A Question of Fairness

The property-tax relief of Proposition 13 has been distributed unevenly from the day it was approved by voters in June, 1978.

People who bought homes before then pay taxes only on the 1975-76 market value of their property. For everybody else--and that now means a majority of homeowners--property taxes are based on the price that was paid for homes since Proposition 13 was approved. Wild inflation in the home market in some of those years has meant that people who have not moved since Proposition 13 pay only a fraction of the taxes that newcomers pay even though their homes are worth as much as or more than any others in the neighborhood.

It has long been argued that fairness demands that both classes of homeowners be treated the same way. A bill that is now before the California Legislature would cure the problem by rolling back the tax base for all homes to the 1975-76 market value.

There are a number of problems with that approach, not the least of which is the narrow way it would define fairness. Even within that narrow definition--applying only to the owners of homes--it could not be entirely equitable because it would not apply to homes built since Proposition 13, except by applying a complicated formula whose bottom line might be right and might not.

Supporters of the proposal say that whereas Proposition 13 cut the property-tax base in California by $7 billion a year, the new plan would cut local government revenues by only $2 billion. That sounds suspiciously low.

Even if the estimate is accurate, it would further rob local governments and school districts of the ability to raise their own revenues and control their destiny--a control that began to ooze toward Sacramento after Proposition 13. If there is any doubt that control has drifted to state government, consider that one man--the governor--is now able to block funds needed to keep school reforms going, able to make a decision for every school district in the state, no matter how the districts feel about school reform. That is an inequity outside the definition as it applies to homeowners.

It would make local governments even less able to support hospital trauma centers, improve schools and provide adequate levels of road repair and other services that have deteriorated in recent years. That is scarcely fair.

The 55% of California homeowners who have bought homes since 1978 are entitled to a break. But reformers must find a way to be fair to them that does not take billions of dollars more from public services. If property taxes are to be rolled back further, other taxes must be raised to offset the losses and to hold harmless the public services that already suffer from a shortage of revenue.

California cannot afford to do otherwise, particularly when it is falling behind in a race with other states to prepare its youth, its cities, its transportation systems and its other services for a future that looks more competitive each day.