June 5, 2008
Historic Prop. 13 property tax revolt turns 30
(Page 2 - Previous Page)There have been problems for California, to be sure, but these are not the fault of Proposition 13. Lots of people come here. And many, while they contribute to the economy, also claim substantial public services. Immigrants here illegally may benefit consumers or business, but government must fund, for example, the growth in school enrollment.
A study commissioned by the Howard Jarvis Taxpayers Association reviewing the first quarter century of experience with Proposition 13 found that school district revenue -- per student and adjusted for inflation -- had increased 30 percent. In that same 1978-2003 period, state government revenue, as a whole, had increased 25 percent. Even the revenues of the chronic complainers, city governments, had increased 20 percent -- adjusted for inflation and population.
In the three decades since Proposition 13 passed, big business has been less than grateful for its property tax breaks, which disproportionately favor large properties like, say, Disneyland and skyscrapers. Ever courting the state's increasingly liberal Legislature, the corporate interests have funded efforts to undermine Proposition 13, such as ballot measures to lower the threshold for approving local special taxes for school funding.
In trying to change Proposition 13, they should be careful what they wish for, or they could end up with a "split roll"—a higher tax rate for business property than for residential real estate. After all, the Jarvis coalition was centered not on business but on homeowners.
Perhaps the most controversial manifestation of Proposition 13 is that it treats different homeowners differently -- favoring longtime owners over newcomers. When you buy a home, the purchase price is the assessment, and that assessment (and consequent property taxes) can increase only by 2 percent annually, regardless of real estate appreciation.
When you eventually sell it, the new owner is assessed his purchase price, and the process starts again. This means that a new homeowner could be paying two or three times the property taxes of his neighbor, who has lived there a long time. But trying to change this formula could open the door to large increases for everyone. So it has retained popular support.
As time goes by, more and more of the original supporters (many were seniors 30 years ago) disappear from the electorate. I just conducted a study for the Jarvis organization of how California voters view Proposition 13. Although they feel (by 3-to-1) that things in California are on the wrong track, they would vote for Proposition 13 again -- by a 2-to-1 margin.
It does not do as well among the roughly one-third of the electorate that is "not familiar at all" with Proposition 13. But once they are told of its key provisions, voters opt to keep Proposition 13 as is. Here's to 30 more years.
Arnold Steinberg is a political strategist and analyst.
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