Roy E. Hanson Jr. Mfg. v. County of Los Angeles

Opinion

MOSK, J. The County of Los Angeles appeals from a judgment awarding plaintiff taxpayer a refund of taxes paid on property assessed on the 1978-1979 unsecured tax roll. The sole issue is whether the tax rate limitation established by article XIII A of the California Constitution, adopted by the voters in June 1978 as Proposition 13, is applicable to the unsecured roll for the tax year 1978-1979.

For the reasons stated in Board of Supervisors v. Lonergan (1980) ante, page 855 [167 Cal.Rptr. 820, 616 P.2d 802], we conclude that article XIII A does not apply to the 1978-1979 unsecured roll. We do so after considering in this case an alternate theory presented by the respondent.

Taxpayer contends the application of the 1 percent rate limitation established by Proposition 13 to the 1978-1979 unsecured tax roll is mandated by article XIII, section 12, subdivision (b) of the California Constitution.1 That provision states: “In any year in which the assessment ratio is changed, the Legislature shall adjust the rate described in subdivision (a) to maintain equality between property on the secured and unsecured rolls.” According to taxpayer, subdivision (b) furnishes an exception to the general requirement of subdivision (a) that property on the unsecured roll be taxed at the rate applied to the previous year’s secured roll. It maintains the exception is applicable [873]here because the adoption of article XIII A resulted in a change in the assessment ratio within the meaning of subdivision (b), and the Legislature made the required adjustment in the tax rate by enacting section 2237 to establish a uniform rate of $4 per $100 of assessed value.

Taxpayer’s theory rests on the definition of assessment ratio as the ratio, “expressed as a percentage, of ‘assessed value’ to market value. ...” (County of Sacramento v. Hickman (1967) 66 Cal. 2d 841, 848 [59 Cal.Rptr. 609, 428 P.2d 593].) All property subject to general property taxation is to be assessed at 25 percent of its “full value.” (§ 401.) Prior to the adoption of article XIII A, “full value” was defined as “fair market value” (§ 110.5), which is essentially current value in the open market (§ 110). As we explained in Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 235 [149 Cal.Rptr. 239, 583 P.2d 1281], under article XIII A, section 2, subdivision (a), real property is to be assessed and taxed at its value at date of acquisition. The county maintains the assessment ratio has remained 25 percent under section 401, but taxpayer asserts a change in the ratio has effectively occurred because the percentage is now applied to a different valuation standard.