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By Steve Levy

The Joint Venture Proposition 13 Paper

Uploaded: Feb 11, 2012

Here is the link to the Joint Venture Index of Silicon Valley including the Special Analysis I wrote on Proposition 13.

The purpose of the paper was to explain Proposition 13 from a historical perspective and how it works now after the housing market crash.

There are no recommendations to repeal Proposition 13 in the paper or at the Joint Venture conference yesterday.

There is one fact we all have to deal with.

For 30 years from 1978 to 2008, assessed values and property taxes arose steadily averaging near 8% per year, much faster than inflation or income gains.

That stopped in 2008 as 1) housing prices declined; 2) new construction plummeted and 3) the gains in assessed value from changes in ownership also fell sharply. This is the "new normal" for at least the next several years.

That leaves local governments with two general taxes (property and sales) that will grow more slowly than the economy, even with the recovery accelerates.

This prompted Joint Venture to call for a conversation on local government finance including, but certainly not limited to Proposition 13 reforms.