (and not just valuations), that would appear to benefit all property owners; but it would do so by essentially subsidising the tax burden of those with increasing property values. The higher the value of the property, the higher the amount of the subsidy; thus this proposal would regressivise the tax structure, disproportionately benefiting those with the most valuable property over time, at the expense of Joe Homeowner.
Now, as we’ve seen recently, property values can ‘bubble’ and fluctuate extremely, unpredictably, and perhaps unfairly rapidly, so some form of capping is good public policy, but a flat 5% cap seems extremely low. A more appropriate solution would be some sort of weighted average of 5-10 years of valuations, and should exclude investment properties (by saying, for example, that capping only applies to property used as a primary residence for its owner or a relative). This would meet yeson117.com’s stated goal of making property taxes simpler and more predictable without causing undesirable, regressive subsidisation (subsidization I think is the Yes-on-117 crowd’s actual goal).
I oppose this measure because I do not believe it will meet it’s stated goal, it would produce undesirable consequences (subsidisation), there are better solutions, and finally, again, because specific tax policy does not belong in a constitution.