Happy Birthday Prop. 13
Older residents and others on fixed incomes were being forced out of their homes because property taxes were going through the roof. So were tempers until the governor stepped forward to limit property tax increases to an annual two percent.
Sound like California in 1978? Hardly. In 1978 when homeowners were being forced into the street then Governor Jerry Brown sat on his hands. No the paragraph above describes New York last month.
Governor Andrew Cuomo has reached an agreement with legislative leaders to limit tax increases and provide New York property owners the same security against arbitrary taxation that is enjoyed by Californians under Proposition 13. That the two percent limit was selected — the exact same limit as provided by Proposition 13 — is probably no coincidence. Any dispassionate observer will note that Proposition 13 has been extremely successful in providing certainty and security to property owners so that they know what their tax bill will be from year to year and can budget accordingly.
While the New York Times reported on the state’s new property tax limitation ironically it chose this time to editorialize against Proposition 13 as having devastated California education. That a major East Coast paper with a left-of-center editorial policy would perpetuate this “urban myth” is not surprising. We see this all the time in California where editors should know better.
First and foremost Proposition 13 which turned 33 on June 6 does not dictate how our government spends property tax revenues. It simply set a property tax rate of 1% and limits annual increases in assessed value to no more than 2% per year.
Proposition 13 did not shift the responsibility for education funding from the local level to the state. Seven years before Proposition 13 passed the California Supreme Court ruling in Serrano vs. Priest mandated that school funding be equalized for all California students. That meant education funding could not be based upon property tax receipts because wealthy neighborhoods with high property values could spend more per pupil than poor communities.
The funding of our education system based on property tax receipts was found unconstitutional but we never hear the tax-and-spend lobby discuss this ruling nor its implications. We also never hear them talk about the fact that spending per pupil has actually increased 30% adjusted for inflation since Proposition 13 passed in 1978.
Another myth promulgated by the tax-and-spend lobby and a cadre of left-wing ideologues is that only those who have owned their homes since 1978 enjoy the benefits of Proposition 13.
Everyone benefits from Proposition 13. The moment California homeowners get the keys to their new home they are protected from potential annual increases in their tax bills of 20 or 30 percent or more that were common under the old system — in February of 1978 Los Angeles County Assessor Alex Pope announced that many parcels of property would see assessed valuations increase by as much as 100%. By setting a reasonable annual limit on tax increases property owners no longer fear they will lose their homes to the tax collector.
Renters too reap the benefits of Proposition 13. Without it one can be sure that higher business property taxes on apartment buildings would be passed on to California working families and seniors living on fixed incomes in the form of higher rents.
But what about government? Proposition 13 is an advantage to government planners because it eliminates severe yearly changes in revenue including when the real estate market crashes and results in huge decreases in property value. The value reserve built into the system lets those in government predict revenues coming in although unfortunately that doesn’t prevent many politicians from spending above and beyond that amount.
Proposition 13 remains one of the few advantages of living in California. The people understand — recent polls show Proposition 13 remains wildly popular — and most are not only wishing Proposition 13 a happy birthday but want to see it enjoy many many more.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.