Many people find the basic rules for collection and use of property taxes in California to be confusing. The Legislative Analyst’s Office (LAO) has prepared a helpful report about state property taxes, including a series of easy-to-watch videos. It describes the amount of taxes collected, the types of properties covered, the distribution of property tax revenues, the basic rules of Proposition 13 and an economic analysis of California property taxes according to five criteria: growth, stability, simplicity, neutrality and equity. Overall, the LAO scored California property taxes well on the first three criteria, less well on the last two.
Property taxes are important for the water sector, because local governments control most investments in drinking water, wastewater and irrigation infrastructure. Approximately 80 percent of Californians receive their drinking water service from local government agencies, and almost 100 percent receive wastewater treatment, collection, disposal and reuse services from such agencies. The nature and amount of property taxes can have a significant effect on the funds available for investment in water infrastructure. While the primary source of funds for such investments come from user fees, a portion is derived from property taxes. I recommend the report to anyone involved in the water sector in California or other jurisdictions.