Ho-Hum Attitude Traced to Prop. 13 Tax Revolt : Study Finds Diminished Interest in Local Government

A major result of the passage of Proposition 13 nearly a decade ago is that people care less about city and county governments, a legislative committee report has concluded.

The joint Legislative Budget Committee has issued an analysis of the effects of tax-cutting Proposition 13, which dramatically cut property taxes, and concluded that the 1978 measure led to citizen alienation from local government.

“Local citizens no longer have a stake in local government,” said the report. “The homeowner and the general public have walked away from local government; they have lost interest because there isn’t anything for them to be concerned about.”

‘Tax Revolt’

Proposition 13, an initiative of the so-called “citizen tax revolt” led by Paul Gann and the late Howard Jarvis, put a lid on spiraling taxes on homes and other real estate. The measure in one swoop rolled back assessed property values to their 1975-76 levels, forbids more than a 1% tax on property, limits growth in assessed value of property to 2% a year and provides that any new taxes must be approved by two-thirds of the affected voters.

Since cities, counties, school districts and most other local agencies relied heavily on property taxes, Proposition 13 severely limited their traditional source of funds, the legislative report noted.

State government has stepped in to fill the void, using its resources to help financially pressed local governments and school districts. This has shifted power to state government and has led to citizen loss of interest in the plight of cities and counties, the report said.

Moreover, the report notes, when state government has the financial sniffles, local governments get pneumonia. “Counties and school districts in particular are now vulnerable to the financial problems threatening state government,” the report said.

Major Threat Cited

The legislators’ study also said that a major threat to cities and counties exists in a 1979 initiative, Proposition 4, that passed in the wake of the 1978 tax revolt. Proposition 4, generally called the “Gann Initiative,” limits budgets of all governments to growth based on population increase and the annual rise in the cost of living.

The Gann Initiative affected state governments and many cities and counties for the first time in 1987. State government currently is rebating $1.1 billion to taxpayers because of the Gann measure, and some local governments also face the prospect of having to return taxes.

Currently there are rival initiatives being circulated for the 1988 ballot; one would revise the Gann limit to allow more spending on transportation. The other would allow wider changes, including more spending for schools.

‘Local Fund Raising’

Another conclusion of the committee report was that “some local fund-raising capability should be granted to local governments.” The legislative committee, however, offered no specific recommendations.

Sen. William Campbell (R-Hacienda Heights), the chairman of the committee composed of key legislators from the Senate and the Assembly, said Friday that he will press for a new, permanent source of revenue for cities and counties. Campbell personally favors earmarking for local governments up to half a cent of the state’s 6-cent sales tax.

The report of Campbell’s committee said that apparently the fervor of the 1978 tax revolt is gone and that recent public opinion polls show sharply reduced voter concern about high taxes.

Nonetheless, a move is afoot by the California Tax Reduction Movement that Jarvis founded to expand on the tax-cutting of Proposition 13. His widow is its honorary chairwoman.

Literature in Mail

The Jarvis group is currently mailing literature urging homeowners to support what it calls “the new Proposition 13.” This is a proposed constitutional amendment being carried by Assemblyman Ross Johnson (R-La Habra) that would roll back assessments on homes bought after 1978.

Proposition 13 allows those homes to be assessed at the purchase price. By contrast, homes purchased before 1978 are assessed on the basis of their 1975-76 value. Homeowners in the same block can therefore pay widely different taxes on homes of essentially the same value.

The Jarvis group mailers urge voters to sign a petition that calls for passage of the proposed constitutional amendment. Johnson’s measure currently is in the Assembly Revenue and Taxation Committee, and a hearing there is expected in February, Johnson’s office said.

Since the new proposal would result in more loss of property tax money for local and state governments, considerable opposition is expected.