Prop 8 passed after Prop 13, so when Prop 13 passed in 1978 there was no provision for a decline in property values. Still, even without Prop 8, property values will not always increase every year.
The problem is in the interpretation of Prop 13 (or the application of the 2% increase). Is an increase in assessment value limited to
2% from last year,
2% from the highest assessed value (in the event of an intermediate temporary decline), or
2% compounded by the number of years you've owned your property?
It means that the judges are space aliens.
I notice that there is no mention of reductions, ever. The tax assesment can only go up. This has to be the most Kafkaesque reasoning I have seen in a very long time.
Their reasoning is, that since reductions are not mentioned in the law, they can never exist.
Time for a new amendment!