Parcel tax

A parcel tax is a highly regressive real property tax used in California for the funding of K-12 public education and other ongoing local government services and programs. It is not uncommon for homeowners in California, especially in the Bay Area in northern California, to have many parcel taxes appearing on the annual property tax bill. The total amount of all parcel taxes levied on some parcels, especially on modest single-family homes, can sometimes be so high as to even exceed the property tax owed under the basic 1% tax rate limit contained in Proposition 13 (1978).

Parcel taxes originated in response to California's Proposition 13 (1978), a state initiative constitutional amendment approved by California voters in June 1978. Proposition 13 limited the property tax rate based on the assessed value of real estate to 1% per year. However, a parcel tax circumvents the property tax rate limits of Proposition 13 because it is a flat tax on each parcel of real property and does not vary according to the assessed value of the property. As a result, a parcel tax does not violate the ad valorem property tax rate limits of Proposition 13.

Mello-Roos taxes are a species of parcel tax levied under the Mello-Roos Community Facilities Act of 1982.Mello-Roos taxes are levied to pay for various local government services and infrastructure. The use of Mello-Roos taxes has been controversial in many local governments in California, especially for homeowners who have to pay such taxes in addition to the basic 1% property tax rate under Proposition 13.

Simple majority vote parcel taxes were found unconstitutional under the uniformity of property taxation provision of the California Constitution. To the extent parcel taxes are legally authorized and allowed by law, Proposition 218 (1996) ("Right to Vote on Taxes Act") requires every parcel tax be levied as a special tax (a tax legally dedicated for specific purposes) subject to two-thirds voter approval.

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