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Proposition 13: What It Says and Means

April 07, 2002

I have just finished reading Robert A. Pool's March 10 article, "A Property Tax Refund May Be Yours." It's about whether assessed values under Proposition 13 can be increased annually more than 2%.

A response is in order. I'm a semi-retired appraiser for the Orange County assessor. However, I write as an individual and not as a spokesperson for the department.

Pool asserts that the debate hinges on Section 2(b) of Proposition 13 (now Article XIII A of the California Constitution). As he indicates, that section reads: "The full cash value base may reflect from year to year the inflationary rate not to exceed 2% for any given year ... or may be reduced to reflect ... a decline in value." Pool complains that nobody focuses on the plain wording of the constitution.

He says there are two questions to be asked: May the full cash value base be reduced? If it's reduced, may the full cash value base be increased more than 2% per year?

Three more questions need to be asked. The first: What is the meaning of the term "full cash value base"? Article XIII A tells us if we go back to its beginning.

Section 1(a) limits the tax rate to be applied to a property's "full cash value." Section 1(b) says that the tax rate limitation shall not apply to charges for paying off bonded indebtedness.

Section 2(a)--which, interestingly, Pool declines to focus on--defines full cash value: "The 'full cash value' means the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment."

Then comes Section 2(b), with its term "full cash value base." The second additional question I propose is to Pool: For properties that have changed ownership since 1975, under what standard of interpretation can "full cash value base" refer to something besides the previously mentioned "full cash value," that is, "the appraised value of property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment"?

The third question I propose is an obvious follow-up: According to the plain language of the state Constitution, what value may reflect from year to year the inflationary rate not to exceed 2% for any given year? Not an assessed value that has been "held" because of a flat real estate market. Not an assessed value that has been reduced to reflect a decline in market value. It's the full cash value base--as defined in Section 2(a).

As I understand it, the Howard Jarvis Taxpayers Assn. has agreed with the interpretation of the Orange County assessor in this matter. That association--or its predecessor--drafted the Proposition 13 ballot initiative. In light of that, what more needs to be said about the proposition's original meaning and intent?

If the assessor formally concludes that the judge in the court case erred in his decision, the department has the right to appeal the ruling.

Donald Hart

Garden Grove

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