How does Proposition 13 affect budgeting today?

Question

What will be an ideal response?

Answer 1

Varies. Prior to 1978, cities, counties, and schools relied on property taxes to finance their budgets, taxes that largely fund essential services. When Prop 13 capped property taxes at 1% of a home or commercial building's purchase price and limited property assessment increases to no more than 2% per year, local governments were forced to look for other ways to pay for services (now mainly sales taxes and fees), and state government assumed responsibility for refilling local government accounts and funding schools. In tough economic times state lawmakers "borrow" from cities and counties, leaving them short by millions of dollars that they rely on to provide services to local residents. Low property taxes affect both state and local governments, which have to look for other sources of revenue to meet their general obligations.