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States Constitution. The Court stated, among other things, that(i) the State has a legitimate interest in local <br /> neighborhood preservation, continuity and stability, and consequently may decide to structure its tax system <br /> to discourage rapid turnover in ownership of homes and businesses, and (ii) the State may legitimately <br /> conclude that a new owner at the time of acquiring his or her property does not have the same reliance <br /> interest warranting protection against higher taxes as does an existing owner. Notwithstanding the <br /> Nordlinger ruling, however, there can be no assurance that Article XIIIA will not be challenged on other <br /> constitutional grounds in the future. <br /> Legislation Implementing Article XIIIA <br /> Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. <br /> Under current law, local agencies are no longer permitted to levy directly any ad valorem property tax. The <br /> 1% property tax is automatically levied annually by the county and distributed according to a formula among <br /> using agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied <br /> prior to 1978. Any special tax to pay voter-approved indebtedness is levied in addition to the basic 1% <br /> property tax. <br /> In the general election held November 4, 1986, voters of the State of California approved two <br /> measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 amends Article XIIIA <br /> to provide that the terms "purchased" and "change of ownership," for purposes of determining full cash <br /> value of property under Article XIIIA, do not include the purchase or transfer of(1) real property between <br /> spouses, and (2) the principal residence and the first $1,000,000 of other property between parents and <br /> children. <br /> Proposition 60 amends Article XIIIA and allows persons age 55 or older to transfer the lower <br /> assessed value of their current residence to another newly purchased residence of equal or lesser value. For <br /> the exemption to apply, the new residence must be located in the same county and be purchased within two <br /> years after the sale of the previous residence. Proposition 60, as such, has no direct State or local fiscal <br /> effect unless the county board of supervisors passes an ordinance implementing it. <br /> Proposition 62 <br /> On November 4, 1986, an initiative statute("Proposition 62 ")was adopted by the voters of the State <br /> which (i) requires that any tax for general governmental purposes imposed by local governmental entities <br /> be approved by resolution or ordinance adopted by a two-thirds vote of the governmental entity's legislative <br /> body and by a majority vote of the electorate of the governmental entity, (ii) requires that any special tax <br /> (defined as taxes levied for other than general governmental purposes) imposed by a local governmental <br /> entity be approved by a two-thirds vote of the voters within that jurisdiction, (iii) restricts the use of <br /> revenues from a special tax to the purposes or for the service for which the special tax was imposed, (iv) <br /> prohibits the imposition of ad valorem taxes on real property by local governmental entities except as <br /> permitted by Article XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the sale of <br /> real property by local governmental entities, and (vi) requires that any tax imposed by a local governmental <br /> entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the <br /> adoption of the initiative or be terminated by November 15, 1988. <br /> Various provisions of Proposition 62 were declared unconstitutional at the appellate court level. On <br /> September 28, 1995, the California Supreme Court, in Santa Clara County Local Transportation Authority <br /> v. Guardino, upheld the constitutionality of the portion of Proposition 62 requiring a two-thirds vote in order <br /> for a local government or district to impose a special tax, and by implication upheld a parallel provision <br /> requiring a majority vote in order for a local government or district to impose any general tax. <br /> 15 <br />