1.7.1 Proposition 13 (1978), Jarvis-Gann Initiative

1.7.1 Proposition 13 (1978), Jarvis-Gann Initiative

PURPOSE OF INITIATIVE – Officially named the People’s Initiative to Limit Property Taxation, Proposition 13 addressed the perceived problems of high property taxes resulting from escalating property values. It also addressed the potential to offset reduced property taxes through increases in other taxes.

PRINCIPAL PROVISIONS – Proposition 13 added Article XIIIA to the California Constitution, limiting ad valorem property taxes to 1% of full cash value (with exceptions to protect existing obligations). The proposition required two-thirds voter approval for “special taxes.” Subsequent court rulings excluded from “special taxes” taxes levied by entities without property taxing power, taxes for general governmental purposes, assessments, user fees and charges, and regulatory charges.

PRINCIPAL IMPACT – In lieu of lost revenues at the local government levels, the State assumed greater responsibility for certain public services, especially public school funding. Proposition 13 stopped the financing of public improvements through general obligation bonds by eliminating the ability to impose new property taxes, giving rise to increase in financing through assessments, land owner voted special taxes, special district sales taxes, revenue supported debt, and lease financing. The passage of Proposition 13 by California voters has been the catalyst for the creation of many financing techniques discussed in this Guide.