Capitol Letters
Thursday, July 9, 2009
Howard Jarvis, the acid-tongued author of Proposition 13, surfaced in Sacramento one year to the day after voters overwhelmingly passed his historic tax cut measure, to warn Capitol politicians against messing with his initiative.
On June 6, 1979, Jarvis was holding forth on the Capitol steps when a group of mothers, in town to lobby for more money for preschools, interrupted him: “What about the schools?” a woman from Azusa hollered. “They’re ending programs to help.”
Capitol Letters
With characteristic tact, Jarvis bellowed right back: “That would be your problem, not mine,” he said. “It’s absolutely not so. Prop. 13 didn’t have any effect on the schools at all.”
In the 30 years that have followed, California politicians of every stripe have been loath to challenge the stubborn certainty of the late Mr. Jarvis, or the persistent popularity of his legacy, long perceived as the political third rail (or the 800-pound gorilla, Big Enchilada, or elephant in the room, depending on your choice of cliché) of state politics.
With the state’s current fiscal meltdown as a backdrop, however, serious debate about amending Prop. 13 for the first time is beginning to emerge across the state. Amid widespread cuts in public education and social programs, increasing attention is being focused on how Prop. 13’s consequences, unintended and otherwise, have shaped the dysfunctional structure of state and local government. At the same time, the growing perception that California has become ungovernable is fueling a good-government reform movement that is raising questions of how much Prop. 13 and its fallout have contributed to the state’s systemic problems.
“If your goal is to make California governable again by restoring fiscal sanity and political accountability, there’s no way to avoid Prop. 13,” Mark Paul, senior scholar and deputy director of the California program at the nonpartisan New America Foundation, wrote recently. “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.”
At one level, Prop. 13 is deceptively simple. In the late 1970s, steadily and rapidly escalating tax rates threatened homeowners across the state, especially older ones living on fixed incomes, with the loss of their houses; the initiative rolled back rates to 1975 levels, capped tax bills at one percent of assessed value, and limited annual increases to 2 percent. For property owners, it was clear, easy to understand, and delivered instant tax relief along with future certainty.
Beyond its salutary effects for taxpayers who owned residential property, however, Prop. 13 included other features that have helped to warp rational governance by wrapping political leaders in double-bind knots of political and fiscal restrictions. It is these features that increasingly draw the ire of reformers:
• Although focused on property taxes, Prop. 13 imposed a two-thirds vote requirement for raising most other taxes in jurisdictions as well, meaning that even revenue measures for local services backed by large majorities of city or county voters are defeated routinely.
• Then-Gov. Jerry Brown and the Legislature reacted to Prop. 13’s approval by passing legislation that effectively took away control of remaining property taxes — and thus governance of schools and many local services — from city councils, boards of supervisors, and special districts and put authority in the hands of Sacramento. This established a crazy quilt of government finance in California with a decline in local control and overall accountability.
• The measure provided the same level of tax relief to corporations that owned commercial property as it did for individual homeowners. Throughout time, this has resulted in some areas in a substantial shift in the property tax burden, with business bearing less of the load and homeowners more.
The relative taxes paid by commercial and residential property owners are the focus of the most intriguing push for Prop. 13 changes: San Francisco Assessor Phil Ting recently launched a statewide effort to put in place a “split roll” assessment system that would use different rules for taxing commercial and residential property, in an effort to shift the balance once again. The proposed change would increase revenue for local government by about $7.5 billion a year.
“Tough times offer the best opportunity for change,” Ting wrote in a statement on his Web site closetheloophole.com. “California cannot continue to mortgage the future to protect corporate tax loopholes for commercial properties. The longer we wait to reform a property tax system that is bankrupting our state, the further we will fall behind.”