Prop 13 vs. Palesky (sidebar)

(from Maine Townsman, October 2004)

Proposition 13 (adopted in California in 1978)

• Property tax rate reduced from an average of 2.6 percent of property value to 1 percent through a state constitutional amendment.

• Property assessments rolled back to 1975 levels and locked in (with a two percent escalator) as long as owner doesn’t move.

• No local override. A two-thirds vote of the Legislature needed to raise state taxes. Local government eventually regained authority to bond construction projects with a two-thirds vote and later to bond school construction projects with a 55 percent vote.

mitigating factors

• state’s $5 billion surplus used to lessen service cuts.

• local government retained power to raise revenue for dedicated purposes through a variety of other means besides the property tax.

aggravating factors

• In its implementation of a California Supreme Court directive to eliminate rich-poor disparities, the state adopts a cap on school spending.

Palesky

• Property tax rate reduced from an average of 1.53 percent to 1 percent in statute.

• Property assessments rolled back to 1996-97 levels and locked in (with a two-percent escalator) as long as owner doesn’t move.

• No local override; A two-thirds referendum vote is needed ever to ever change the 1 percent cap, which may be an unconstitutional interference in the Legislature’s authority to amend any law, including those created by citizen initiative.

mitigating factors

• Maine Supreme Court likely to throw out as unconstitutional attempt to control property assessments by some other means than the market.

• In June referendum, voters directed the state to bring its share of education spending to 55 percent, which would require the state to contribute over $200 million more in school funding.

aggravating factors

• Other than the property tax and motor vehicle excise taxes, local government lacks power to collect other kinds of taxes.

• Vacation homeowners – many from out of state – would reap $50.9 million of the benefit from the tax cap.