Experts tell BOE that California’s property tax structure contributes to housing unaffordability and inequity

The Board of Equalization hosted a panel April 20 that examined how California’s property tax system intersects with poverty, housing shortages and economic mobility. Vice Chair Sherry Lieber convened the discussion and said the Board should be familiar with the broader fiscal context as it considers policy options related to property taxation.

Panelists included Lenny Goldberg, a longtime tax policy analyst and former California Tax Reform Association executive director; Professor Darien Shanske, a UC Davis law professor and state and local tax scholar; and Devin Gray, president of Ending Poverty in California (EPIC). Each described different consequences of California’s current property‑tax framework.

Goldberg framed the problem around land taxation: he argued that the current treatment of land under Proposition 13 encourages holding underutilized commercial parcels off the market, inflates land prices and raises barriers to housing development. He outlined a layered proposal that (1) reassesses commercial land values (a so‑called "smart roll" focused on land rather than improvements), (2) exempts new investment from annual reassessment, and (3) reconsiders cumulative change‑of‑ownership rules for business structures and publicly traded entities. Goldberg said those changes could free land for housing, create a more durable local revenue stream and provide funding for infrastructure tied to new development.

Professor Shanske explained historical and legal mechanics: he noted that Proposition 13's 1% cap and the AB 8 allocation formula frozen many local distributions in place, shifting revenue responsibility to the state and constraining local fiscal responses. Shanske recommended pairing market‑value assessment with targeted circuit breakers (state income‑tax credits or rebates tied to property tax burdens) to protect liquidity‑constrained homeowners while moving toward a more equitable tax base.

Devin Gray framed the discussion around poverty and mobility: EPIC’s fieldwork in more than 20 counties found strong local support for proposals that address commercial land or high‑value property tax relief, so long as reforms protect low‑income, long‑term homeowners from displacement. Gray said reliance on volatile income tax receipts leaves anti‑poverty programs vulnerable during downturns, and he urged the state to develop steady, predictable revenue streams that can fund housing and anti‑poverty programs.

Panelists disagreed on specifics but agreed on two practical points: (1) California’s tax system steers behavior (e.g., land banking and high developer exactions) and contributes to supply shortages that push housing costs up; and (2) reforms should pair revenue changes with explicit protections for low‑income or fixed‑income homeowners (circuit breakers, phased approaches, or transfer protections).

The Board did not act on legislation at the meeting; the session was presented as informational. Board members thanked the panelists and said the Board would use the testimony to inform future inquiries.

Ending — Panelists urged the Board to treat property tax reform as part of a larger strategy that includes infrastructure planning, clarified change‑of‑ownership rules and targeted protections for vulnerable homeowners.