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Submitted by on 1, October 1, 2009 – 6:00 am11 Comments

Second in an occasional series

When Doug deHaan got his property assessment in the mail, he knew that a heart-to-heart talk with his wife was coming. The couple was going to have to sell their home.

Just 18 months earlier, DeHaan and his family had moved into a new place in the Gold Coast. And in that short time, their property taxes had tripled.

“We overextended ourselves, like everyone else would do at that time, when you’re young,” deHaan remembered. Even if they had stayed in their old place, their taxes would have doubled, he said.

Then Proposition 13 came along. And deHaan, now a two-term city councilman, voted in favor of it.

“You never know the aftermath of any of these things,” deHaan says now.

Local leaders who are working to change the property tax-slashing measure have blamed it for the Golden State’s tumble from grace. But the measure’s backers say that their opponents fail to understand the problems that led to its passage.

So The Island took a trip back in time to 1978, interviewing longtime residents and reviewing months’ worth of newspaper clippings to see what was happening locally in the moments before Proposition 13 passed, and to get a sense of its immediate aftermath.

Back then, deHaan’s story was not an uncommon one, according to several people interviewed by The Island.

Gretchen Lipow bought a “big, beautiful house in the Oakland hills” in 1973 for $39,500, she said. And she and her neighbors watched as their home values went up, up and up.

“We’d look at each other and go, ‘What’s your house worth today?’ And it was ridiculous,” the longtime Alameda teacher and union leader said.

Data from the California Association of Realtors show that median home prices nearly tripled in the decade before Proposition 13 passed. And with those increases came sharply higher property taxes that Lipow and others say drove many people out of their homes.

Homeowners here and across the state were angry about what they saw as out-of-control government taxation and spending, and they pressed state leaders to come up with a solution. But anti-tax activist and apartment owner lobbyist Howard Jarvis beat them to the punch, funneling all that anger into what would ultimately become a nationwide taxpayer revolt.

“The general consensus at the time was that state government was out of control with spending. This was a way to shut that down,” longtime resident and onetime City Council candidate Pat Bail said. “But it didn’t work.”

The local newspaper supported Proposition 13, as did then-Mayor C.J. “Chuck” Corica. But local seniors groups, public employee unions and other local leaders – along with some of the state’s biggest corporations – opposed it.

In a letter to the editor of the Alameda Times-Star, the head of the local police officers association said Proposition 13 would lead to “massive reductions in city operations and services” and a statewide rise in unemployment.

In a separate article, Hayward’s then-mayor, Ilene Weinreb, was quoted as saying that the measure would lead to increased income, business and sales taxes and expensive user fees for services.

In that same article, Kaiser Aluminum and Chemical president Cornell Maier spoke out against the measure.

“While the company would realize an immediate substantial saving in property taxes, the measure is not in the longer term best interests of either the company or the state,” Maier was quoted as saying. “Everyone stands to lose more than they would gain.”

But anger carried the day on June 6, 1978, and the measure passed with 63 percent of California’s voters – and a majority of Alameda County voters – casting a “yes” vote. The measure was to go into effect less than a month later, on July 1. And one then-member of the city’s management team said it heralded a sea change in the way cities did business.

“Before Proposition 13, if we were deficient in any of (our revenue sources), we could just raise the property tax (to pay for services),” said Rob Wonder, who at the time served as assistant to City Manager John Goss. “Now all of a sudden, we’re faced with, you can’t raise property taxes. And that’s amazing.”

The measure also rolled taxes back to their 1975-76 levels, a move the local papers reported would drop property taxes for both homeowners and commercial property owners by 60 percent, or about $7 billion statewide.

And Alameda, then as now, relied on property taxes more than neighboring cities with stronger business bases. Goss told the local Rotary that passage of the measure wiped out 30 percent of the city’s revenue.

City leaders said the reductions translated into a loss of $4.2 million from a $14.5 million budget, while the school district calculated that it could lose upwards of $5 million off a $21.3 million budget. And they scrambled to come up with ways to close the massive deficits.

Teachers were fighting a school district proposal to cut their salaries by 20 percent, while district leaders considered slashing the budget for adult school, eliminating daily school cleanings, increasing class sizes, closing and consolidating schools, eliminating sports and even requiring teachers to pay their own substitutes.

Meanwhile, city leaders reduced operating hours at the city’s libraries and its animal shelter, trimmed salaries for a handful of top managers, shut off a third of the city’s street lights and passed on health benefit price increases to all city employees. And they handed out layoff notices.

City leaders talked about closing Edison Park, which was then a public park (a pair of local families raised money to save it), and they eliminated and then restored crossing guards. They also briefly considered stationing firefighters in local parks to handle gardening chores.

But city staff were also assembling a long list of new and increased fees that included higher fees for library services, recreation programs and golf; a property transfer tax increase; a sewer connection fee; engineering, building and construction fees. They also considered a utility users tax and a new fee designed to recoup some of the property tax windfall that was coming to the Island’s two major shopping centers.

Some local residents were outraged, and they wrote letters to the newspaper demanding to know why city and school district leaders didn’t seem to be getting the message that they wanted the fat to be cut from government.

Corica pushed to cut management positions, and at one point he raised a series of unsuccessful votes on whether to lay off specific people. But the city employees’ contracts gave more senior workers “bumping” rights that pushed the layoffs to the city’s lowest level, front-line workers, including maintenance workers and library staff.

The state, which was sitting on a $5 billion surplus, started handing out money to local school districts and governments. But it wasn’t enough. On June 28, the council approved a budget that cut funding for both parks and libraries by a third. Police and fire saw much smaller cuts of about 4 percent, in part because the state funds were to be used to help maintain public safety services.

But less than a month later – and a week before dozens of layoffs were due – city leaders reshuffled their budget, adding $690,000 in city surplus and capital improvement funds to save jobs. Fewer than three dozen people, none of them full-time, permanent employees, lost their jobs. The final cut, made after nearly two dozen revisions, was about $1.1 million.

The school district, which faced a $1.4 million deficit of its own, eliminated nearly all of its capital improvement projects, cancelled summer school classes, cut its adult school budget and also funding for community access to school buildings.

Schools Superintendent Clarence Kline later complained to the local Rotary that the measure robbed locals of control over their purse strings and handed it over to the state. Before the measure passed, the district got about a third of its money from the state. But after it passed, that amount doubled. And the money came with strings attached.

Wonder, who left as Alameda’s longtime assistant city manager in 2003, said his feelings about the measure are mixed.

“I look back at that time and I see uncertainty, difficult choices and tremendous challenges as being what governed us for almost a whole year there,” he said. And he conceded that it sapped funding for things like road and tree maintenance and the city’s recreation offerings, which once included a legendary youth baseball program.

Still, Wonder said the effect of Proposition 13 was largely positive, because he feels it ushered in better management of taxpayer dollars.

“It said, ‘Guys, you’ve been too free with the money. Now you need to be more accountable for it.’ I think that’s what you really want in an enterprise, to be more accountable with the resources that you have,” he said.

DeHaan said Proposition 13 has caused some real problems. But he thinks that bad local decision-making is what lies at the heart of the city’s current financial ills.

” Is Proposition 13 the thing, the driving force that caused it all? No, I don’t think so,” deHaan said. “It could have been done better. But it’s not the complete cause of where we’re at.”


  • Sarah says:

    As a two-term councilmember, DeHaan is responsible for his own "bad local decision-making is what lies at the heart of the city’s current financial ills."

  • Richard Bangert says:

    Former assistant city manager Rob Wonder, in your article above, says that he feels Prop. 13 ushered in better management of taxpayer dollars. If this is true, then can we have a moratorium on the populist sounding but inaccurate ballyhoo about bloated bureaucracies every time there is a budget crunch? Maybe it actually costs more to run a 21st century school system than it did in the 1970s. Maybe it's time to figure out how to pay for the things we think are important like schools.

    Wall Street companies are "too big to fail." When will we hear a politician say that schools are too important to fail in their mission? When will we see the river of taxpayer money start flowing to schools the way it flows to businesses (in the form of bailout money or tax dodges)? The split tax role idea is one possible solution whereby businesses pay more. How many times has the Chevron refinery changed hands in the last 30 years and been reassessed?

  • Denise Shelton says:

    Knee-jerk legislation is always a bad idea, creating more problems than it solves. Prop 13 should not have been applied across the board to all income levels. We now have multi-million dollar properties whose owners pay outrageously low fees and the little guy is still losing his shirt because he can’t afford the taxes and the mortgage on his newer home. I also think that transfer of the old tax to relatives who were not living in the house to begin with when the owner dies is ridiculous. DeHaan has obviously benefited tremendously personally from Prop 13, so he down plays the significance. This “I got mine” mentality is one of the biggest problems we face in Alameda.

  • Barbara Thomas says:

    DeHaan is only one of five policy makers. He is often out voted. He wasn’t present for the hiring of Korade, Flint, Kurita and other seriously defective but major shapers of the City’s poor financial situation. We have highly paid city staff in the form of managers and attorneys who for most purposes do all the policy ground work. Then ask the Council if what they have done is OK. The Council is paid $50 per meeting, (the Mayor gets an extra $250 per month). They have no staff of their own to investigate and research. They must depend upon the Manager and Attorney. These two have staffs of ten or more. They are paid hundreds of thousands of dollars in salary and benefits. They belong to Associations which teach them how to run the City’s departments, they way they want them run. It takes 3 votes to fire either. As we saw with Bruce Rupp, Jim Flint, Carol Korade, and Debra Kurita the damage they do far exceeds the scope that part time Councilmembers can even detect until the pedulum has traveled to the far reaches of its swing.

    The citizens of Alameda have always been extemely penny wise and pound foolish when it comes to paying their Councilmembers an adequate compensation for their time. Without paid staff, the City is lucky it gets anything done that the professional staff doesn’t want and ask for first.

    Proposition 13 simply put a stop to those professionals taxing residents out of their homes to fund poorly run bureaucratic kingdoms. I remember the layoffs well. The people who actually did the important work, the upkeep of the parks, the vaccuuming of the sanitary toilets at the beach, were all laid off. Not the managers.

    If Proposition 13 is set aside the same thing will happen again. Only then the newbies will be the ones fighting for it when they are faced with losing their homes. It is not perfect, far from it. But it is better than any thing that any legislator, lobbyist, or politician is going to come up with to replace it.

    • Hey Barbara,

      I wanted to weigh in on your statement that "Proposition 13 simply put a stop to those professionals taxing residents out of their homes to fund poorly run bureaucratic kingdoms." One of the interesting things I've discovered in my research thus far is that our city government actually has far more staff now (over 600) than then (just under 400 with additional temp staffers paid through a federal grant program), and it seems like we have far less in terms of park programs and maintenance, and less city support in other areas like library. So I am definitely wondering what I'm missing here, and I am to find out for my next Prop 13 piece.

  • Jill Staten says:

    The following topic is a little off-subject:

    One thing I've been wondering about is whether "back in the day" more civic programs were run by volunteers as opposed to paid staff. Today it seems as if anything that gets done has to be done by paid employees, which makes things more expensvie. I remember a few years ago when some parents wanted to paint a run-down local school (which has since been painted, although it's still run-down), and we were told that was not allowed by the unions.

  • Mark Irons says:

    Barbara Thomas wrote: “But it is better than any thing that any legislator, lobbyist, or politician is going to come up with to replace it.” Jarvis wasn’t a lobbyist, just a grass roots landlord activist? What do the records show about who backed the Prop 13 campaign? were there no lobbying groups like real estate interests on that band wagon?

    As far as Alameda and the penny wise thing, you are correct. This town seems to want it both ways. Our school parcel taxes have always been much lower than surrounding communities.

  • Troy Staten says:

    While prop 13 has caused many problems it was a response to a real problem that the state government did not address in a timely fashion. The end result was a ballot proposition that did the elected officials jobs for them. On another note does anyone think that the state would have a budget surplus now if property taxes where much hire? Until there is meaningful pension and benefit reform on a state,county and city level we are always going to have budget problems.


  • Barbara M says:

    Since many of you have done much more research than I, here is a question. How did commercial property end up in Prop 13? I have heard many versions. Is the commercial real estate and rental association lobby just too large? I personally feel as though there is a huge difference between your actual home and income property. I heard a guy on the Ronn Owens show that was the tax assessor for San Jose say it would be impossible to separate and I find that hard to believe.

  • Barbara Thomas says:

    Michele, Hmmm. You think we have more staffers and less work? How are you measuring "we have far less in terms of park programs"? Granted East Bay regional has taken a load in terms of Washington and the Shoreline Parks. There appear to be ways to measure worker productivity for laborers but not for thinkers/managers. We can measure how clean the parks are but not how productive the 10 staffers in the City Attorneys office are, where there used to be one attorney and one Legal Secretary. And for the last 20 years or so, all litigation has been hired out. Before only sophisiticated legal work like Bond Counsel, was hired out. So one really has to be sure one is comparing apples to apples. And governments constantly try new ways to get around Proposition 13 through developer fees, which developers then try to get around by tax increment financing and pass throughs. Which has been shot down by the Cal. Supremes in Silicon Valley Taxpayers Association vs. Santa Clara Valley (2008) 44 Cal.4th 431.

    • Hi Barbara,

      According to the clips I read, the City of Alameda employed 396 people before Proposition 13 passed. In 2008, before the city conducted its most recent round of layoffs, it employed 661 people. So I guess that's how I measure how we have more staffers.

      In terms of less work – I don't believe I said that. I think what I said is that it appears we have fewer city-run programs in certain departments, notably parks. I understand the parks department once had a robust baseball league that it ran. My understanding is that now this is not the case. Unless I'm missing something?

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