Doubts After 13 Years of Prop. 13

When it was passed in 1978, Proposition 13 was championed as an appropriate limit on tax-raising politicians. But now, more than a decade later, with the state in distress, Proposition 13 looks increasingly like an inappropriate--indeed, debilitating--straitjacket on California.

Several ways out of that straitjacket have been sketched by a bipartisan state commission in a valuable report made public today. Established by Senate resolution, the 18-member commission concludes that the time may have come for some changes.

The panel, headed by Assistant Prof. Robyn Phillips of UC San Diego, draws attention to the “substantial inequities” of our property tax system. Homes of roughly equal value are taxed dramatically differently simply because one home was purchased years ago and another more recently; businesses new to the state, or those that bought their property recently, find themselves paying a lot more in commercial tax than an older competitor.

The second problem highlighted by the commission is the “erosion of the property tax base” that is a heavy contributor “to the fiscal strain experienced by local government and its citizens.” In the event the U.S. Supreme Court voids Proposition 13, the panel calls for a gradual transition from the frozen tundra of Proposition 13 to a more fluid system of market-value assessments that would produce the same level of taxes as now. But the panel does not disguise the fact that such a changeover could also easily lead to greater revenues for local governments.

And that, of course, could prove the rub. Proposition 13, while more a sledgehammer than a scalpel, nevertheless keeps government property taxation at bay. Many people still find that attractive, including the business community, which under a new split-roll system--an option raised by some of the commissioners--would pay more taxes.

The panel’s work is destined not to be the last word on the topic but only the first contribution to what one hopes will be a serious debate. There’s no denying California is in considerable difficulty. This thoughtful report deserves to be thoroughly absorbed and carefully considered.