Pulverizing property taxes since 1978: The history of Proposition 13 and its modern-day impact

The passage of Proposition 13 in California on June 6, 1978 presented an enticing new landscape for homeowners and radically altered the state’s taxation for years to come. 

Officially known as the People’s Initiative to Limit Property Taxation, and as the Jarvis-Gann Amendment after co-authors Howard Jarvis and Paul Gann, Prop. 13 continues to make a long-standing impact on California homeowners 46 years later. 

Supporters of Prop. 13 claim it has saved generations of homeowners from losing their property; its opponents argue the amendment has deprived public services of tax revenue and allowed commercial properties to escape just taxation. 

Today, as California cities struggle to build affordable housing and fund state infrastructure improvements, the existence of Prop. 13 remains controversial.

There is no universal agreement on whether Prop. 13 has been more helpful or hurtful. However, whether they are aware of it or not, every California resident has been affected by Prop. 13 — so let’s dive in. 

Prop. 13 origins and significance

The charismatic face of Prop. 13 in California was unquestionably Howard Jarvis — a politician, businessman, avid anti-tax advocate and namesake of the Howard Jarvis Taxpayers Association.  

With rapidly rising inflation and sky-high gas prices due to the ongoing energy crisis during the 1970s, thousands of Californians were concerned about losing their homes. Jarvis’s calls for citizen action inspired them to act on their fears and vote for property tax limitations.  

Property taxes are paid to a local state government based on where the property is located and based on the purchase price and/or value of a specific property. The revenue raised from property taxes in California help fund public schools, local infrastructure and government services as well as pay for first responders and law enforcement.  

Channeling the incensed character of newscaster Howard Beale from the 1975 film Network, Jarvis adopted Beale’s trademark rant of “I’m mad as hell, and I’m not going to take this anymore!” Jarvis equipped the phrase as the motto for Prop. 13, stoking a cult of personality that galvanized voters to curb rising taxes. 

A YouTube video from KPBS detailing the legacy of Prop. 13 also cites the failure of the state legislature to pass meaningful tax relief in 1977 as another potential cause for strife among Californians. Coupled with it was a growing belief that legislators were wasting the state’s tax revenue on trips and frivolous expenses.  

According to the Public Policy Institute of California, Prop. 13 consists of three essential elements:

1. Limits property tax to 1% of the assessed annual value at the time of purchase. 
2. Restricts annual tax increases to no more than 2% until the property is sold. (If ownership of property changes hands or new construction is completed on the property then it will be assessed at the current market rate.)
3. Requires a two-thirds majority to be reached in both legislative houses for there to be any increases on tax rates in the state — including income tax. Also requires that special taxes imposed by local governments be approved by two-thirds of voters. 

The 1978 California Proposition 13 passed in a landslide, earning over 62% of “Yes” votes, despite strong opposition from then-Governor Jerry Brown, becoming a certified state amendment as article XIII A of the California Constitution. 

UCLA’s Blueprint Magazine reported that before the massive 1978 legislation, the statewide average property tax rate was 2.67 percent. With the passage of Prop. 13, that tax rate was now capped at 1%, instantly securing billions in tax breaks for some California homeowners. 

Long-term impacts of Prop. 13

Prop. 13 offered a massive incentive for homeowners to continue living in the same home to reap the rewards of tax breaks. 

Theoretically, two homes sitting right next to each other could be worth virtually the same on the housing market. But, if one homeowner has lived in the neighborhood for five years while the other has had their house for 15, then the homeowner who has lived there the longest will likely pay significantly less in property taxes. With Prop. 13, the waiting game pays off.  

The California Dream Series, a media research collaboration created for the 40th anniversary of Prop. 13, mapped the long-term financial impact that the amendment has had on California neighborhoods. Working with Zillow’s Zestimate tool and using data from 2017 and 2018, the map shows that Belmont Shore and Naples are the two Long Beach neighborhoods impacted most by Prop. 13.  

Neighborhood	Belmont Shore	Naples
Total tax savings/revenue lost under Prop. 13	$6,207,711	$8,797,707
Tax savings/revenue lost per home	$3,343	$6,307
Effective tax rate	0.69%	0.6%
Avg. assessed value	$570,300	$729,900
Avg. market value	$1,075,700	$1,565,000

While long-term homeowners benefitted from the generous property tax initiative, public schools took a big hit. With property tax revenue cut by more than half — 60% according to The California Dream Series — schools received massive budget cuts, leading to a noticeable disparity in the amount of teachers in the classroom and per-student spending. 

As a long-term result, California had the highest teacher-to-student ratio in the nation in 2022 according to Public School Review, with an average of 22 students to one teacher per classroom. District Administration reports this ratio as twice as high as the lowest ratio in the U.S. of 11 students to one teacher in Maine. 

The enduring legacy of Prop. 13 reared its head once again during the March 3, 2020 election in California. A new education-focused bill named Prop. 13, authored by Long Beach’s former District 70 Assemblymember Patrick O’Donnell, was surprisingly voted down with 53% of voters against the legislation. 

The bill, which notably received opposition from the Howard Jarvis Taxpayers Association, would have authorized the state to borrow $15 billion for renovations, funding and new school construction by selling generational obligation bonds. 

There is a strong belief that the primary reason the bill failed is due to its association with the 1978 Prop. 13. After becoming the first education bond voted down in California since 1994, according to EdSource, O’Donnell sent out a post on Twitter (now X), saying “I will be introducing legislation to retire the number 13 to ensure voters are not misled in future elections.” 

When looking back on the history of Proposition 13 in 2016, the New York Times reports that the landmark California legislation inspired similar tax revolts in several other states. That being said, Prop. 13 likely remains the strongest piece of the anti-tax movement. 

It is difficult to gauge the extensive aftermath of Prop. 13 because of the perplexing web of amendments tied to it, as depicted in the CalMatters Prop. 13 family tree. As of 2020, California has voted on 33 potential amendments to Prop. 13, adding to its legislative legacy.  

Where do people stand on Prop. 13 today?

In June 2018, research from the Public Policy Institute of California found the majority of California voters still support Prop. 13. 

The study found that 57% of Californians and 65% of likely voters believe Prop. 13 turned out mostly good for California. It also found that homeowners compared to renters were more likely to view Prop. 13 as a good thing (65% to 50%, respectively) and that at least half of all voters across all demographics except African Americans (39%) viewed it as good.

California voters had the chance to revise Prop. 13 with the approval of Prop. 15 on the Nov. 3, 2020 ballot, but the legislation was narrowly defeated with 51.8% of “No” votes prevailing. Prop. 15 would have secured billions of dollars in revenue, including over $2.5 billion for schools and community colleges statewide according to EdSource, and required commercial properties to be reassessed every three years. 

In 2022, a 47-page report from The Opportunity Institute and Pivot Learning named “Unjust Legacy: How Proposition 13 Has Contributed to Intergenerational, Economic, and Racial Inequities in Schools and Communities” reckoned with how the greatest benefactors of Prop. 13 were wealthy white homeowners. The report also proposes potential reforms for Prop. 13 as well as ways to close California’s housing wealth gap between Black and Latino residents and white residents. 

With strong support for property tax limitations and organizations like the Howard Jarvis Taxpayers Association still leading the anti-tax crusade, it is unclear whether voters will ever shed some of the Prop. 13 property tax protections in pursuit of resounding housing reform.