In June of 1978, California voters approved Proposition 13 which added Article XIII A to the California Constitution. As a result of this amendment, property taxation was changed by:

1. Limiting the property tax rate to 1% of assessed value (plus additional rates necessary to fund local voter-approved bonded indebtedness)
2. Placing limits for government to impose additional property taxes
3. Significantly changing property assessment methods

Before Proposition 13 was enacted, annual property taxes were based on current fair market value. Under this proposition:

• Real property is reappraised only when a change in ownership occurs or when new construction takes place.
• Except for these two instances, property assessments cannot be increased by more than 2% annually.

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