Proposition 19 would limit property taxes on seniors, disabled people and the victims of disasters. It also would change rules on inherited property, while some of the money would be added to a disaster fund.

Formally titled the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” Proposition 19 would do the following if passed:

• Permits homeowners who are over 55, severely disabled, or whose homes were destroyed by wildfire or disaster, to transfer their primary residence’s property tax base value to a replacement residence of any value, anywhere in the state.
• Limits tax benefits for certain transfers of real property between family members.
• Expands tax benefits for transfers of family farms.
• Allocates most resulting state revenues and savings (if any) to fire protection services and reimbursing local governments for taxation-related changes

Proposition 19 would allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an “upward adjustment.” It also would allow people over 55 years old or with severe disabilities to transfer their tax assessments three times, as opposed to the one-time allotment provided in current state law.

The proposition would also require that inherited homes that are not used as principal residences, such as second homes or rentals, to be reassessed at market value when transferred. This would mean that any inherited property not used as a primary home would be taxed based on the market value of the time when it was inherited, and not off of the market value of when it was originally purchased.

Additional funds generated by the change in property tax laws would be allocated to wildfire agencies and counties. According to the text of the initiative, the California State Controller would be required to deposit 75 percent of the calculated revenue to a “California Fire Response Fund,” and 15 percent to a “County Revenue Protection Fund.”

The County Revenue Protection Fund would reportedly be used to reimburse counties for revenue losses related to the measure’s property tax changes, while the Fire Response Fund would be used to fund fire suppression staffing and full-time station-based personnel.

The roots of the proposition lie as far back as 1978, when California voters approved Proposition 13, which required that properties be taxed at no more than one percent of their full cash value shown on the 1975-1976 assessment rolls. It also limited annual increases of a property’s taxable value either the inflation rate or two percent, whichever was lower.

However, when a property is sold or transferred to new owners, the property is then reassessed at one percent of its full cash value, and the limit on increases to a property’s assessed value is reset.

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Then, in 1988, Proposition 90 was passed, which allowed qualified homeowners age 55 or older to transfer the current taxable value of their original home to a replacement home in another county. However, the catch was that they could only do so if the county in which the replacement home was located agreed to participate in the program. As of 2020, only 10 of 58 California counties participated in the Prop 90 program.

Proposition 19 would allow qualified homeowners to transfer their current taxable value of their original home to a replacement home in any part of California.

State officials estimate that if Proposition 19 is passed, local governments and schools “could gain tens of millions of dollars of property tax revenue per year,” with the possibility of those gains growing “to a few hundred million dollars per year.”

Additionally, revenue from other taxes could increase by tens of millions of dollars annually for both the state and local governments. The majority of any new state revenue would be spent on the proposed California Fire Response Fund.

The proposition is supported by California Governor Gavin Newsom, along with members of both the California Democratic Party and the California Republican Party, as well as over a dozen unions and organizations.

“Prop. 19 protects tax savings and benefits for vulnerable Californians, including seniors, disabled homeowners, and wildfire victims,” writes Jim Brulte, former Chair of the California Republican Party, in the Official Voter Information Guide.

Meanwhile, the California American Civil Liberties Union (ACLU), along with the editorial boards for half a dozen prominent state newspapers stand opposed to Proposition 19.

“Proposition 19 would just expand the inequities in California’s property tax system,” The Los Angeles Times Editorial Board writes. “It would grossly benefit those who were lucky enough to buy a home years ago and hold onto it as values skyrocketed. It would give them a huge tax break and greater buying power in an already expensive real estate market. It would skew tax breaks further away from people who don’t own a home or who may be struggling to buy one.”

Over $36.2 million has been raised by campaigns in support of Proposition 19, while just over $45,000 has been raised by campaigns against the proposition.

Proposition 19 is one of a dozen state initiatives on the 2020 ballot. To read more about each of them, click here.

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