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PROPOSITION 13’S CONTESTED LEGACY: Prologue

Submitted by on 1, July 29, 2009 – 6:00 am3 Comments

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?

Stay tuned.

3 Comments »

  • BC says:

    I've heard many people explain why Prop 13 passed at the time, and some of those explanations seem perfectly reasonable: there were real problems. I've never heard a convincing argument about why Prop 13 is a fair solution to the these problems. Ms. Thomas talks about government behaving like children with taxpayers' money (fair enough, but the tree example is pretty weak, and it's a shame Ms. Thomas didn't decide to stay on the council to act on her convictions) but to me Prop 13 seems like a singularly childish response–throwing your toys on the floor rather than engaging in a proper discussion on how to balance the needs of future generations (education and infrastructure, both of which are becoming alarmingly third-world-like in California) with the need to protect old people from being forced from their homes and to stop taxes from automatically to ratcheting. Prop 13's a good example of all that's wrong with making complex policy choices via the proposition system.

  • Barbara Thomas says:

    Was it Thomas Jefferson who once said, “Eighty percent of the money spent by government is wasted”? And Lincoln who said, “The job of goverment is to do that for the people that they cannot do or cannot do well for themselves.”

    In good times or faced with obvious, need government expands. It never shrinks. It has evolved into a huge self-perpetuating bureaucracy. There is no objective means to measure the effectiveness of the government workforce. There is little accountability such as we would require in our own personal budgets. Terminated City Managers and City Attorneys receive plump benefits just to get them to move on without litigation. Only after they have left do we uncover how bad they actually were.

    Having been on the council, I was aghast at such expenditures as $50,000 for a “survey of all the trees in Alameda.” You or I wouldn’t pay for a similar task in our own yards, so why did 4 members of the council blithely say yes? Staff told them it was necessary.

    We continue to hear and see horrendous tales of abuse of financial power such as the current ones involving the Peralta School District. Yet we will continue to elect (by default) equally as bad policy managers for the next governing board. Why? Few want to take the time from their personal lives to do it themselves. The effort to get elected, the chase for the money, the system created thereby, is distasteful. Better to complain about it, then become part of it. Once you become part of it, you are transformed into the same type of non-sensical spender. Homeowners and tax payers drew the line when the flagrant and unchecked process threatened and did cause some to lose their homes.

    The resulting Prop 13, saved the California Dream of homeownership from the unbridled spending of uncontrolled and unaccountable management and operation of our governmental entities.

    Businesses don’t have the political clout of homeowners. So when government needed more money to spend for its “vital” tasks, business was an easier mark. Until the businesses were taxed into oblivion. Then the tax collectors say “Wait, were did our money go?” Government came to expect an annual increase in spending and didn’t do anything to earn the increased taxes. It was like a litte kid, it just spent it, with little responsibility.

    Prop 13 and the current economic crises are self-inflicted responses to the excesses of government management without proven purpose. Political forces are like a pendulum swinging one way then the next. Prop 13 however provides the end of the swing which is the final say to big government spenidng.

    We get what we deserve, and we are the problem. Without the protections of Prop 13, we would all be moving out of California come retirement age. And taking the solidity of the base that generation after generation of citizens give a state, a city and a community.

  • Mike McMahon says:

    To me the unintended consequence of Prop 13 was the shift of government from the local community (i.e. city, county and schools) to Sacramento. Right now who do you trust to provide the level of services need in our local community – Sacramento or locally elected officials?

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