PROPOSITION 13’S CONTESTED LEGACY: Prologue
Like any good politician, San Francisco Assessor Phil Ting has set the state’s fiscal meltdown – and its solution – into the simplest of sound bites.
“We’re in a financial catastrophe,” Ting told me a few weeks ago. His solution? Amend California’s property tax-slashing Proposition 13.
And like any good advocate of a once-righteous cause, Kris Vosburgh of the Howard Jarvis Taxpayers Association – whose namesake was responsible for getting Prop 13 on the ballot and passed – was locked in a familiar defensive crouch on the subject. He says Ting may be well intentioned, but he’s wrong.
“We’re certainly not for raising anybody’s taxes,” Vosburgh said when I called.
As far as Vosburgh and other advocates are concerned, Proposition 13 is doing exactly what it was designed to do. To them, it’s protecting California’s home and business owners from capricious government tax collectors who would gladly turn them out in the streets. They say the recession, and not Proposition 13, is to blame for California’s money problems and that amending the 1978 ballot measure would only make things worse by driving businesses away to lower-tax states.
But Ting – whose Close the Loophole campaign aims to put a measure on the ballot that would eliminate commercial property owners from the list of those benefiting from the tax break – is leading a growing chorus of local elected leaders and others who are saying that Proposition 13 and other related rules are responsible for everything from failing schools to potholed streets and that it’s even driving land use decisions (and not for the better).
They say the rules unfairly benefit commercial property owners, who he says are paying taxes on just 58 percent of their properties’ market value, according to a recent state Board of Equalization report (it’s around 65 percent in Alameda County).
Ting says that if commercial properties were all reassessed, the state would rake in $7.5 billion this year – if, Vosburgh says, they don’t leave the state for cheaper taxes elsewhere.
So who’s right?
Regular readers of The Island know that I rarely stray off Alameda for news. But no matter how you slice it, Proposition 13 has had profound implications for all of us.
At the very least, we typically have a good idea what our tax bill will be, year after year after year. (But then, if we haven’t been here that long, we know it’s probably double or triple or even quadruple a neighbor’s.) At worst, we have faced divisive campaigns for new taxes to pay for services most of us want and need but many don’t want to pay another dime for.
We have heard our elected officials curse the state for the control it has over our purse strings – and blame Sacramento politicians for exerting that power to balance their budgets at our expense.
Property taxes made up 31 percent of our city’s revenue this past year and are the city’s biggest revenue source; 77 percent of our school district’s revenue comes from Sacramento. And the budget the state Legislature just passed would borrow more than $2 million of Alameda’s property tax revenue, and make, potentially, millions in cuts to our school district for the school year that just ended.
Then again, these same elected officials are facing a looming retiree health benefit crisis of their own making, which could drain millions each year out of the city’s coffers (if the city had to cut a check for what they owe right now, they would have to pay their entire, original general fund budget of around $75 million to cover it).
No matter how you cut it, California – and the city where we live – are facing a fiscal crisis. But how much did Proposition 13 and other, interrelated political decisions contribute to that, and how much of it is due to human error and the unstoppable ebb and flow of the economy? How did we get here? Who’s right? And how do we fix it?