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If California citizens were to allow industrial and commercial property to be taxed at 1 percent of market value, the state would reap about $3.3 billion more tax dollars, says a new report from the 51³Ô¹ÏºÚÁÏ Davis Center for State and Local Taxation.

"We were asked to look at how much money the state loses by keeping industrial and commercial property under the current Proposition 13 limitations," said 51³Ô¹ÏºÚÁÏ Davis economics professor Steven M. Sheffrin, co-author of the study and director of the 51³Ô¹ÏºÚÁÏ Davis taxation center. "Many think the Proposition 13 protection is more appropriate for homeowners."

The report, just issued through the University of California's California Policy Research Center, was requested by the California Senate Office of Research last summer.

State voters would have to approve a constitutional amendment to Proposition 13 to allow a split tax roll. Under Proposition 13, which passed in 1978, all property assessments were rolled back to 1975 values.

Subsequent assessments could increase only by a maximum of 2 percent per year until the property was sold, at which time it would be reassessed at market value.

The 51³Ô¹ÏºÚÁÏ Davis report points out that property values have increased on average faster than 2 percent per year, and the current assessed value of real property in California is significantly below market value.

"Hence property-tax revenues statewide are significantly less than what would be collected if property were assessed at market value," the report says.

The report looks at the true market value in Los Angeles County, which accounts for about a fourth of the state's industrial and commercial properties. From that $840 million valuation, Sheffrin and Terri Sexton, associate director of the taxation center, made an estimate for the full state, Sheffrin said.

The $3.3 billion is about 10 percent of the governor's projected deficit, Sheffrin said.

Although business owners will probably be concerned about increased costs of taxation, Sheffrin said California's 1 percent property tax is still very low in comparison to other states.

Sheffrin and Sexton, an economics professor at California State University, Sacramento, have done similar property tax projections in the past. The Legislature asked them to update their findings at a policy roundtable hosted by the Senate Office of Research and the California Policy Research Center last summer, Sheffrin said.