The Senate Governance and Finance Committee did not take action on Senate Bill 668 by Senator Patricia Bates (R-Laguna Niguel) yesterday that would delay the implementation date of a provision of Proposition 19 (2020) to February 16, 2023. The committee’s chair, Senator Mike McGuire (D-Healdsburg), instead pledged to work with Senator Bates on addressing the issues that many families are facing due to Prop. 19. Senator McGuire promised to convene a meeting and create a working group on Prop. 19 next week.
The delay in SB 668 would have applied to the “Property Tax Fairness for Family Homes” (intergenerational transfer exclusion) provision, to give time for assessors, the Board of Equalization, and the Legislature to clarify ambiguities. The delay would not have applied to the base-year value transfer provision.
Senator Bates said, “While SB 668 did not advance this week, I hope Democrats and Republicans can come to an agreement to address the issues raised by Prop. 19. The last thing we want to see is some middle class families being forced to sell their long-time homes due to higher tax bills they cannot afford.”
Approved narrowly by California’s voters in the November 2020 election, Prop. 19 helps some taxpayers while hurting others. While Prop. 19 expands “portability” of property tax base-year value, allowing homeowners over age 55 more opportunities to move to a replacement home while keeping their prior home’s lower tax bill, the downside is that this measure has repealed Proposition 58 (1986) and Proposition 193 (1996).
The loss of these constitutional protections mean property will be reassessed to market value when it is transferred from parents to children, and sometimes from grandparents to grandchildren. The only exception is if the person to whom the property is transferred moves in within one year and the property is that person’s principal residence.
However, it is not always possible for family members to relocate, especially during the COVID-19 pandemic. Some parents and grandparents have faced difficultly transferring property under the pre-Prop.19 rules due to government buildings being closed to the public. Adult children could be forced by higher taxes to sell their longtime home if they cannot move in fast enough due to Prop. 19.
County assessors and many taxpayers have expressed concerns on how to implement a significant change to California’s property tax system.
The California Assessors Association outlined their concerns to the California Board of Equalization stating, “Proposition 19 is silent on many critical implementation issues. Assessors have received a steady stream of inquiries as to how they will implement Proposition 19. It is extraordinarily urgent that ambiguities in the law are resolved.”
The California Board of Equalization’s website also states, “Unfortunately, Proposition 19 did not have companion legislation that would have clarified a host of issues.”