If Prop. 13 Goes, We’ve Got to Have a Plan : Legislature: Chaos could result from a court-ordered change to our property tax system. Certain rights must be protected in any case.

Proposition 13, enacted 11 years ago by a majority of California’s voters, is under attack by a surprising combination of groups, both in the courts and on the streets. These challenges promise to shake the foundation of our unique property tax system.

No one knows what the result will be, but the outcome could do injustice to California residents and harm to our business climate.

Proposition 13 is being challenged in the courts by three major lawsuits. The issue is destined for the U.S. Supreme Court, which indicated as recently as last January that it might be ready to overturn California’s landmark tax-cutting measure.

The lawsuits ask the court to throw out Proposition 13 on equal-protection grounds, because people owning similar property pay radically different taxes based on the dates they purchased the property.

The plaintiffs are a financial institution, a major retailer and a homeowner represented by a public-interest law firm. This is an unusual cross section of interests betting that Proposition 13 is unconstitutional.

On the streets, Proposition 13 is being taken on by none other than Voter Revolt, the organization that sponsored Proposition 103 on insurance. This group has apparently qualified an initiative for the 1990 ballot that would convert Proposition 13 to a “split roll,” which would raise the property taxes of businesses by $8 billion a year. Although the change would put an enormous flood of dollars into housing programs, it would leave intact the very inequities that the U.S. Supreme Court is being asked to throw out.

The sponsors of the split-roll initiative, so called because it splits business taxes from residential property tax rolls, will be asking the electorate to vote narrow pocketbook interests without a thought to rational tax and fiscal policy for the most populous state in the union.

The Legislature needs to respond to the attacks on Proposition 13 and the real possibility that it will be declared unconstitutional. We need to evaluate carefully the legal criticisms and make sure that, no matter what happens, we retain protections against skyrocketing property taxes that would threaten the homes of senior citizens.

The Assembly Revenue and Taxation Committee begins that process Tuesday with a public hearing in Sacramento. We will examine the lawsuits challenging the constitutionality of Proposition 13, and begin a comprehensive review of California’s property tax system. If the attacks on Proposition 13 are successful, we need to be ready with alternatives to present to the voters for their approval.

For example, the court could effectively require that “current market value” become the basis for property taxes. What would we do about neighbors now living in similar houses, with one family paying $1,000 annually in property taxes, and the other paying $3,000?

To comply with the court’s possible requirement, do we triple one family’s taxes so the properties will be taxed in a similar manner? Emphatically, no.

Do we cut the other family’s taxes by two-thirds? Impossible, in view of the harm to local government services, including police and fire protection.

There would almost certainly be efforts to take such Draconian actions, but fairness requires compromise. We should keep in mind what California voters have a right to if we are required to revise Proposition 13:

Fairness and equality in tax burdens, not only now but also for our children who will come of age in the next century.

Stable and predictable property taxes in the context of California’s unique and often volatile real estate market.

Special protections and assistance for senior citizens and families hoping to buy their first homes, as well as for low-income families and renters.

Flexibility for local communities to plan for their own growth, infrastructure, public services and environmental protection.

A rational and thoughtful examination of property taxes must invite the widest participation of citizen groups. It requires open minds and objective evaluation of a range of approaches. If the court rules that Proposition 13 must be revised, we need proposals on hand that will pass constitutional muster and receive the blessing of California’s taxpayers and voters.