Proposition 5: Voters Reject Expanded Property Tax Benefits for Seniors

Voters have defeated Proposition 5, a California ballot measure that would have allowed homeowners 55 and older to keep their tax bills low if they sold their home and bought a new one in another California county.

Proposition 5 would have expanded property tax benefits first enacted in 1978 with the passage of Proposition 13, a landmark measure that ushered in an era of anti-tax, smaller government crusading throughout the country. Under Proposition 13, property tax rates were set at 1 percent of a property's sale price, with annual increases limited to no more than 2 percent a year. That continues until the property is sold, and it's reassessed and taxed based on the purchase price.

In the decade after Proposition 13 passed, voters approved two other ballot measures to make that tax benefit more portable, allowing homeowners 55 and older to apply their lower tax bill to a new home purchased in any county, if that county allowed it. Fewer than a dozen of California's 58 counties currently do.

Proposition 5 was placed on the ballot by the California Association of Realtors (CAR), with help from the national affiliate. Backers spent about $6 million to put the measure before voters, but then went silent. Unlike other ballot measures with their dueling TV ads for and against, voters had little awareness of a campaign for or against Proposition 5.

Realtors said their ballot measure would have allowed seniors to afford to move, freeing up larger homes for families with children. But critics said Proposition 5 was a tax giveaway to homeowners who didn't need it, while doing nothing to help others wanting to buy their first home.

Local governments also opposed it, fearing the loss of property tax revenue that the legislative analyst said would eventually rise to $1 billion a year.

But another measure to tinker with Proposition 13 is already on the horizon. A measure to remove commercial property from the protections of Proposition 13, creating a so-called split roll, has qualified for the November 2020 ballot.