Harman Calls for Looking at Modifying Prop. 13’s Impact

Taking aim at California’s landmark Proposition 13, Rep. Jane Harman called Thursday for modification of the state’s property tax system to equalize the burden between longtime homeowners and newer home buyers.

The Torrance Democrat and gubernatorial hopeful insisted that she would not raise taxes under her proposal, which remains to be fleshed out.

And in a somewhat contradictory sequence of comments, she backed away from a statement made 24 hours earlier that suggested that some homeowners would have to pay higher taxes to ease the tax burden on others.

“That incorrectly reflects my view,” Harman said in an interview, in which she disavowed her earlier statement and sought to modify other remarks made at a subsequent news conference.

“I am not going to touch Proposition 13,” she vowed.

Instead, Harman said in the interview, she would explore ways to use any future state budget surplus to equalize the tax system between new and longtime homeowners. Under Proposition 13, which caps property tax rates, neighbors can pay vastly different amounts of property taxes depending on when they bought their homes.

“What I’m talking about is equity in payment and a longer-term way to do it,” Harman said.

Proposition 13, passed in 1978, capped property taxes at 1% of a home’s assessed value. Property can be reassessed only when it changes hands--a system that works to the considerable advantage of longtime homeowners. And regardless of inflation, property taxes cannot increase more than 2% a year.

The political contretemps began with an interview Harman gave Wednesday to the editorial board of the San Francisco Examiner, in which the candidate said she would seek to narrow the tax gap between older and newer homeowners.

That would require long-term homeowners “to pay a bit more and the folks who’ve just come in to pay a bit less,” Harman said.

Asked about her comments Thursday at a Los Angeles news conference called to announce her endorsement by City Atty. James K. Hahn, Harman said: “It is not my plan to change [Proposition 13] in any way.”

However, Harman went on to suggest that she would like to make “a slight adjustment at the margins” to equalize the tax burden between longtime and newer homeowners.

“I’m going to lower someone’s property taxes and share the lowering with the guy next door,” she said.

Pressed to explain what she meant--specifically, whether her proposal would mean higher taxes for at least some homeowners--Harman replied in evident frustration, “I know we play a lot of political games here. What I’m trying to do is be fairer to homeowners and communities.”

A short time later, Harman telephoned The Times to further explain her position.

“I am not going to raise property taxes, period,” she said. “I’m certainly not going to affect the property taxes paid by those who were grandfathered”--or covered--”by Proposition 13.”

Rather, Harman said, she would use any budget surpluses beyond this year’s $4.4-billion bonanza to “explore” ways to equalize the state’s property tax burden, perhaps through rebates, credits or other benefits directed at newer homeowners. Harman has called for divvying up this year’s surplus through a combination of tax cuts, education spending and boosting the local share of state revenues.

Political observers and budget analysts alike expressed surprise that Harman would even think of tampering with Proposition 13, which enjoys almost folkloric status.

Although academics and others who have studied the issue have criticized the inequities created by Proposition 13, USC’s Jeff Chapman suggested that any significant overhaul is a political nonstarter.

“What the gubernatorial candidates should be focusing on is trying to figure out a way to correct the state’s incomprehensible tax and budgeting system,” said Chapman, a Sacramento professor with USC’s School of Public Administration. “Not wasting their time on nickel and dime stuff that’s not going to happen.”