Formula for Inequity? : Why Orange and San Diego counties are complaining

Nearly 14 years after it rocked California, Proposition 13 is being challenged by two important lawsuits now winding through the courts. One is a taxpayers’ suit challenging the equity of the measure’s assessment provision on the ground that neighbors with nearly identical properties are paying widely disparate property tax bills. That issue has made it to the U.S. Supreme Court.

The other suit, brought by San Diego County, challenges the property tax distribution system put in place by the Legislature after passage of Proposition 13.

Last week San Diego Superior Court Judge Michael I. Greer declared that some counties--including his own, Orange and Riverside--had been unconstitutionally shortchanged by state funding formulas. He ordered the Legislature to implement new formulas by mid-1993.

The state is expected to appeal, as it should. This is a complicated issue and it is possible that the perspective of a local judge living in a locality that has felt especially disadvantaged by the state formulas may not be the best judge of the overall equity of the system. Even so, both lawsuits highlight the need for the Legislature itself to address the issue of fairness.

If Proposition 13 is overturned by the Supreme Court, it will fall first to lawmakers to propose to voters a new constitutional amendment that would meet the court’s fairness test. As for the San Diego case, even if Greer’s ruling does not stand, the Legislature should take a hard look at the equity of the funding formulas set in place so long ago. The post-Proposition 13 formulas did fail to take into account future population growth patterns. Over the years, faster-growing counties found it harder to provide services.

Greer said that the state, by assigning densely populated counties a disproportionate share of property tax money, failed to adequately fund his county’s criminal justice programs. He said the right to public safety was assured by the Victims’ Bill of Rights, a state constitutional amendment passed by voters in 1982.

Greer used unnecessarily inflammatory language in accusing the Legislature of favoring “high-tax, high-spend” counties when it adopted the original formulas based on tax rates set by counties before Proposition 13 passed. But these counties set tax rates they thought were needed to finance health and welfare programs. An argument could be made that “low-tax, low-spend” counties set unrealistically low rates.

Of course, giving counties like Los Angeles and San Francisco, which face daunting social welfare problems, a larger share of property taxes makes some sense. But most property taxes at issue in the San Diego case aren’t used for social or health programs aimed at the poor. Rather, they are used to support jails, courts and other services. It could be argued that those services ought to be tied more closely to objective population levels.

In the Legislature, however, large counties dominate. Under pressure from Orange, San Diego and other counties, there was a formula adjustment last year affecting health services funding.

But there is strong resistance to further change because state funding now is a zero-sum game in which one county gains only at the expense of another. Still, the issue of equity must be seriously addressed. It will not go away.

Per Capita County Spending

County spending levels for courts, welfare, jails and health are influenced by funding levels established by the state after Proposition 13. Los Angeles: $156 Riverside: $117 Ventura: $107 Orange: $103 San Diego: $102 Statewide average*: $134 * 1987-’88 Source: Legislative Analyst’s Office