NEWS RELEASE CONTACT: NAPA COUNTY ASSESSOR JOHN TUTEUR DATE: December 23, 2009 TOPIC: Proposition 13 negative inflation adjustment for 2010-2011 tax roll On June 3, 1978 California voters passed Proposition 13 which changed how property taxes were calculated and how property values were adjusted. Proposition 13 established a base year value for property whenever there was a change in ownership or completion of new construction. That base year value could be adjusted each year by no more than 2% to account for inflation, and for each of the past 31 years there has been an upward adjustment based on the California Consumer Price Index. As an example, a home that was purchased in 1985 for $400,000 had a January 1, 2009 Proposition 13 factored base year value of $618,588 because over 23 years the annual inflation adjustments of between 1 and 2 per cent resulted in a compound factor of 1.54647. For the first time since the passage of Proposition 13 the California Consumer Price Index (CCPI) actually declined between October 2008 and October 2009. This decline reflected the worst economic recession in almost 70 years that struck California and the nation following the collapse of the housing bubble and the resultant credit crunch. Thus for the 2010-2011 tax year all properties in Napa County which are assessed at their base year value will see a decline of 0.237 per cent as reflected in the CCPI. Continuing the example above of the home purchased in 1985, its January 1, 2010 Proposition 13 factored base year value will be $617,122, a value reduction of $1,466 from its 2009 base year value, based on a factor of 0.99763. “As County Assessor my job is to be fair,” said John Tuteur, Napa County Assessor-Recorder-County Clerk, “and we will enroll the appropriate value for every property based on the 2010 Proposition 13 inflation factor and current real estate market conditions.” The negative Proposition 13 base year factor will not apply to real property which is already in a decline in value status, to properties which undergo a change of ownership or new construction from July 1 to December 31 2009 or to personal property such as business equipment, boats and aircraft which are not subject to Proposition 13. “I estimate that the total Napa County assessment roll will be reduced approximately $47 million dollars because of the negative inflation factor,” Tuteur added. “More importantly the roll will not have the estimated $400 million increase that the usual 2% inflation factor would have added for a combined impact of approximately $447 million.” Please contact Assessor Tuteur at 707-253-4459 or john.tuteur@countyofnapa.org if there are any questions or comments.