Taxation.

TAXATION. INITIATIVE CONSTITUTIONAL AMENDMENT. Amends Article XIIIA, enacted as Proposition 13 in 1978, by adding additional restrictions on real property taxation and on enactment of new tax measures. Designates various effective dates for provisions. Prohibits imposition of any new tax based upon real property ownership, sale, or lease. Prohibits adoption of measures which increase any tax on any taxpayer except upon two-thirds vote of Legislature for state taxes and two-thirds vote of electorate for other governmental entities. Provides for specified refunds including refunds of real property taxes attributable to assessed value inflation adjustments in assessment years 1975-76, 1976-77, 1977-78. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: There will be both one time and ongoing fiscal effects. One time fiscal effects: (1) If pending litigation does not change current assessment practices, there will be a potential cost of approximately $1.15 billion to pay property tax refunds. These would be paid by the state ($420 million), local property taxpayers through higher levies for debt service (up to $140 million), and local governments ($590 million). If pending litigation overturns current assessment practices, the cost of refunds payable would not be attributable to this measure, but there will be a cost of $250 million to pay higher interest on the refunds. (2) The state will gain either $60 million or $13 million in increased state income tax revenues because the property tax refunds paid or higher interest will be taxable income. Ongoing fiscal effects: If pending litigation does not change current assessment practices: (1) There will be revenue losses of $54 million to local governments and $30 million to school districts. (2) There will be an unknown but probably major gain in state income tax revenues. (3) There will be unknown multimillion dollar costs and revenue losses to state and local governments due to tax rate limitations; assessments practices changes; voting requirements for tax legislation; and the definitions of taxes, fees, and assessments contained in the measure. If pending litigation changes current assessment practices, the revenue losses noted in (3) will occur