Prop. 13: The Need for Reform

As soon as California voters approved Proposition 13 on June 6, 1978, the Legislature rushed in with a multibillion rescue of local governments, which had suddenly found themselves stripped of half their traditional property tax base. The infusion of state aid to cities, counties and special districts filled much of the fiscal hole, but the state could not afford to prop up local governments indefinitely. So when the state found itself in a fiscal crisis of its own, during the recession of the early 1990s, Sacramento expropriated $3.6 billion of local government’s remaining property tax and used it to help balance the state budget.

The result of this and other actions is that California has turned tradition and good fiscal practice on its head: No longer does the property tax go to finance those services historically provided by local governments and linked to properties: our streets, fire and police protection, parks and libraries.

The breaking of that tie between local taxes, local services and local officials also makes it more difficult for voters to hold anyone accountable when the potholes aren’t filled or branch libraries are closed. It’s too easy to say, “It’s Sacramento’s fault.”

The situation is so bad that experts claim that government has become dysfunctional in California. But every attempt to reform the system has failed because of the threat of a political firestorm against any effort to tamper with Proposition 13.

However, it would be unfair to blame all of California’s fiscal problems on Proposition 13. California had an archaic tax system before 1978, rooted in the agriculture and merchant economy of the late 19th century. Other problems were caused by the manner in which the state implemented the Proposition 13 rescue plan.

Blue-ribbon committees and good-government groups have proposed reforms in recent years, most notably a three-year effort by the California Constitutional Revision Commission created by the Legislature with a mandate to be “bold and creative.”

The commission’s report met the same fate as its predecessors--it was ignored by state officials who feared a backlash from voters and special interests against any attempt to shake up the system.

There is more hope for the California Governance Consensus Project, a broad-based organization that includes representatives of business, labor, education and other interests described as a “Who’s Who” of economic power and influence in California.

The project plans to submit proposals to the Legislature early next year, in hopes of putting the plan on the 2000 election ballot. If the Legislature rejects the reforms, the project would force the issue with an initiative petition, the same manner in which Proposition 13 was presented to Californians. This effort will have a powerful constituency that cannot be ignored by the Legislature and has the financial resources to wage an effective initiative campaign if necessary.

Government reform within the spirit of Proposition 13 will require common sense, smart politics and a major selling job. It should not be difficult to demonstrate that the state’s moribund system is incapable of dealing with 21st century problems. The trick will be persuading legislators and voters that effective reform will provide critical benefits for all for decades to come. But it must be done.