By K. Lloyd Billingsley. Thirty years ago Friday, on June 6, 1978, Californians passed Proposition 13, the “People’s Initiative to Limit Property Taxation” that helped California homeowners but is now blamed for many state woes.
Owning a home has always been part of the American dream. During the latter part of the 1970s, the inflationary Carter Era, property taxes were soaring in California, to the point that they created hardship. Bill Stall, press secretary for then-governor Jerry Brown, explains that the taxes were “especially hard on senior citizens and others living on fixed incomes.”
Proposition 13 rolled back assessments to 1975 levels, and these could rise no more than 2 percent per year, capped at 1 percent of a home’s cash value. It also mandated a two-thirds majority to raise any state tax, and easily secured a place on the June, 1978, ballot. During the campaign, state officials, particularly Governor Brown, opposed the measure in apocalyptic terms. Jesse Unruh, state treasurer and a Democrat, pointed out that California enjoyed a budget surplus of $5 billion. A full 65 percent of state voters approved Proposition 13, a landslide by any definition.
Proposition 13 cut property taxes but a tax cut of any kind, contrary to what many politicians and pundits imagine, is not a gift or subsidy. Homeowners simply were allowed to retain more of the funds they had already earned. Proposition 13 freed up more money for food, mortgage payments, medical care, transportation, tuition and other family needs. Those who bought homes in ensuing years enjoy the same limitation. Even so, the measure gets a bad rap in Sacramento from those one might call the pillage people.
This group, primarily politicians and pundits, supports ever encroaching government and construes whatever tax increases may be necessary to bankroll it as automatic and beyond discussion. In this view, people must live within limitations, but not government, so naturally Proposition 13 incurs their wrath. Consider this account by Peter Schrag of the Sacramento Bee. Proposition 13, he writes, “triggered the national tax revolt and marked the first major triumph of latter-day me-first individualism and market theology over the communitarian ideals and civic concern that moved the country to its greatest achievements during the Depression and the years of World War II.”
Proposition 13 actually constrained greed on the part of government. That is, the government taking more of what people earn, not to offer them new and better services but to compensate for their own excessive spending and budgetary mistakes.
Meanwhile, Stephanie Greenwood, editor of 10 Excellent Reasons Not to Hate Taxes, (yes, that’s the actual title) published in 2007 by The New Press, blames Proposition 13 for education woes. The measure, she writes, “drastically limited property tax increases . . . the change coincided with a rapid drop in student achievement.”
The drop in achievement had actually been going on many years prior to Proposition 13 and is more related to junkthought, low standards, social promotion and bilingual education. High education spending does not guarantee high test scores. Private and charter schools outperform government schools on much less. If there were truly a dearth of money for K-12 education, as educrats continually claim, we would not see $200-million-plus boondoggles such as the ill-fated Belmont Learning Center in Los Angeles.
There’s no denying that California faces serious financial problems. Those problems are due to excessive spending, bloated bureaucracy, an unfavorable business climate, waste, and corruption. They are not due to Proposition 13, which turns 30 as members of the baby boom generation begin to retire and live on fixed incomes. With food and fuel prices soaring, they will rely on Proposition 13 to remove the unpleasant surprise of their property taxes following “California’s often exuberant housing prices into the stratosphere,” as Mr. Stall puts it. Any attempt at reform should keep that in mind.
If the pillage people believe property and income taxes are too low they are free to pay an extra thousand or two out of pocket. They could also launch a ballot measure titled “Government Initiative to Raise Property Taxes” and see how state voters respond. It would be better simply to support limited government and lower taxes, as California voters did thirty years ago.
33
{ 4 comments… read them below or add one }
Prop 13 is not for everyone. Here is what Bob Monterey at Calitics has to say:
http://www.calitics.com/showDiary.do;jsessionid=0174DD2959280179661873EE1A96E875?diaryId=6144
What we should be doing is pushing for an initiative such as they are doing in Massachusetts. That is, one that eliminates the state income tax. Even though it will likely fail, it will keep the looters from focusing on what has already passed.
You whipper snapper…it’s the 64th anniversary of D-Day! And here you are ranting about Prop 13. Probably better than making a big deal out of National Donut Day.
Too often Prop 13 is frequently blamed for causing the all of the financial problems for California’s local governments. Not so. The San Diego Tribune did an editorial outlining just how much more money is, in fact, going into the government coffers. While the editorial is harsh on public employees, remember, it is the elected officials who actually grant the salaries and benefits, not the unions.
But first an excerpt from the Leonard Letter, a email newsletter from the State Board of Equalization member, Bill Leonard, for those who don’t remember the pre-Prop 13 days:
‘Prop. 13 was not dreamed up by people who hate government and wanted to handicap worthwhile governmental functions. Rather, it was a legitimate reaction to out-of-control property taxes, a fact that seems forgotten in the past 30 years. Joel Fox (past president of Howard Jarvis) reminds us that back in 1978, “The tax rate throughout California averaged almost 3% of market value, and there were few limits on increases either for the tax rate or property value assessments. Some properties were reassessed 50% to 100% higher in just one year.” This was causing people not to pay overwhelming tax bills and many people, especially the elderly on fixed incomes, were losing their homes through no fault of their own.’
http://www.signonsandiego.com/uniontrib/20080606/news_lz1ed6bottom.html
The San Diego Union-Tribune
June 6, 2008
EDITORIAL
Lucky 13
Revenue numbers refute initiative’s critics
Today is the 30th anniversary of California voters’ landslide approval of Proposition 13, which capped how much property taxes can go up each year and required a two-thirds vote to hike state taxes.
The landmark measure sparked a national tide of anti-tax sentiment.
But to hear Proposition 13’s critics tell it, the initiative marked the beginning of California’s long decline, with public schools, the University of California system, infrastructure, transit and more all suffering greatly because of a voter-dictated fiscal emasculation.
Baloney.
From fiscal 1980-81 — the year Proposition 13 took effect –through 2005-06, property tax revenue skyrocketed from $6.4 billion to $38.3 billion. That is an increase of more than 500 percent. So much for talk that the measure turned off the property tax spigot.
Any claim that the two-thirds requirement to hike state taxes depressed other revenue is also flat wrong. Total state revenue went from $19 billion in 1980-81 to $93.5 billion in 2005-06 — a jump of nearly 400 percent.
These whopping revenue gains occurred in an era in which the state’s population went up by 58 percent and, according to federal data, inflation rose by 131 percent. The upshot: Lawmakers have at least twice as much money — inflation-adjusted money — to spend per Californian as they did when Proposition 13 took effect.
Contemplate these numbers, and the claim that the initiative starved the state becomes absurd.
So where did all the money go and why is criticism of Proposition 13 now reaching such a crescendo? The answers to these two questions are interrelated.
The passage of the measure in 1978 paralleled the beginning of an aggressive push by public employees unions to gather and wield public power. It paid off. Many school districts are now dominated by teachers unions, many cities by police and fire unions, and the Legislature by a union coalition.
This explains why the cost of public employee pay and benefits have exploded over the past generation. And it also explains why the griping about Proposition 13 has suddenly ratcheted up. From cities (Vallejo, Fresno, San Diego) to school districts (Los Angeles Unified) to the state itself, vast red ink has accumulated due to over-generous pay and benefits for public employees and to overspending in general.
But instead of forcing government agencies to live within their means, public employee unions and their political allies would rather just make it easier to force taxpayers to pay more. To do that, they need to demonize Proposition 13 and demand tax “reform.”
California absolutely does need sweeping tax reform. We have somehow ended up with a jury-rigged system that discourages construction of new housing and encourages sales tax-craving cities to subsidize retail businesses.
But that is not the sort of reform that Senate President Don Perata, Assembly Speaker Karen Bass and most of California’s pundit class have in mind. Their definition of reform is destroying the public’s most reliable protection from profligate politicians.
It must never happen.
Long live Proposition 13. May our great-grandchildren be celebrating its centennial in 2078.