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At the time of this writing, Proposition 19 (Prop 19), holds onto a narrow lead statewide. Should the margin hold, Prop 19 will allow certain homeowners to transfer the base-value of their home to a new home anywhere in California for purposes of property taxes beginning April 2021. It would also require those who inherit property and choose not to reside in that property to pay property taxes on the current assessed value of that property. Collectively, the Legislative Analyst’s Office estimates these changes to the State Constitution will eventually generate several hundreds of millions of dollars per year in revenues that will largely be directed to fire protection agencies.

The new property tax base-value portability provisions under Prop 19 will apply to California residents age 55 and older, as well as to those who are disabled or a victim of a wildfire or other natural disaster, regardless of the replacement property’s value or location, so long as the replacement property is purchased or constructed within two years of the date the original property is sold. Homeowners will be allowed to transfer their property tax base to a replacement residence, up to three times with formulas applied to purchases over or under the sold home’s value. Under current law this portability of base year tax assessments is generally limited to intra-county purchases and between those counties who have passed resolutions agreeing to accept it for those who are severely disabled and over 55.

Prop 19 requires the Director of Finance to determine any net revenue gain to the state’s general fund resulting from these changes (such as savings to the general fund to provide minimum school funding should local property tax revenues rise to offset it) and allocates those savings to local agency fire suppression staffing and to reimburse local agencies for local revenue losses that may result from these changes. It establishes the California Fire Response Fund (75 percent of the state general fund savings) and the County Revenue Protection Fund (15 percent) and the remainder to the state (10 percent).

The County Revenue Protection Fund would allow for grants to reimburse counties that encounter “negative gain” or net losses to property tax. The California Fire Response Fund must be used to expand fire suppression staffing and must not supplant existing state or local funds utilized for those purposes. Twenty percent would go to CalFIRE while 80 percent is used in the Special District Fire Response Fund which will be allocated according to specific requirements aimed at those fire suppression districts that are underfunded as defined by the measure.

Under Prop 19, the parent-child and grandparent-grandchild exclusion from change in ownership for re-assessment will now apply only if the property continues as the primary residence of the transferee. Furthermore, even if the property continues as the primary residence of the transferee, and the property has a current market value of more than $1 million, the exclusion can only reduce assessed value by $1 million (and adjusted for inflation in out years). Under current law properties passed down from grandparents or parents are exempt from re-assessment and other properties up to $1 million.

According to the Legislative Analyst’s Office; “Overall, More Property Taxes for Local Governments and Schools. Some parts of the measure would increase property taxes. Other parts would decrease them. Overall, property taxes for local governments and schools probably would increase. In the first few years, local governments could gain tens of millions of dollars per year. Over time, these revenue gains could grow to a few hundred million dollars per year. Schools could receive similar property tax gain…

Higher Costs for Counties. Counties probably would need to hire new staff and make computer upgrades to carry out the measure. This would increase costs for counties by tens of millions of dollars per year.”

At the time of this writing there were still millions of unprocessed ballots statewide. Prop 19 held onto a lead of over 350,000 votes, or 2.6 percent. The State will certify the election on December 11.