California’s Problem Isn’t Prop. 13

Proposition 13, the tax-cutting measure that capped property tax rates and assessments and required public votes on other tax increases, reaches its 25th anniversary next week both reviled and praised.

With the state and local governments facing severe budget deficits, Proposition 13 is blamed by many public officials for the crisis -- as it has been blamed for so much that has gone wrong in this state over the years, from education failures to freeway collapses during an earthquake to even the not-guilty verdict in the O.J. Simpson trial.

Yet the measure is hailed too. Understandably, it is praised by those who lived through the terrible days before the initiative passed, when soaring property taxes were threatening many people with the loss of their homes.

More remarkable is the widespread support from large numbers of today’s Californians who either did not live in the state or are not old enough to remember the trepidation and dread that accompanied the arrival of pre-1978 property tax bills that most homeowners could not afford.

How can this be? Simply because the average voter understands that Proposition 13 is not about wild charges that the initiative is responsible for death and destruction; nor is it about budget deficits, unequal taxes or encouraging poor land-use planning.

Proposition 13 is about taxpayer protection, and the public gets it.

Proposition 13 continues to give certainty to the taxpayer instead of the tax collector. At a time when taxpayers in other states are facing double-digit property tax increases, California taxpayers, under the Proposition 13 system, know what their property taxes will be year in and year out, no matter how much a rich neighbor paid for the property next door.

Those who complain about inequality because similar side-by-side homes pay different amounts of property taxes do not understand, as economic theorist Adam Smith did, that in taxation “a very considerable degree of inequality ... is not near so great an evil as a very small degree of uncertainty.”

What critics of Proposition 13 miss is that it was a social movement that secured stability in neighborhoods by helping to make housing affordable and by allowing small mom-and-pop operations to stay in business. No less an authority than the United States Supreme Court acknowledged this important goal of stable neighborhoods as an overriding state interest in ruling Proposition 13 constitutional.

The people understand that Proposition 13 cannot be responsible for budget deficits when there have been huge surpluses in government budgets since Proposition 13 passed.

California state and local governments collect $120 billion annually in revenue, far more than they collected in 1978, even adjusted for population growth and inflation.

If revenue allocation between state and local governments is out of kilter because of legislative decisions, such as the 1990s education fund known as ERAF that shifted money from local government to state control, then the Legislature can fix those problems statutorily. There is no need to change Proposition 13’s constitutional protections.

Because of ever-expanding government, taxpayers need to hold on to their taxpayer protections. With legislative proposals such as the one that would increase some public employee pensions to 100% of their pay, citizens know that Proposition 13 is their last check against an out-of-control government.

Critics list the wrongs that Proposition 13 purportedly caused, but the voters merely shrug. The voters know that Proposition 13 is their taxpayer shield. They do not intend to put down the shield and remain defenseless in the face of an array of salivating, money-hungry governments that look longingly at the taxpayers for ever more revenue.