April 04, 2004 | By Keith Martin in Washington, DC

CALIFORNIA said that its limits on property taxes are applied over time rather than each year.

Proposition 13 rolled back property tax assessments to the value in 1975, fixed the property tax rate at 1% of assessed  value, and limited increases in the assessed value to 2% a year until the property is sold. 

A homeowner bought a house in Orange County in 1995. The county left the assessed value unchanged in 1996 and 1997 because of the weak real estate market. In 1998, it increased the assessed value by 4%. A California appeals court ruled in late March that the increase in assessment was allowed. The cap of 2% a year on assessments is applied over time, the court said.

The case is expected to be appealed to the state supreme court. Fifty eight California counties use the “recapture” method and could have been forced to refund as much as $10 billion in property tax collections if the decision had gone the other way. The case is California v. Bezaire.