Has anyone started a pool on how long Proposition 13 will remain standing, the way it now stands?
The process that made Proposition 13 possible is 100 years old, but the revolutionary tax makeover is 35. And it could be argued that its effect on the Golden State has been almost as fiscally immense as those 1913 reforms that gave us the initiative, proposition and recall have been for the body politic.
But like those reforms, the unwritten law of unintended consequences means Proposition 13 is showing some unlovely signs of aging.
Over those 35 years, the property tax burden has swung from businesses to the homeowners that Proposition 13 was supposed to be protecting. They have become the Atlas of Proposition 13, bearing the property tax burden on their shoulders. From a 60/40 percent business/homeowners figure in 1978, the number is now about 70/30, the 70% being homeowners.
Why? Because big businesses can game the word “ownership” in ways that are not possible for homeowners.
Just a few months back, The Times reported about a legal shuffle that allowed Texas computer magnate Michael Dell to take over ownership of the Miramar hotel in Santa Monica without actually ‘’buying” it, which would have triggered a new Proposition 13 tax assessment. And that shuffle, our story said, meant a million a year in property taxes that Dell didn’t have to pay.
Businesses change hands less frequently than homes, and big businesses can afford lawyers and accountants to configure these as transfers or mergers, even though the effect is the same as selling it. Imagine selling your house but it’s not technically a sale, it’s a merger -- as if you and the other family could share the same space: you’re there in the day, they’re there at night, like that Arthur Sullivan operetta “Cox and Box.”
Those business advantages are one reason that a coalition of labor and anti-poverty groups is targeting the Westfield real estate operation, one of L.A. County’s largest commercial property owners, to make a point about all the ways big businesses can work property taxes to their advantage.’
In Orange County, Disneyland can party like it’s 1978, because it pays just a few cents a square foot in property tax. While Disney stock ownership churns through hundreds of thousands of stockholders’ hands, Disney itself is a business whose jewel, Disneyland, has not changed corporate hands since it opened nearly 60 years ago, and so can benefit from Proposition 13’s tax rates.
California legislators, even with a two-thirds Democratic majority, have considered but rejected any major overhaul of Proposition 13. But even the U.S. Constitution gets amended from time to time; Proposition 13 should not be exempt from corrections.
Yet it is still that third rail of California politics; any change to the measure would need deep analysis of how it will affect the demographic that was imperiled by unchecked property taxes the first time around -- the elderly. All good public policy is subtle and nuanced, not a broadsword.
One huge strategic issue for anyone trying to remedy Proposition 13 -- their “fix” won’t fit on a bumper sticker. “Save Prop. 13” will practically fit on a bicycle.
(Ten years ago, on Proposition 13’s silver anniversary, I went to Forest Lawn to commune with Jarvis’ ashes – and to ask him about this “split roll” change idea.)
Jarvis died 27 year ago this week, but his visage – waving a hectoring finger like a jowly, peeved version of James Montgomery Flagg’s “Uncle Sam” -- still appears on campaign fliers to this day.
After all this time, it’s time for makeovers all around.