The following article appeared in the San Diego Union on June 22, 2003:

PROP. 13: 25 YEARS LATER

Taxpayers still like measure's protections

By Joel Fox

Twenty-five years ago, Proposition 13 saved many people from giving up or selling their homes because of out-of-control property taxation. On this point, there is little disagreement and on that fundamental level Proposition 13 must be scored a big success.

The measure came along at the time of escalating home values which coupled with high tax rates saw property taxes increase 50 percent to 100 percent or more annually. Many Californians, especially those on fixed incomes, could not pay their taxes, yet governments, for the
most part, did little to adjust tax rates to reduce the tax burden. Proposition 13 capped tax rates at 1 percent and limited increases, thus becoming a life preserver to the taxpayers who were about to drown in a sea of increasing taxation.

However, as the saying goes: "That was then and this is now." Has Proposition 13 withstood the test of time so that its taxpayer protections should remain in place?

The argument over Proposition 13's viability comes on the occasion of the measure's 25th anniversary when state and local governments are struggling with severe revenue shortfalls. Over the years, standard procedure is to blame Proposition 13 for the ills that have befallen
California. Some of those charges have been heatedly debated, like Proposition 13's effect on public education. Many charges are patently absurd such as the column in a 1995 issue of the New Republic magazine charging that O.J. Simpson escaped a guilty verdict in his criminal
trial because Proposition 13 reduced funds to law enforcement, resulting in a weak case presented against the former football star.

Still, Proposition 13 has been accused of helping to create the gargantuan state deficit, holding down education, turning local government authority over to the state government, and being
undemocratic by requiring a two-thirds vote to raise taxes.

Let's look at these issues one at a time.

DEFICIT: If Proposition 13 caused the $38 billion state deficit 25 years after the tax cutting measure passed, it also must get credit for the billions of dollars of surplus a few years ago, but no one ever made that connection. To argue that the current deficit was caused by Proposition 13 is absurd.

In fact, Proposition 13 did not stop increases in government revenue. All governments, state and local, have more money in constant dollars today than they had before Proposition 13 passed. The difference today is that government has expanded greatly. Government has more programs
than 25 years ago and pays its employees with relatively higher wages, more benefits and generous pensions. Increased spending has gotten California into trouble, not Proposition 13's restrictions.

EQUITY: A constant complaint about Proposition 13 is that it treats similar properties differently depending upon when they were purchased. Under Proposition 13 all properties are taxed at a 1
percent tax rate, but the rate is applied to the market value when the property was purchased. Therefore, similar homes may pay different taxes because a recently purchased home pays more than one in which the owner has lived for a long time.

In accepting Proposition 13's tax system, the voters opted for certainty in their taxes. Under the Proposition 13 system, taxpayers know what their property taxes will be when they purchase a property and can budget for their property taxes year in and year out.

Prior to Proposition 13, neighborhood property taxes were adjusted upward when another home was purchased in the neighborhood for more money. If it were not for Proposition, 13, imagine what would have happened to long-time residents in the Silicon Valley a couple of years ago when a high-tech entrepreneur purchased a garage refurbished as a home for a million dollars. Taxes on neighboring homes, even modest ones, would have shot through the roof. To a lesser degree, this phenomenon is occurring in all California neighborhoods in an inflated real estate market.

SCHOOLS: Proposition 13 did not change the ways schools would be financed. The Serrano v. Priest decision by the California Supreme Court prior to Proposition 13 said that it was unfair to base school funding heavily on property taxes because richer communities could afford to spend much more on education. The Serrano decision forced the state to get heavily involved in school financing. Additionally, more money is spent per capita on students in constant dollars today
than was spent prior to Proposition 13.

LOCAL GOVERNMENT: Proposition 13 clearly states that the property tax shall remain in the counties and be distributed "according to law." The Legislature makes the laws and it has not made many good ones when it comes to overseeing local tax money. However, Proposition 13 does not have to be changed to give more control to local governments. Allocation formulas and other state mandates can be changed -- and should be changed -- statutorily to fix the state-local relationships without jeopardizing the taxpayer protections of Proposition 13.

SUPERMAJORITY VOTE: Proposition 13 required a two-thirds vote for the Legislature to increase a tax and also a two-thirds vote by the people for local taxes dedicated for a special purpose. A supermajority vote has historical precedence to assure consensus on important matters. The two-thirds vote appears ten times in the United States Constitution for such things as approving a treaty or convicting an impeached official. The state constitution has had a provision
requiring a two-thirds vote of the people to raise property taxes to back local bonds since 1879. There is no more important matter than taking property in the form of taxation from the people and such an action deserves a two-thirds vote standard.

Despite all the attacks against Proposition 13, it is still supported by the voters in polls by the same two-to-one margin it passed by in 1978. This is remarkable since many of those polled either did not live in California 25 years ago or were too young to remember the dire
consequences caused by an oppressive property tax system.

However, the great majority of people understand that California governments receive ample money and that Proposition 13 is a taxpayer protection that will prevent more raids on their pocketbooks. The people have no plans to give that protection away.

Joel Fox is past president of the Howard Jarvis Taxpayers Association and a public affairs consultant. His recent book "The Legend of Proposition 13" is available at http://www.HJTA.org/orderbook.htm.

The original URL of this article is:
http://www.signonsandiego.com/news/uniontrib/sun/opinion/news_mz1ed22fox.html

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