Posts Tagged ‘property tax’

Why Constitutional Convo Must Consider Prop 13

Friday, July 3rd, 2009

Mark_Paul280x350By Mark Paul
Special to Calbuzz

In the life of every would-be California reformer, there inevitably comes the gut-check moment. You give your best rap about the ungovernability of the state — the unbalanced budgets, the legislature gridlocked by supermajority voting requirements, the dysfunctional state-local relationship, the schools and cities run more for the benefit of their unionized employees than the public.

And then a reporter sidles up to you and asks, “So, are you talking about changing Prop 13?”

If politics is your only measure, the answer is obvious. Prop 13 is the best brand in the state. To the homeowners who make up the core of the state’s electorate, the phrase “Prop 13” means one thing, and one thing only: low and certain property taxes. If you had a choice, the phrase would never pass your lips.

But if your goal is to make California governable again by restoring fiscal sanity and political accountability, there’s no way to avoid Prop 13. The 1978 Jarvis-Gann measure is not just a property tax limitation. It’s the hack that rewrote California’s operating system in ways that make it unworkable and unloved across the political spectrum.

A case in point: A few years back, Tom McClintock, the former legislator who’s taken his lance to Congress to tilt at bigger windmills, stopped by the Sacramento Bee and launched into a soliloquy describing how power had flowed away from cities, counties, and school districts, which know their own needs and people best, to distant Sacramento and the state Capitol. After a couple moments, I interrupted. “Senator, I think we’re prepared to stipulate that Proposition 13 was a bad idea.”

We all laughed, but everyone understood it wasn’t a joke. By slashing local property tax revenues, putting up higher barriers for local passage of taxes and bonds, and giving the Legislature the responsibility to divvy up remaining property tax dollars, Prop 13 was the great centralizer. It forced the state to take a primary responsibility for funding services formerly controlled closer to home.

As a result, the big decisions about things like schools get made in Sacramento and on the statewide ballot, not at the school board. It has made government opaque, inflexible, and unaccountable. By separating the responsibility for taxing and spending, it has opened the way for public employee unions––teachers, cops, firefighters––to dominate local politics and drive up their pay and pensions.

Another case in point: The current Commission on the 21st Century Economy, which is looking at how to modernize California’s tax system and reduce the swings in revenue. It’s been comical to watch the commission try to avoid the obvious: that a lot of the volatility in California’s tax system is a result of having deeply cut relative stable property taxes (both through Prop 13 and the slashing of the vehicle license fee), leaving it more dependent on sales and income taxes that swing with the business cycle.

If it were prepared to treat Prop 13 as just another policy, and not a religious icon, the commission might be considering relying more on property taxes, particularly on land, while reducing taxes on work and investment, the kind of pro-growth option upon which both liberal and conservative economists would agree.

Prop 13 wasn’t the product of great deliberation or foresight. James Madison and the boys didn’t draft it after weeks of high-minded discussion about checks and balances. It was ginned up by cagey old Howard Jarvis to put before voters a measure so simple — 1 percent rate, 2 percent annual cap on assessment increases — that it would pass where more complex property tax measures had failed.

Were it not for the inaction three decades ago of a feckless governor and a divided Legislature stymied by supermajority vote requirements, California might easily have found a way, as other states did, to protect homeowners against inflation-driven property tax bills without making state government unworkable. Voters didn’t approve Prop 13 because they thought it was a good idea to shift power to Sacramento; they approved it because it was the first chance they had to protect themselves and their investment in their homes.

No one wants to remove those protections. But there’s no way to make the big reforms California needs — getting rid of two-third rules, restoring accountability, shifting power out of Sacramento and back to communities — without jettisoning Prop 13’s excess baggage.

Mark Paul, senior scholar and deputy director of the California program at the New America Foundation, was formerly deputy editorial page editor of the Sacramento Bee and deputy treasurer of California under Phil Angelides.