Jarvis Leaves a Whole New Ball Game : California Tax Revolt Transformed All the Rules of Politics

That we now speak of tax reform rather than tax revolt may be Howard Jarvis’ ultimate triumph.

Proposition 13 was a successful grass-roots protest against the political establishment. Voters in California sent their leaders an angry message that resounded throughout the nation. As a result, taxes are lower and the fiscal landscape is strewn with formal restrictions on the budgetary power of state and local governments. Ronald Reagan quickly polished Jarvis’ rhetoric, and his presidency has enshrined the gadfly’s credo as national policy.

After Jarvis-Gann 1, the cutting of taxes clearly was too good an issue to be left to the amateurs. The professional politicians quickly wrested this torch from the guerrilla fighters, and once the impending revision of the federal tax code is enacted this fall they will pass it on to the accountants. Assuaged by success, the passions unleashed by Jarvis are largely spent, leaving behind an enduring legacy.

The aftermath of Proposition 13 is neither the millennium depicted by Jarvis nor the Armageddon predicted by his detractors. Its most obvious achievement is the promised reduction in taxes. The state and local tax burden in California is about one-third lower today than in 1978. Homeowners have secured permanent protection against the tax consequences of real-estate inflation. And business, which campaigned against Proposition 13, now argues that the change stimulated economic growth.

On the spending side, the tax revolt has slowed but not reversed the dreadnought of government expansion. First the state surplus and more recently a booming economy have enabled public expenditures to grow, albeit at a somewhat reduced rate. This may be disappointing to the zealous few who genuinely desire less from government, but it largely explains the tendency of most voters, who want both lower taxes and a steady supply of public services, to feel satisfied with the outcome of the tax revolt. The tax rebels claim that there was so much waste in government that public spending could be sharply curtailed without affecting the quality of services.In rebuttal, local officials are quick to blame Proposition 13 for shortfalls in virtually everything. The crisis in public education is attributed to Jarvis; so, too, is the crisis in infrastructure.

It is hard to determine precisely how widespread the worsening in services is and whether quality per dollar invested has actually declined. What is clear is that government in California has been forced to tighten its belt and that the political unfeasibility of raising tax rates makes the amount of revenues available to government even more heavily dependent on the strength of the private economy than previously. This has meant increased inequalities in the levels of local services. Rich communities cope, while the governments of those with weak fiscal bases struggle. Still, all of them have managed to survive.

Beyond these changes in the pattern of taxing and spending, the tax revolt has transformed the rules of the political game in California, sometimes in unintended ways. Howard Jarvis and Paul Gann employed plebiscitary tactics to tie the hands of elected officials whom they viewed as untrustworthy, arrogant and wasteful. They advocated popular control of the public purse strings. But in order to keep local government afloat in an era when raising taxes seemed impossible, the centralization of fiscal power in Sacramento resulted. And with this comes reduced local control over programs.

The success of Proposition 13 heightened the recognition of policy-making by the initiative process. An industry has developed to collect signatures and place initiatives on the ballot in California. Interest groups, political parties and even the governor have embraced direct democracy to circumvent a recalcitrant Legislature.

In short, the tax revolt has encouraged new strategies of government.

In the pre-Proposition 13 era, policy-makers had the freedom to think first of what programs they wanted to expand and feel confident that revenues would be available. Now officials must revise spending priorities to fit relatively fixed resources. New programs must be “sold,” not merely announced. In the meantime, local officials use creative accounting, user charges and lease-back arrangements to increase revenues.

Proposition 13 has altered the language of contemporary American politics. Austerity and self-reliance have replaced planning and social reform as symbols of legitimacy. Officials increasingly speak in terms of trade-offs, weighing the benefits of entitlements against their effect on economic growth.

The main lessons of the tax revolt are not new, just important. When elected representatives fail to act, the American system remains open to democratic change. The institutions of direct democracy facilitate the speedy translation of popular frustration into new policy, however poorly thought out or inflexible from the experts’ point of view. Finally, an upsurge in public hostility toward government can be harnessed to conservative policies favorable to business interests.