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Prop 13 saved San Franciscans millions

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$447 million in 2015 alone

A photo of the homes along Lombard Street at Sunset. f11photo

The real estate site Trulia took a gander at the recent history of Prop 13, the California property tax law that remains a constant bone of contention in Sacramento’s budget dealings almost 40 years after it passed.

Some Californians believe that Prop 13—which voters approved in 1978 by a margin of nearly 2 million ballots in a 2-1 blowout—prevents property taxes from rising at all, but that isn’t accurate.

It did, however, radically alter the way the state levels property taxes and put an extremely tight cap on the size of the bill homeowners receive.

So tight, in fact, that Trulia economist Ralph McLaughlin estimates that in 2015 alone, Prop 13 cost the state—and saved California homeowners—roughly $12.5 billion, 3.6 percent of that just from San Franciscans.

(That’s the third highest holdout rate in the state, after Los Angeles and San Diego.)

Prop 13 put two hard limits in place: First, except in the event of a sale or a major remodel, cities can hike the assessed value of a home for tax purposes no more than two percent each year.

Prop 13 also stuck a uniform one percent property tax rate across the entire state. So you’re paying one percent on the value of the place back when you bought it, with up to two percent annual appreciation.

In almost all cases that’s not a lot of money relative to what you’d owe sans Prop 13 with home values assessed in “real time,” and of course longtime homeowners benefit the most.

What all this means is that San Franciscans overall would have paid more than $447 million in additional taxes last year if California were allowed to raise tax rates as fast as home values went up.

So says McLaughlin when we asked him to break it down to a dollar figure based on data from the Census’ American Housing Survey.

That also means that San Francisco’s equivalent property tax rate is only 0.6 percent, one of the lowest in the state. Although not so low as the likes of Palo Alto (0.42 percent), Millbrae (0.48 percent), or Los Altos (0.5 percent).

Thirteen remains a lucky number on the peninsula.