An amendment to the California Constitution passed by voter initiative in June 1978 that limits property taxes to no more than 1% of full assessed value (plus any additional rates approved by local voters, such as general obligation bonds). Annual increases in assessed value are capped at 2% or the percentage growth in the state’s Consumer Price Index (CPI), whichever is less. For individual properties, the assessed value is also raised when new construction or the sale of property occurs (with a few exceptions). Proposition 13 and implementing legislation caused a shift in support for schools from local property taxes to state general funds. Local voters can levy a uniform dollar tax per parcel of land, but they cannot increase property taxes based on value with one exception. In 1986 authority for school districts to levy taxes for general obligation (G.O.) bonds for school construction or renovation was reinstituted. Because Proposition 13 drastically reduced property taxes, they are no longer the major source of school funding. Until 1978 property taxes furnished about two-thirds of education’s revenues. Proposition 13 caused a nearly exact flip-flop when the Legislature bailed out school districts with state funds. The governor and Legislature also took over the allocation of local property taxes to schools, cities, counties, and special districts.
