California Proposition 19, the Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment, is on the ballot in California as a legislatively referred constitutional amendment on November 3, 2020.
|A “yes” vote supports this constitutional amendment to:
* allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;
* increase the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;
* require that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and
* allocate additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.
|A “no” vote opposes this constitutional amendment, therefore continuing to:
* allow eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value;
* keep the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments at one;
* allow the tax assessments on inherited homes, including those not used as principal residences, to be transferred from parent to child or grandparent to grandchild.
How would the ballot measure change the rules governing tax assessment transfers?
The ballot measure would change the rules for tax assessment transfers. In California, eligible homeowners can transfer their tax assessments to a different home of the same or lesser market value, which allows them to move without paying higher taxes. Homeowners who are eligible for tax assessment transfers are persons over 55 years old, persons with severe disabilities, and victims of natural disasters and hazardous waste contamination.
The ballot measure would allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. The number of times that a tax assessment can be transferred would increase from one to three for persons over 55 years old or with severe disabilities (disaster and contamination victims would continue to be allowed one transfer).
How would the ballot measure affect inherited properties?
In California, parents or grandparents can transfer primary residential properties to their children or grandchildren without the property’s tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, can also be transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.
The ballot measure would eliminate the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, such as using a property a rental house or a second home. When the inherited property is used as the recipient’s principal residence but has a market value above $1 million, an upward adjustment in assessed value would occur. The ballot measure would also apply these rules to certain farms. Beginning on February 16, 2023, the taxable value of an inherited principal residential property would be adjusted each year at a rate equal to the change in the California House Price Index.
What would the ballot measure do with changes in revenue?
The ballot measure would create the California Fire Response Fund (CFRF) and County Revenue Protection Fund (CRPF). The ballot measure would require the California Director of Finance to calculate additional revenues and net savings resulting from the ballot measure. The California State Controller would be required to deposit 75 percent of the calculated revenue to the Fire Response Fund and 15 percent to the County Revenue Protection Fund. The County Revenue Protection Fund would be used to reimburse counties for revenue losses related to the measure’s property tax changes. The Fire Response Fund would be used to fund fire suppression staffing and full-time station-based personnel.
Text of measure
The ballot title is as follows:
|“||Changes Certain Property Tax Rules. Legislative Constitutional Amendment.||”|
The ballot summary is as follows:
Fiscal impact statement
The fiscal impact statement is as follows:
- See also: Article XIII A, California Constitution
Note: Use your mouse to scroll over the below text to see the full text.
(a) Limitation on Property Tax Increases on Primary Residences for Seniors, the Severely Disabled, Wildfire and Natural Disaster Victims, and Families. It is the intent of the Legislature in proposing, and the people in adopting, this section to do both of the following:
(b) Property Tax Fairness for Seniors, the Severely Disabled, and Victims of Wildfire and Natural Disasters. Notwithstanding any other provision of this Constitution or any other law, beginning on and after April 1, 2021, the following shall apply:
(c) Property Tax Fairness for Family Homes. Notwithstanding any other provision of this Constitution or any other law, beginning on and after February 16, 2021, the following shall apply:
(d) Subdivision (h) of Section 2 shall apply to any purchase or transfer that occurs on or before February 15, 2021, but shall not apply to any purchase or transfer occurring after that date. Subdivision (h) of Section 2 shall be inoperative as of February 16, 2021.
(e) For purposes of this section:
(a) Protection of Fire Services, Emergency Response, and County Services. It is the intent of the Legislature in proposing, and the people in adopting, this section and Section 2.3 to do both of the following:
(b) (1) The California Fire Response Fund is hereby created within the State Treasury.
(c) For purposes of the calculations required by Section 8 of Article XVI, moneys in the California Fire Response Fund and the County Revenue Protection Fund shall be deemed to be General Fund revenues which may be appropriated pursuant to Article XIII B.
(d) The Director of Finance shall do the following, as applicable:
(e) No later than September 15, 2022, and each subsequent September 15 thereafter, the Controller shall do both of the following:
(f) Moneys in the California Fire Response Fund shall be appropriated by the Legislature in each fiscal year exclusively for the purposes of this section and, except as otherwise provided in subdivision (g), shall not be appropriated for any other purpose. Moneys in the California Fire Response Fund may be used upon appropriation without regard to fiscal year and shall be used to expand fire suppression staffing, as set forth in paragraphs (1) to (4), inclusive, and not to supplant existing state or local funds utilized for those purposes.
(g) Notwithstanding subdivision (f), if in any fiscal year after the first fiscal year for which moneys are transferred from the General Fund to the California Fire Response Fund pursuant to this section the amount transferred exceeds the amount transferred in the previous fiscal year by more than 10 percent, the Controller shall not transfer the amount in excess of that 10 percent, which shall be available for appropriation from the General Fund for any purpose.
(a) Each county shall annually, no later than the date specified by the California Department of Tax and Fee Administration by regulations adopted pursuant to this section, determine the gain for the county and for each local agency in the county resulting from implementation of Section 2.1 by adding the following amounts:
(b) A county or any local agency in the county that has a positive gain determined pursuant to subdivision (a) shall not be eligible to receive reimbursement from the County Revenue Protection Fund. A county or any local agency in the county that has a negative gain determined pursuant to subdivision (a) shall be deemed to be an eligible local agency entitled to a reimbursement from the County Revenue Protection Fund.
(c) The California Department of Tax and Fee Administration shall determine each eligible local agency’s aggregate gain every three years, based on the amounts determined pursuant to subdivision (a) for each of those three years, and provide reimbursement to each eligible local agency with a negative gain from the moneys in the County Revenue Protection Fund equal to that amount. If there are insufficient moneys in that fund to cover the total amount of reimbursements under this section, the California Department of Tax and Fee Administration shall allocate a pro rata share of the moneys in the fund to each eligible local agency based on the amount of the eligible local agency’s reimbursement relative to the total amount of reimbursements under this section.
(d) At the end of each three-year period described in subdivision (c), after the California Department of Tax and Fee Administration has reimbursed each eligible local agency that has experienced a negative gain during that three-year period, the Controller shall transfer the remaining balance, if any, in the County Revenue Protection Fund to the General Fund, to be available for appropriation for any purpose.
(e) The California Department of Tax and Fee Administration shall promulgate regulations to implement this section pursuant to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), as may be amended from time to time by the Legislature, or any successor to those provisions.
(f) For purposes of this section and Section 2.2, an “eligible local agency” is a county, a city, a city and county, a special district, or a school district as determined pursuant to subdivision (o) of Section 42238.02 of the Education Code as it read on January 8, 2020, that has a negative gain as determined pursuant to this section.
Yes on 19: Tax Savings and Housing Relief for Seniors, Severely Disabled, And Wildfire Victims was organized as a political action committee (PAC) to support Proposition 19. The campaign had raised $19.15 million. The California Association of Realtors Issues Mobilization PAC was the largest donor, contributing $15.70 million. Before Proposition 19, the PAC was called Homeownership for Families and Tax Savings for Seniors and supported the California Property Tax Transfers and Exemptions Initiative.
|Cash Contributions||In-Kind Contributions||Total Contributions||Cash Expenditures||Total Expenditures|
The following table includes contribution and expenditure totals for the committee in support of the measure.
|Committees in support of Proposition 19|
|Committee||Cash Contributions||In-Kind Contributions||Total Contributions||Cash Expenditures||Total Expenditures|
|Yes on 19: Tax Savings and Housing Relief for Seniors, Severely Disabled, And Wildfire Victims||$19,076,476.40||$70,000.00||$19,146,476.40||$10,471,499.84||$10,541,499.84|
The following were the top five donors who contributed to the support committee.
|Donor||Cash Contributions||In-Kind Contributions||Total Contributions|
|California Association of Realtors Issues Mobilization PAC||$15,700,000.00||$0.00||$15,700,000.00|
|National Association of Realtors||$2,800,000.00||$0.00||$2,800,000.00|
If you know of media editorial board endorsements that should be listed here, email email@example.com.
The following media editorial boards published an editorial opposing the ballot measure:
- The Orange County Register Editorial Board: “But Prop. 19 is best understood for what it is: an attempt by real estate interests to accomplish what they couldn’t accomplish two years ago by pandering to the state’s firefighters union. This is a special-interest measure that seeks to raise hundreds of millions of new tax revenues to appease yet another special interest. Prop. 19 has one good feature — portability. Counties ought to enable it forthwith, as a few already have done. But Prop. 19 is a cash grab, not tax reform; it’s not fair to property heirs, and it buys off a union so it has a better chance of passing. Vote it down.” [Source]
- Mercury News & East Bay Times Editorial Boards: “Prop. 19 merely plugs one hole in the state’s porous property tax laws while creating another. It’s time for holistic reform that simplifies the system and makes it more equitable. This isn’t it. […] The longer a person had owned their current home, and already benefited from inordinately low tax bills due to Prop. 13, the greater the tax break on the new property. And those who downsize would often be competing with first-time buyers for more-affordable smaller homes. The real reform would be to abolish the tax-transfer program, not expand it. Vote no on Prop. 19.” [Source]
- The Bakersfield Californian Editorial Board: “Proposition 19 is another do-over on the ballot. Two years ago, the real estate industry spent $13 million on a similar initiative campaign to expand the program statewide and enhance the benefit for eligible homeowners. Sixty percent of voters rejected the initiative. They should do the same this year.” [Source]
Withdrawal of Initiative 19-0003
The California Association of Realtors (CAR), which was behind the Property Tax Transfers and Exemptions Initiative, negotiated with the California State Legislature for Assembly Constitution Amendment 11 (ACA 11). However, ACA 11 did not receive legislative approval before the deadline on June 25, 2020, to place measures on the general election ballot.
CAR’s Alex Creel, who is listed as the initiative’s proponent, asked for the ballot initiative’s withdrawal to be conditioned on two legislative actions:
(1) the passage of ACA 11, as written on June 23, on or before June 26, 2020
(2) the adoption of Senate Bill 300 (SB 300), as written on June 23, on or before July 1, 2020.
SB 300 was written to provide the state Legislature with additional time to place ACA 11, along with several other constitutional amendments, on the ballot for November 3, 2020. ACA 11 was approved on June 26. SB 300 was signed on June 30.
Steve Reyes, chief counsel for the office of Secretary of State Alex Padilla (D), responded to the request for a conditional withdrawal, saying that, under existing law, the ballot initiative had to be certified for the ballot because the deadline to withdraw passed on June 25. However, the office also said the withdrawal would be accepted after the deadline should ACA 11 and SB 300 both pass.
House Speaker Anthony Rendon (D-63) wrote to Secretary of State Padilla, stating, “At this point, you have no legal authority to remove Initiative #1864 from the November ballot. Our house will consider its legal options for challenging any removal of Initiative #1864 from the ballot, if that should occur.”
California Proposition 13 (1978)
California Proposition 13, the Tax Limitations Initiative, was on the ballot for the election on June 6, 1978. Voters approved Proposition 13, with 64.79 percent voting for passage. Howard Jarvis, who founded the Howard Jarvis Taxpayers Association, developed Proposition 13. He worked with Paul Gann on writing the ballot initiative.
Proposition 13 required that properties be taxed at no more than 1 percent of their full cash value shown on the 1975-1976 assessment rolls and limited annual increases of assessed (taxable) value to the inflation rate or 2 percent, whichever was less. When a property is sold or transferred to new owners, however, the property is reassessed at 1 percent of its full cash value and the limit on increases to assessed value resets.
Amendments to Proposition 13
The following ballot measures amended Proposition 13 to change who can transfer their home’s taxable value and how the transfers work:
- Proposition 58 (1986): Voters approved Proposition 58, which allowed the transfer of a principal residence between spouses or between parents and children without a reset on the home’s taxable value. Proposition 58 also exempted the first $1 million of other real properties that are transferred from parent to child from tax reassessments.
- Proposition 60 (1986): Voters approved Proposition 60, which permitted homeowners over the age of 55 to transfer the taxable value of their present home to a replacement home, assuming the replacement home was of equal or lesser value, located within the same county, and purchased within two years of selling the original home.
- Proposition 90 (1988): The voter-approved Proposition 60 allowed qualified homeowners age 55 or older to transfer the current taxable value of their original home to a replacement home in another county, but only if the county in which the replacement home is located agrees to participate in the program.
- Proposition 193 (1996): Proposition 193, which was approved, allowed the transfer of a principal residence from a grandparent to a grandchild when the parent is deceased without a tax reassessment. Proposition 193 also exempted the first $1 million of other real properties that are transferred from grandparent to grandchild from tax reassessments.
Proposition 90 tax transfers between counties
In 1988, voters approved Proposition 90, which allowed qualified homeowners age 55 or older to transfer the current taxable value of their original home to a replacement home in another county, but only if the county in which the replacement home is located agrees to participate in the program.
As of 2020, 10 counties in California had adopted ordinances to accept the tax transfers of qualified homeowners age 55 or older from the other counties allowing tax transfers between counties. For example, a person age 55 or older who sold a house in Los Angeles County would be allowed to transfer their original home’s taxable value to their new home in San Diego County, assuming the new home was of equal or lesser value than the original home.
The following map illustrates which counties allow for tax transfers between each other, as of 2018:
Tax policies on the ballot in 2020
- See also: Taxes on the ballot
In 2020, voters in 12 states will vote on 19 ballot measures addressing tax-related policies. Ten of the measures addressed taxes on properties, three were related to income tax rates, two addressed tobacco taxes, one addressed business-related taxes, one addressed sales tax rates, one addressed fees and surcharges, and one was related to tax-increment financing (TIF).
Click Show to read details about the tax-related measures on statewide ballots in 2020.
Path to the ballot
- See also: Amending the California Constitution
In California, a two-thirds vote is needed in each chamber of the California State Legislature to refer a constitutional amendment to the ballot for voter consideration.
In 2019, the constitutional amendment was introduced as Assembly Concurrent Resolution 11 (ACA 11). The original version of ACA 11 was designed to add the Legislative Analyst to the California Constitution. The California State Assembly passed the original version on May 6, 2019. The Senate Elections and Constitutional Amendments Committee adopted a rewritten version of ACA 11, which addressed property tax transfers and exemptions, on June 23, 2020. The California State Senate voted 29 to 5 to pass the rewritten version of ACA 11 on June 25, 2020. The California State Assembly voted 56 to 5 to pass ACA 11 on June 26, 2020. As one seat was vacant in the Assembly, 53 votes were needed to pass ACA 11.
Senate Bill 300
Based on California Elections Code 9040 (CEC 9040), the deadline for the California State Legislature to place legislative referrals, including constitutional amendments, on the ballot for the general election on November 3, 2020, was June 25, 2020. Since CEC 9040 is a statute, the state Legislature can waive or adjust the referral deadline with a bill.
With Senate Bill 300 (SB 300), the state Legislature is seeking to allow more time to place three constitutional amendments—ACA 4, ACA 11, and ACA 25—on the ballot for November 3. SB 300 would give the state Legislature until July 1, 2020, to pass the constitutional amendments.
On June 26, the Assembly voted 47 to 16 to pass SB 300. On June 29, the Senate voted 29 to 8 to pass SB 300.