In the early 1970's property tax rates peaked and were still rising each year, which was driving people out of their homes. Even though this gave the state and county governments a surplus of $3.8 billion by the end of the1970's, something had to be done. Homeowners' were also getting angry because as their property taxes rose the quality and quantity of their public services didn't. Legislature tried to respond with an introduction of three major reform packages in 1977, that was not enough.
             When legislature returned in 1978, which happened to be an election year for statewide officeholders, two men have already been working and submitted 1.2 million signatures for an initiative. This was enough signatures to place what was called Proposition 13 on the June ballot. The Governor at the time disliked the idea of cutting property taxes because he didn't want to use the states surplus to make up for the lost revenue. He put forth an effort against Proposition 13 and legislature rushed to put a competitor proposition, but it was too little, too late.
             Therefore, in June of 1978 California voters went out to the polls and Proposition 13 passed by a vote of 65 percent to 35 percent. After the dust cleared Proposition 13 reduced tax revenues by approximately $6.1 billion, that is a 53 percent decrease. After the proposition passed it rolled the property values for taxing purposes back to the 1975-76 level and capping property tax rates to 1 percent. The rise in tax prices were slowed by only allowing an annual increase in property tax bill at 2 percent and only allowing reassessment if property changes ownership. Immediately after Proposition 13 pass legislature had the very difficult task of how to distribute a significantly diminishing amount of tax revenue to local governments. The load was slightly lighten by the $3.8 billion surplus, legislature still had to pass a bill (SB 154) to provide relief ...