Secretary of State No.



REAL PROPERTY TAXATION - INITIATIVE CONSTITUTIONAL AMENDMENT. Prohibits levy of any ad valorem tax on real property by state or subordinate taxing agencies, except that Legislature may provide for tax of not more than 2% on fair market value of residential property, 2 1/2% on other property. Limit reduced if taxes for schools, welfare, medi-cal or other purposes eliminated. Increases homeowner's exemption to $40,000 for persons over 61, $10,000 for others. Prohibits increased taxes because of repairs or minor improvements. Provides for challenge of appraised values. Requires 2/3 vote of electorate involved for new debts, liabilities or tax increases over limits described. Financial impact: a) Initial reduction in state costs of $160 million with savings declining to zero by fourth year and increases in state costs annually thereafter. b) State revenue increase of up to $60 million in the first year growing by an unknown amount in subsequent years. c) Local property tax revenue loss of $1.3 billion in the first year measure is operative. Loss will grow annually thereafter and amount to $2.5 billion by fourth year. d) Local government cost increase of $20 million in the first year. Subsequent year costs approximately $10 million annually.


Steve D. Wilson, Ph.D., P.O. Box 415, Soquel, California 95073



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