On June 6, 1978, California voters overwhelmingly approved Proposition 13, the property tax limitation initiative, by a vote of 65% to 35%. Proposition 13 reduced local property tax revenues state-wide by capping property tax rates at 1 percent.

Historical Background

Prior to 1912 the State of California derived up to 70 percent of the revenues from property taxes. The state no longer relies on property tax as its primary source of funds. Since 1933 the only property tax levied and retained by the state is the tax on railroad cars owned by private individuals. Today California's counties, cities, schools and special districts depend on property tax as a major source of revenue.

Property Tax Apportionment

The Property Tax Division distributes property tax collections to individual taxing jurisdictions. The Property Tax Division develops the apportionment factors which are applied to assessed taxes. The current system for allocating property taxes is governed to a large extent by two bills developed by the Legislature nearly 20 years ago - SB 154 and AB 8.

SB 154 was enacted immediately following the passage of Proposition 13. Under SB 154, a local government's share of the property tax was based on the share of the property tax going to that local government before Proposition 13. AB 8, enacted in 1979, provides a methodology, whereby, the increase or decrease in a local governments share of the property tax is based on increase/decrease in property values in that jurisdiction and the county.