Debunking the myth of Prop. 13
Two months ago, I violated a cardinal sin with an unholy, unforgivable suggestion. I quoted an economist who said it was time to redo Proposition 13.
The column attracted the usual taunts and boos from readers, but a kindred spirit sent me this email:
“Go man go!”
Dowell Myers offered this thumbnail sketch of himself:
“Who am I? A USC professor, a demographer, census expert and planner.”
And so began a back-and-forth by phone and email. Myers believes that despite the state’s seemingly eternal budget crisis, California elected officials are all too happy to opt for bickering and tinkering rather than educating and reforming.
The state is billions in the hole, even with $6 billion in unexpected revenue falling out of the sky recently, and the thing we’ve been fighting about for months is whether to extend a few temporary tax increases that would fix nothing in the long term?
Pathetic. Dishonest. And a long-term disaster, Myers told me over lunch on Tuesday at Homegirl Cafe on the edge of Chinatown.
Because a wave of demographic change has just hit L.A. County, said Myers, and a tsunami could be headed our way. Thanks to all the aging boomers, the ratio of seniors to working people in Los Angeles County has surged for the first time in four decades. And this is going to throw “everything out of whack,” Myers said. “Healthcare costs, pensions, etc.”
While the number of seniors grew, the number of children between the ages of 5 and 9 fell by a staggering 21% between 2000 and 2010. And at the same time, immigration has leveled off and begun to decline.
As a result, home prices will stagnate for years to come, Myers said, and for-sale signs will petrify.
“There are too many sellers and not enough buyers coming up,” said Myers. “And it’s going to get worse.”
So we can’t afford high dropout rates, and we can’t afford devastating cuts in higher education. And if that means that we have to rethink how we pay for those institutions, which were devastated in part by Proposition 13, now is the hour.
“We need all hands on board,” said Myers.
He doesn’t like talking about illegal immigration because it ends all rational discussion, but he does question the wisdom of educating illegal immigrants until 12th grade, as required by law, and then cutting off their chance to get a college degree and pay back our investment by pumping more taxes into the public well.
As for Prop. 13, Myers said its popularity was roughly the same in 2008 as it was in 1978, when homeowners feared being thrown out of their houses by rapidly rising taxes. But that’s because of the myth of Prop. 13. In fact, Myers said, young people who think the proposition is a good thing really don’t know much about it.
They don’t realize, for instance, that Prop. 13 works for a homeowner only if the value of the house keeps going up. It’s protection in that case, thanks to a strict limit on how much property taxes can increase. But anyone who bought after 2002 isn’t getting any benefit at this point, because prices have crashed since then.
“Prop. 13 is toast,” said Myers, because it relies on ever-rising home prices to maintain its political support, and he doesn’t see home prices rising significantly in California for many, many years. That’s due in part to a housing glut caused by a shortage of new buyers.
“Renters don’t benefit and the majority of new home buyers don’t benefit, but they don’t know that because of the myth of Proposition 13,” said Myers.
For those whose property taxes are among the lowest in the nation because of Prop. 13, Myers said, it’s not the government they’re getting the best of.
It’s their grandchildren, who may be driven to another state, where they can more easily afford a house because they don’t have to make up for their grandparents’ super-low property taxes.
Or it’s their neighbor.
The neighbor who bought later and pays higher property taxes essentially subsidizes the longtime owner. That’s why we’ve got examples, throughout the state, of people paying several times as much in annual property taxes as the folks next door, even if the houses are worth the same on the market.
Myers isn’t naive, but he’d like to believe that if more people understood all this, as well as the fact that commercial property owners have benefited from Prop. 13 even more than homeowners have, there might be more public pressure on legislators to rewrite the state’s tax structure in more equitable ways. And if that miracle ever happens, California could become less reliant on sales and income taxes that rise and fall each year based on economic trends.
As I’ve said before, Prop. 13 brought needed relief in 1978, but it went too far. It shouldn’t be wiped out now, but it can be tinkered with, so long as there are protections for long-term owners so people don’t get thrown out of their houses.
The logical person to lead the way is Gov. Jerry Brown, who sat in the same chair in 1978 as he does now, and shouldn’t have bothered to run again if he wasn’t serious about fixing a broken state.
The stories shaping California
Get up to speed with our Essential California newsletter, sent six days a week.
You may occasionally receive promotional content from the Los Angeles Times.