Advocacy Updates

Property Tax Relief Bill Moves Ahead

Bill 21, which provides property tax relief to property owners who dedicate their property for lifetime residential use, is receiving opposition from the Department of Budget and Fiscal Services (BFS). However, the bill will move to a second reading before the full council. BFS testified that the bill would discriminate against certain groups of property owners. They explained that when real property taxes are limited by a specified percentage increase year over year in a rising market, new owners, including first-time homebuyers, will bear a greater proportion of the taxes than their neighbors. The length of time of ownership has no direct correlation to the ability to pay real property taxes.

 
BFS added that when limitations are placed on the real property taxes, the tax burden could shift to less desirable areas and types of properties. Such limitations can be regressive in nature and benefit certain homeowners at the expense of others. Also, limiting the taxes for properties that are rebuilt or renovated based upon a percentage over the previous year will unfairly benefit homeowners who undertake extensive costly renovations. The impact on the city’s finances could be substantial and hamper its ability to provide necessary public services.
 
The administration believes that an unintended consequence of the bill could be an increase of the real property tax rates for other property classifications. In California, the result of placing limitations on real property taxes has had far-reaching effects on local governments, including reduction in services to park maintenance, public safety and libraries, a decline in infrastructure and school systems, and lower bond ratings, which increase the cost of borrowed money for essential projects. The city believes that Bill 21 is not necessary, as the current home exemption and county tax credit are sufficient measures to provide tax relief to those homeowners who are truly in need of such assistance.

 

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