Let’s get started! Implementing split-rate property taxation in your community cannot be accomplished overnight. Successful implementation will require a sustained campaign of local education, regional coalition-building, and state-level lobbying efforts. Implementing this tool should therefore be a long-term goal. You shouldn’t be discouraged, however, because this section will help you organize your initial advocacy efforts. Read on to find out whether split-rate property taxation is already allowed in your community, check out a possible campaign strategy to get the legal authorization for your community to adopt split-rate property taxes; and discover other advocates’ secrets of success.

Is your community eligible? If you live in a city with a ‘Home Rule Charter’ (call your city councilperson to find out), your community already has some discretion in setting its own property tax policy. Alternately, you may live in a city that, due to earlier lobbying efforts, has received special legislative authorization to implement split-rate property taxes (a kind of ‘limited home rule’). Finally, if you live in a city located in a state where the State Constitution allows all taxing jurisdictions the option to adopt split-rate taxation (as of this writing, this is true only in Pennsylvania), your community also has the legal authority to adopt split-rate property taxation.
 

If any of the above situations describes where you live, then you’re already well on your way to bringing the benefits of split-rate property taxes to your community. You can jump to the ‘What Can You Do?’ section to learn how to begin building political support for split-rate property taxes in your city. However, if your community does not currently have the legal authority to establish its own property tax rates, or relatedly, to establish differential rates on buildings and land, then your jurisdiction must first receive legal authorization at the state level to be able to shift to split-rate property taxation.

Even if your community has not yet received authorization at the state level to adopt split-rate property taxation, you should know that the legal framework and procedural capacity for collecting split rate property taxes is already well established in many communities: property taxes on land and buildings are commonly assessed separately, thus laying the groundwork for those communities that wish to assess land and buildings differentially. According to a study of states’ existing laws related to split-rate property taxation, 29 states already require that the value of land and buildings be assessed separately for property tax purposes; and none of the fifty states or the District of Columbia legally prohibits the separate valuation of land and improvements. In addition, the study found that an overwhelming majority (99 percent) of property tax assessors’ offices already value land and improvements separately and a majority (58 percent) already notify property owners of the separate valuation of land and improvements.

The state of affairs in California. In California, as in most states, property taxes are collected at the county level (this agency is usually called the County Assessor’s Office) and then distributed to all the cities, schools, and special service districts within the county, as well as to the county itself. However, because of Proposition 13, local city and county governments in California no longer have the authority to set their own property tax rates: Prop 13 mandated that property tax rates be capped at 1% of the property’s assessed value. In addition, Prop 13 placed control of the allocation of property tax revenues at the State level, so counties must distribute the property tax revenue they collect according to formulas established by the State Board of Equalization.

Thus in California, local governments have no control over the amount of property tax revenue they can collect, nor do they have much discretion to over the allocation of those revenues. However, with the proper enabling legislation, local governments could still implement split-rate property taxation without violating the mandates of Proposition 13, as long as they merely adjust the relative value of the tax rates levied on buildings and land (increasing the tax rate on land and decreasing the tax rate on buildings by a commensurate amount). In so doing, local governments would be shifting property tax rates, but not increasing the overall tax rate or exceeding Prop 13’s limitation of property tax rates to 1% of assessed value.

California already has the legal framework and organizational capacity to allow local governments to implement split-rate property taxation. For example, a survey of California’s existing laws relating to split-rate property taxation found that both the California Revenue and Tax Code (Section 607) and the California Constitution (Article XIII, section 13) both require land and buildings to be valued and assessed separately for property tax purposes. This requirement has been noted by the California courts (T. M. Cobb v. County of Los Angeles, 16 Cal. 606, 547 P.2d 431 (1976)). In addition, the County Assessor’s Office in all six of the California counties that were surveyed (Los Angeles, Monterey, Orange, Alameda, Lake, Fresno) already value land separately from buildings and other improvements (each of the surveyed counties also informed property owners of the separate valuations of their land and buildings on their property tax bill).

In summary, Proposition 13 does not prohibit adjusting the property tax rates levied on buildings and land (so long as the overall property tax rate does not exceed 1%); California law already requires separate valuations of land and buildings for property tax purposes; County Assessor’s offices in California have already institutionalized procedures for assessing land and buildings separately, and California taxpayers are already familiar with seeing the individual contribution of land and buildings to their overall property tax bill. Advocates who want to implement split-rate property taxes in their community must now receive authorization to do so at the state level, and the next section shows one possible campaign strategy to accomplish that very goal.

What can you do? If your community does not currently have the legal authority to establish its own property tax rates or to establish differential rates on buildings and land, then you must first receive legal authorization at the state level to be able to shift to split-rate property taxation. This authorization can be accomplished either by amendment to the State Constitution, passage of an enabling statute by the state legislature, or passage of a statewide ballot measure. The latter two strategies could be crafted to grant either 1) universal authorization to any tax-assessing entity, 2) a more limited authorization specific to one or more categories of tax-assessing entities (i.e., cities larger than 500,000 or school districts with enrolments of 75,000 or more), or 3) exclusive authorization to only one tax-assessing entity (i.e., the City of Oakland).

Although the unique circumstances of your community (as well as the organizational capacity of local advocates) will determine the specific actions and timing of the strategy that your group pursues in order to bring the benefits of split-rate property taxes to your community, strategy outlined below should serve as a useful starting point. The process might look like this:

Secrets of success. Remember that your community’s efforts to gain the option to implement split-rate property taxes will likely take several years of sustained effort. Establish realistic, short-term goals that can be accomplished in stages in order to keep you and your supporters energized.

Once your community has been granted the authority to transition from single-rate property taxes to split-rate property taxes, policymakers’ suggest the adoption of a gradualist approach. In a Working Paper on split rate property taxation for the Lincoln Institute of Land Policy, Steven B. Cord writes: