There are various ways to set this up. What I would propose for California would have these properties: () The annual tax bill would be capped according to th

There are various ways to set this up. What I would propose for California would have these properties: () The annual tax bill would be capped according to the Prop. 13 formula (annual increase limited to 2%). The difference between the tax bill and the tax due gets added to the lien balance. () The tax bill would increase at that rate even if the property value drops, until the lien balance is paid off. With these rules in place, it's actually pretty hard for the lien balance to get very large compared to the amount by which the property has appreciated. It would take a catastrophically sudden and severe drop in property values for that to happen.