A November initiative would cost local government $1 billion in property tax revenue, much of it earmarked for public schools, the nonpartisan Legislative Analyst reports.
The proposal: Proposition 5 would allow homeowners 55 and older to move to more expensive homes and keep their lower property tax bills from their old homes.
Current law: Older homeowners can keep existing property tax bills if they move within their county to less expensive homes. Ten counties also allow people to move across county lines and keep old property tax rates.
Backers say the initiative would ease the housing crisis by making it more affordable for empty nesters to move out of larger homes, freeing up housing for families:
“If seniors can move to a new primary residence that better fits their needs (such as downsizing after children move away), their old homes will generate more tax revenue once sold to new buyers” — Ballot pamphlet.
Opponents cite the Legislative Analyst, which says local government including schools would lose up to $1 billion a year over time. The state would be expected to make up the difference:
“The real estate interests who cynically paid to put Prop. 5 on the ballot have decided to pit some homeowners against others. Why? You’ll have to ask them. But we think it probably has something to do with their profits” — Ballot pamphlet.
Money matters: Realtors have spent $7.2 million on Proposition 5 so far. Unions representing teachers and firefighters oppose it but have spent little to date.
This story originally appeared in WhatMatters, our daily roundup of the most important policy and political news and analysis in California. Subscribe here.