The assessed values of properties subject to Proposition 13 will increase 2 percent for the 2018 assessment roll – the maximum allowed under the property tax initiative’s annual inflation adjustment provisions – the State Board of Equalization reported November 30.
The Proposition 13 inflation factor is the percentage change, rounded to the nearest one-thousandth of 1 percent, from October of the prior fiscal year to October of the current fiscal year in the California Consumer Price Index (CCPI) for all items, as determined by the California Department of Industrial Relations.
The CCPI increased from 257.836 in October 2016 to 265.472 in October 2017. Rounded to the nearest one-thousandth of 1 percent, this is an increase of 2.962 percent, but the 2 percent cap limits the increase.
According to BOE data, the inflation adjustment has reached the maximum 2 percent level in 34 of the 43 years that it has been in effect. Only once, for the 2010 assessment roll, during the height of the nationwide “mortgage meltdown,” did the inflation adjustment result in a reduction in assessed values (by 0.24 percent).
The BOE numbers dispel a myth perpetrated by critics of Proposition 13 who frequently claim that longtime property owners are paying “the same amount” in property taxes now as in the ‘70s. In fact, the assessed value has increased 2 percent nearly every year, providing predictable property tax revenue growth for local government while protecting homeowners and business owners from large year-to-year tax increases that otherwise might threaten their ability to keep their homes and businesses.
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