Proposition 13′s Effect On California Foreclosures In The Golden State

Study on the effect of Proposition 13 on the rate of California foreclosures in the Golden State is a worthy activity to take on, considering how much affect California has on the rest of the country, especially when it comes to initiatives like Prop 13. This initiative passed by the people of California in 1978 has had a far-ranging impact on the state and the rest of the country, it seems.

The official name of the initiative is “The People’s Initiative to Limit Property Taxation.” It’s officially amended the California Constitution in a way that capped taxes on real estate to a certain specific level. It also capped property tax rates and even reduced these rates in some cases by nearly 60% on certain types of property and under certain conditions.

Basically, Proposition 13 was a reaction on the part of many state voters over what at the time was believed to be unfair usage of taxes to continually raise their rates on property as a way of strengthening state revenue collections. A person who bought a home in California prior to 1978 could be staring at a big tax bill at sale and then yearly continually increasing tax bills from then on out.

Of course, the passage of an initiative that restricted the ability of legislators out in the Golden State to raise taxes without any oversight created a great deal of consternation. The issue was finally settled for good in 1992 when the US Supreme Court ruled Proposition 13 legal. Although it never directly affects the decision a person might make to go into foreclosure, it can have an impact on the state thereafter.

That’s because much of California in terms of government depends on a steady stream of revenues coming from various taxes and tax rates. While the market was strong, little trouble ensued because sales volume brought in a lot of tax revenue anyway. But nobody in the state at any level seemed to be banking any of that money for a rainy day.

Over the last few years, that rainy day has hit California and the rate of CA foreclosures has been increasing with every month that goes by. There are a few small indicators of possible stabilization, but home prices have declined for a while, taking down appraised value with them. With less value, a home will cost less in property taxes. Unfortunately, municipalities haven’t yet adjusted to that reality.

Conservative estimates by supporters of the proposition maintain that it has saved taxpayers over $528 billion from its inception until mid-2009. Those who argue for repeal continue to state that Proposition 13 has had a direct effect to the budget problems have only been exacerbated by the bust in real estate which California is currently experiencing.

In the end, the rate of CA foreclosures probably will remain steady for the near future and any speculation over repeal of Proposition 13 is probably fruitless, as many people in the Golden State demonstrate no taste for going through the repeal process. It’s far better, then, for the state to right its financial ship through a combination of spending cuts and budget discipline, it would seem.

The effect of Proposition 13 on the rate of CA foreclosures is a worthy activity to research, considering how much affect CA has on the rest of the USA, especially when it comes to initiatives like Prop 13. We’ve got the best inside scoop now on ca foreclosure properties.