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10 <br /> <br />PROPERTY TAXES <br />All counties and cities in California receive property tax revenues. <br />Many special districts do too. For all counties and most cities and <br />non-enterprise special districts, property taxes are the largest source <br />of discretionary revenues. <br />How Property Taxes Are Calculated in California <br />The property tax is imposed on “real property” (land and permanently <br />attached improvements such as buildings) and tangible personal <br />property (movable property such as boats, aircraft and business <br />equipment). <br />The maximum tax rate permitted on real property for general purposes <br />is one percent of the property's assessed value plus voter approved <br />rates to fund indebtedness (general obligation bonds, requiring two- <br />thirds voter approval). <br />The tax rate is applied to the assessed value (AV) of the property. <br />The assessed value of real property is the “full cash value” of the <br />property in 1975-76 or at change of ownership, whichever is more <br />recent, adjusted annually by the change in the Consumer Price Index <br />(CPI), not to exceed an annual increase of two percent. The value of <br />new construction is additional. If a property changes hands, then the <br />assessed value becomes the full cash value upon change in ownership. <br />If a property’s market value falls below its factored base year value, <br />it may be temporarily reassessed to its lower actual value but in future <br />years may be reassessed at the lesser of its actual value or its factored <br />base year value. This can result in increases of more than two percent <br />as a property’s actual value returns to its earlier value, as when the <br />housing market rebounds from a slump. <br />Property Tax Revenue Distribution <br />Counties allocate property taxes to the county as well as cities, <br />special districts and school districts within the county according to <br />state law. Allocations among local agencies vary from place to place <br />due to differences in the service responsibilities among agencies <br />serving different areas and differences in the tax rates enacted by <br />those agencies prior to Proposition 13 in 1978. Full-service cities <br />generally receive higher shares than those that do not provide the <br />complete range of municipal services. For example, in a city where <br />fire services are provided by a special district, the city will get a lower <br />share, with a portion of the property tax revenues going instead to <br />the special district. <br /> <br />Page 28 of 109