Capitol Journal: Brown has an opportunity to revisit Prop. 13
Jerry Brown messed up as governor 32 years ago in implementing Proposition 13, the insurgent property-tax slasher. Now he’ll have a second chance to get it right.
The Legislature screwed up too. In fact, it led the way. Those lawmakers are long gone from the Capitol. But Brown is back, trying to piece together a new administration and craft a state budget to address a seemingly bottomless deficit pit.
If he knew in 1978 what he knows today, Brown presumably would have responded differently to Prop. 13 after California voters passed it overwhelmingly. The way the initiative was addressed by Capitol politicians after the election set California’s state government charging down the long path of red ink.
Prop. 13 chopped property tax revenue for schools and local government by nearly 60%. The state rushed in with a $5-billion bailout to keep classrooms, firehouses and police stations open. In one year, state spending leaped by 35%. The locals became addicted to the state’s largess.
Meantime, power was shifted from school boards and boards of supervisors to the governor and Legislature. California government became a Byzantine mishmash with the state dictating to locally elected officials how to administer local services, and often not providing enough money to do the job.
For three decades, there has been a wide disconnect between who mostly pays (the state) and who mostly spends (the locals). It’s more complicated than that. But that’s the basics.
What Sacramento should have done was to provide temporary relief for the local entities and then gradually wean them off the state dole. If local residents want certain government services — high school band, fire substations, mental health clinics — they’d have to dig deeper into their pockets.
But it’s unfair to be too harsh on Brown and the 1978 Legislature. The correct course is clear only in hindsight. At the time, state and local governments were panicked. And angry voters had sent a message.
The state surplus — “obscene,” Treasurer Jesse Unruh called it — had become a potent campaign issue for tax cutters. There was plenty of tax money available, they argued. The state was hoarding it.
So when the governor and Legislature convened after the election to deal with Prop. 13, which most had opposed, they couldn’t unload the state treasury fast enough. Saving had become a sin, a sign of over-taxing.
No policy-maker, including Gov. Brown, looked very far into the future.
Brown received loud kudos for effectively implementing Prop. 13. But the way he and the Legislature did it is one of the major reasons why state government currently is facing a $25-billion deficit over the next 18 months.
There are other culprits, of course. One principal perpetrator is an outdated state tax structure that is boom-or-bust, depending on the economy.
There also are ballot box budgeting, Sacramento’s tendency to overspend and cut taxes in good times, Gov. Arnold Schwarzenegger’s whack of the vehicle license fee, and the Capitol’s habitual borrowing and fiscal gimmickry. And, oh yes, the job-killing recession.
But it all started with the state’s response to Prop. 13.
Brown realizes that now, based on his campaign rhetoric. In running for governor again, the former Oakland mayor talked consistently, if vaguely, about returning more power to local governments and the people.
On his website, Brown promised to create a task force to develop a plan. He also vowed to reduce “excessive mandates” for schools. And he asserted that the ways state and local governments share control over health and welfare programs “blur responsibility and drive up costs.”
“I would work to align program responsibility with revenue authority,” he continued, “so that the entity that manages the program is also responsible to pay for it.”
In non-government speak that means the state would unload much of its costs on the counties, but also give them more power to raise taxes to foot the bill for services. Local voters would decide what they wanted to pay for.
Many in Sacramento want to do that, none more than Senate leader Darrell Steinberg (D-Sacramento), a former city councilman. For him it’s a passion. Do the same for schools, he adds.
Currently, raising the local sales tax for a specific purpose — such as hiring more cops —requires a two-thirds majority vote of the people. Steinberg would lower that to a simple majority. At the same time, he would modernize the entire state tax structure, including lowering the sales tax rate but extending it to services.
But neither Steinberg nor Brown would touch the residential property tax, considered a political third rail.
His goal, Steinberg says, is to maintain services, but allow local entities to operate and finance them more efficiently while “shrinking the size of state government. Because state government simply does not have the revenue stability to meet all its obligations.”
He and his staff, Steinberg says, are going to sit down this week “with butcher paper and try to work up what would really be a fundamental restructuring of government.”
He’s not waiting for Brown to act.
Government restructuring is still a Brown priority, says spokesman Sterling Clifford, but “at this moment a bigger priority is a real thorough analysis of the situation as it is right now.”
Brown may find that the only real way to return the state to solvency is to drop the added baggage he so generously picked up after Prop. 13 passed.
That could be Brown’s biggest achievement, his legacy — returning California’s state and local governments to the way they work best.