Publication 216, The First 100 Years


Tax Revolt of 1976: Proposition 13

At the end of the Board’s ninety-ninth year the controversial Jarvis-Gann Initiative, Proposition 13, climaxed a long simmering property tax revolt. This initiative measure, which provides substantial property tax relief for the people of California, was passed overwhelmingly by popular vote on June 6, 1978, The rapid inflation of the mid-’70s appears to be the most immediate cause of the revolt of property taxpayers; despite shortened reappraisal cycles, the public was becoming more and more painfully aware of the phenomenal increases in property values, Growing tax revenues from these expanding property values were not fully offset by reductions in property tax rates. This situation, coupled with growing surpluses in the state treasury, encouraged an increasing sentiment for property tax reform and/or relief.

Proposition 13, the newly added Article XIIIA to the California Constitution, has essentially four provisions:

  1. It limits the tax on property to one percent of its full value plus bonded indebtedness approved by the voters prior to the adoption of the initiative, or at the same election.
  2. It requires that property be valued as of the 1975 lien date, or as of the date the property changed ownership or was newly constructed after the 1975 lien date, and provides for an annual adjustment for inflation as measured by the California Consumer Price Index for either increases or decreases, but limiting increases to two percent for any one year.
  3. It prohibits both the state and local governments from imposing any new ad valorem taxes on real property.
  4. It requires a two-thirds vote in each house of the Legislature to increase or impose new state taxes and two-thirds of the “qualified electorate” to increase or add new local taxes.129

The Board of Equalization played a key role in implementing Proposition 13. Even before the initiative had passed, the Board had appointed a staff task force “. . . to study the potential impact of this measure on the property tax programs administered by the Board and on county assessors’ activities and responsibilities.” 130 Pursuant to this study, the Board met on June 14, 1978, and did the following:

  1. Advised assessors to use the 1975-76 tax bill values as the basis for the 1978 assessments.
  2. Advised assessors to apply a two percent increase compounded annually to reflect inflation for each year from 1975-76 to 1978-79.
  3. Instructed the Board of Equalization staff to value public utility properties at the 1978 level under procedures and at values approved by the Board on the statutory date of May 24. In effect, the Board decided that the valuation of public utility property was not affected by Article XIIIA, and that only the one percent rate limitation was to be applied. In so ruling, the Board was guided by Section 2(a) which refers specifically to the county assessor in defining full cash value and mandating the 1975 base-year valuation procedure. Since the utilities are assessed by the Board rather than by the county assessors, this specific reference to the county assessor was construed to leave unchanged utility valuation procedures.131

A few weeks later (June 29, 1978), the Board adopted property tax rules 460 through 471 on an emergency basis for the purpose of defining some of the provisions and applications of Proposition 13. These rules became final on September 3, 1978.

129 Report of the State Board of Equalization, 1977-78, p. 18.

130 Ibid, p. 20.

131 Ibid.