Proposal A, which passed on March 15, 1994, placed a limit on the value used to compute property taxes. Prior to 1994, the State Equilized Value (SEV) was multiplied by the Millage rate to compute a tax bill. Today's tax bill is computed by multiplying Taxable Value (TV) times the millage rate.
Property that has been continuously owned and no new construction since the passage of Proposal A will have a Taxable Value comprised of the 1994 SEV times the past seven years' Consumer Price Indexes. The Taxable Value must not exceed one-half of the Market Value and in most cases will be less than one-half of the Market Value, with this beneficial gap widening each year.
The Taxable Value may not increase annually by more than 5% or by the Consumer Price Index, whichever is less. The two exceptions to this limitation are transfer of ownership and new construction. If a transfer of ownership occurred in the prior year, the current Taxable Value is equal to the current State Equalized Value. New construction, other than normal maintenance and repairs, will raise the Taxable Value by the contributory market value of the improvements.
Also included in the passage of Proposal A was the creation of a Homestead Exemption. This exemption applies to those homeowners who own and occupy their home as their principle residence as of May 1. The homestead exemption removes the obligation of paying the school operating portion of the tax bill.