Proposition 13, which was adopted in 1978 as an initiative measure to reduce property taxes, caused a lot of hair-tearing on the part of California's officials and public employee unions. Now thousands of property owners are filing for tax refunds from their home counties as a result of a superior court decision which held that county assessors erred in interpreting the Jarvis-Gann measure.
Proposition 13 returned property assessments to their 1975 levels and permitted them to increase by no more than 2 percent per year thereafter as long as the ownership remained the same. The assessors chose to interpret this as meaning that starting in 1978-1979 they could base taxes on the 1975 valuation plus 2 percent increases for the fiscal years between that time and 1978 when Prop. 13 was adopted. The court held that this reading of the act was unconstitutional (Prop. 13 being part of the state constitution). The result, it said, was that taxes had been levied ever since that were from 2 percent to 6.12 percent too high.
The court decision, which is under appeal, went little noticed until a taxpayer group published an ad in the San Jose papers about it. There appeared to be some urgency about filing applications, because the revenue and taxation code says claims must be filed within four years after the date that taxes for which refunds are sought were paid. The taxpayer group offered to provide the telephone number of the office which would send out the necessary forms. Hal Rogers, who took the calls, says he was swamped with hundreds of them.
With the state narrowly saved from bankruptcy by a loan as the Legislature argued over a budget, and all political jurisdictions complaining about a shortage of funds, the question arises as to where the counties will get the money for a payback. Observers think that a final resolution is at least three years away while the matter goes through the appeals court and probably the state supreme court. By that time revenues may have improved with a business recovery, but in any case it is considered likely that the method of repayment will be by tax credits rather than cash refunds if the superior court is upheld.
The San Jose Mercury and News did a study last year which indicated that some of the tears being shed over Proposition 13 by public officials and employee unions may be of the crocodile variety.
The study showed that in fiscal 1977-78, the last year before the initiative became effective, San Jose residents paid $27 million in property taxes. Their bill was cut to $12.5 million the following year, but the loss was partly offset by $5.9 million from the state surplus of billions which was ''discovered'' after the election. But in 1979-80 the city increased its property tax take to $ 17.7 million, in 1980-81 to $22.4 million, and the city's budget department estimated the amount for the fiscal year which began last July 1 at $29.4 million.
But the city was doing right well in other respects. It levies a 5 percent public utility tax which has soared along with burgeoning charges for gas, electricity, water, and telephones. In 1977-78 this raised $11.6 million, but $ 25.4 million was expected from it in the current fiscal year. Sales taxes, $22.8 million in the earlier period, were expected to reach $40.1 million this year.
The number of city employees remained about level during this period, but San Jose has raised its operating budget from $115.5 million to a current level of about $180 million.
The newspaper headed its editorial on the subject, ''Stop Blaming Proposition 13.''