Weeds and dirt covering the local soccer field? Elementary
school classrooms filled with ancient, damaged textbooks? Peeling
paint and torn linoleum in the school cafeteria? UCLA lectures with
450 students? You can thank Proposition 13.
As Gov.-elect Arnold Schwarzenegger begins his transition into
office, a momentous opportunity to reform an ancient and poorly
written piece of California tax law presents itself. While
Schwarzenegger himself is a fiscal conservative opposed to
reforming Proposition 13, his campaign advisor Warren Buffet, who
may also receive a position in the Gov.-elect’s new cabinet,
is a major supporter of reforming the old law.
Many new California citizens are unaware of the anti-property
tax law that launched the tax revolt and the Reagan Revolution onto
the national scene and drastically altered California’s
government.
Flashback: The year is 1978, the place is California ““
where homeowners are furious about massive property tax increases
being caused by skyrocketing land values. Howard Jarvis and Paul
Gann, two wealthy republican landlords and self-proclaimed tax
activists, financed the signature gathering for Proposition 13, the
Jarvis-Gann Initiative.
When it passed, it froze property taxes at their 1976 levels,
restricted property tax increases to no more than 2 percent per
year, and required a two-thirds “super majority” vote
for all state and local tax measures.
The major problem with Proposition 13 was it provided property
tax relief for all types of property owners instead of targeting
individual homeowners who were being priced out of their homes.
Over two-thirds of the tax relief went to businesses and
landlords who did not need it. This happened because Jarvis and
Gann did not make the simple distinction between commercial and
residential property when writing the proposition.
Overnight, the Jarvis-Gann Initiative eliminated over $6.1
billion in local property tax revenues.
As property taxes are the major source of local government
revenue, Proposition 13 gutted many local services such as police,
fire, schools, sewers, roads and parks and recreation. Before
Proposition 13, California was a leader in per-student spending.
Now, we are in the basement of state per-student spending
rankings.
In response, the state government scrambled to divert revenues
from other sources to localities in order to replace some of this
lost funding. This is where Proposition 13 really becomes
backwards. The intentions of the tax revolt that led to the
initiative being passed were to limit “big” or
“centralized” government ““ but the law has, in
fact, had the opposite effect. As the localities scrambled for
funding, the state government took over financing most of these
services, raising taxes and shifting funding away from county
programs such as health and welfare. Now the funds for all of these
local programs (schools, police, etc.) are collected and divvied up
at the state level instead of the local level.
So much for decentralization and local control. But this is also
the main reason why, to date, California has one of the highest
state sales taxes in the nation. Additionally, whenever the state
government has budget shortfalls, state officials basically tell
school districts and other local officials “tough
luck,” forcing local districts to scramble and make massive
cuts like they did this year.
One thing that is rarely mentioned about Proposition 13 is how
anti-democratic its effect on new tax initiatives has been. The
two-thirds “super majority” requirement basically
allows the minority to hold the majority hostage on tax and revenue
issues.
This recently happened in my hometown of Los Altos, where more
than 50 percent of the voters favored a tax measure for the local
school district, but not quite the 66.67 percent required.
The measure failed, and now class sizes will expand and
textbooks and classrooms will deteriorate. Situations like this
have been happening all over California for the past 25 years and
are the major reason why our schools are no longer the shining
examples they once were.
The proposition has left a wake of fiscal and budgetary
problems. The situation is now dire. Reforming Proposition 13 and
taking out the tax relief for businesses and landlords would create
a huge source of badly needed revenue for local governments. At the
same time, it would keep the important part of the legislation that
protects homeowners from being priced out of their homes.
Gov.-elect Schwarzenegger: Proposition 13 needs to be fixed!
Bitondo is a third-year political science and history
student. E-mail him at mbitondo@media.ucla.edu.