The decision stems from Proposition 13, the landmark tax-revolt initiative that was overwhelmingly approved by voters in the 1970s. The law generally prohibits counties from raising a property's tax bill by more than 2% a year, and bans annual increases altogether when real estate values don't rise.

The case before Orange County Superior Court Judge John M. Watson involved a homeowner who also is an attorney. The lawyer, Robert Pool, paid $330,000 for his Seal Beach home in 1995.

Pool's property-tax bill didn't rise in 1996 or '97 because values in the area were either flat or declining. But when prices spiked sharply in '98, the Orange County tax assessor retroactively hiked the bill by about 4% to make up for the two years when the bill didn't increase.