Have I Got a Proposition For You
STEINBERG, ARNOLD
Have I Got a Proposition For You California’s tax revolt, 30 years on. BY ARNOLD STEINBERG Thirty years ago, this week, California voters started a taxpayer revolt that quickly spread to...
...And then they voted for this historic measure, Proposition 13, to amend their state constitution to limit property taxes...
...13 treats business and residential property the same...
...Early on, I urged my client, Attorney General Evelle Younger, a candidate for governor in the Republican primary that June, to endorse Proposition 13...
...In his own way, he told people to look under the hood...
...For good measure, Prop...
...Because of it, they feel, people in the Golden State are denied the public sector resources necessary to provide vital services and to fund public education adequately...
...If Prop...
...For government expansionists, Prop...
...In fact, he tilted toward Jerry Brown in the general election...
...In November 1978, a host of young Republican candidates (“Prop...
...Gas prices may go up, costly home repairs may be needed, but your property taxes can only increase incrementally each year...
...When you eventually sell it, the new owner is assessed his purchase price, and the process starts again...
...13 babies”) won seats in the state legislature and then advanced politically as conservative prospects improved...
...13 was about much more than limiting property taxes on apartment buildings...
...13 was never an electoral certainty...
...13 detractors are still saying these things...
...But just weeks before Election Day, home owners across the state received their reassessments, which were substantially higher and thus foretold huge property tax hikes...
...But trying to change this formula could open the door to large increases for everyone...
...13, or to argue the state would be better off without it...
...13 at fi rst seemed headed for defeat...
...Howard Jarvis, Prop...
...13, Younger won the June 6 primary...
...13—that the state needed revenue...
...Here’s to 30 more years...
...In simple terms, a home worth $500,000 could be taxed up to $5,000, and, in the event that the value of the home went up, those taxes could increase by no more than $100 (i.e., 2 percent of $5,000) in year one, then $102 (2 percent of $5,100) in year two, and so forth...
...Jarvis was crusty and fi ercely independent...
...But California has done quite well since 1978...
...Then a late revelation of a sizable state budget surplus undercut the main rationale for opposing Prop...
...Employment would fall, so consequently would public revenue, in an endless cycle of decay...
...13, they should be careful what they wish for, or they could end up with a “split roll”—a higher tax rate for business property than for residential real estate...
...13 found that school district revenue—per student and adjusted for infl ation—had increased 30 percent...
...plicated, he maintained...
...BY ARNOLD STEINBERG Thirty years ago, this week, California voters started a taxpayer revolt that quickly spread to other states, helped set the stage for President Ronald Reagan’s income tax cuts, and inspired an entire generation of diehard opponents of big government...
...13, turned on the proverbial dime: He immediately, wholeheartedly embraced its implementation...
...Howard Jarvis had tried and failed with similar measures...
...During the campaign, challenger Arnold Schwarzenegger brought Warren Buffett for a staged fi scal summit...
...California, the line went, would become a statewide ghost town, bereft of such public necessities as policing, firefi ghting, and schooling...
...13 really has bankrupted state, county, and city government here, then why didn’t Silicon Valley move elsewhere...
...Meanwhile, Governor Jerry Brown, who had campaigned vigorously against Prop...
...13 went beyond property tax reform —for an increase in local general taxes, it required the approval of local voters, and for an increase in state taxes, it required a two-thirds majority in the state legislature...
...There have been problems for California, to be sure, but these are not the fault of Prop...
...13’s opponent, the Democrat Brown, with championing lower taxes and, accordingly, reelected Governor Moonbeam...
...13 as is...
...The logic was compelling...
...Ever courting the state’s increasingly liberal state legislature, the corporate interests have funded efforts to undermine 13, such as ballot measures to lower the threshold for approving local special taxes for school funding...
...13 represents all that is wrong with the conservative movement...
...They bought into the argument that, if Prop...
...In trying to change Prop...
...After all, the Jarvis coalition was centered not on business, but on homeowners...
...And Prop...
...fearing implosion of his campaign, Schwarzenegger publicly disowned Buffett, who quickly disappeared from Schwarzenegger’s entourage...
...They have chafed at its restraints for more than a generation...
...13’s creator, felt that if you limited property taxes but did not otherwise inhibit government, it would raise other taxes promiscuously...
...He felt more comfortable among Republicans but was hardly a party man...
...By Election Day in November, confused voters credited Prop...
...In the three decades since Proposition 13 passed, big business has been less than grateful for its property tax breaks, which disproportionately favor large properties like, say, Disneyland and skyscrapers...
...They provided a “moderate” alternative, Proposition 8, that would have trumped 13 if it had received more votes...
...One of Younger’s impressive primary opponents, San Diego mayor Pete Wilson, like most mayors, opposed Proposition 13 as fi scally imprudent...
...Jarvis’s campaign focused on homeowners, but business has been quite the beneficiary as Prop...
...In the end, voters repudiated the hysterical antiProp...
...After all, is it so tragic that people who own a home can look into the future and know they will not lose it over runaway property taxes...
...Fast forward to the 2003 recall of Democrat Gray Davis...
...Partly because of his support of Prop...
...Against my counsel, he then took an immediate vacation to Hawaii...
...Yet the state’s largest corporations led the charge against Proposition 13...
...Lots of people come here...
...And many, while they contribute to the economy, also claim substantial public services...
...Howard Jarvis, who died in 1986, would love that they’re still whining about his mischief...
...The billionaire investor made big news in urging a remake of Prop...
...In that same 1978-2003 period, state government revenue, as a whole, had increased 25 percent...
...Big business allied with politicians in both parties, along with police, fi refi ghters, teachers, and all the usual suspects in a lavish campaign to kill it...
...Jarvis was involved with an association of apartment owners, many of whom were not wealthy but middleclass, owning a few units the income from which they were counting on in their retirement...
...Jarvis felt, and rightly so, that longtime homeowners, especially the retired and elderly, were being forced out of their homes because property taxes were rising at a seemingly uncontrollable and unpredictable rate...
...Although they feel (by 3-to-1) that things in California are on the wrong track, they would vote for Proposition 13 again—by a 2-to-1 margin...
...But to Jarvis, Prop...
...it was the fi scal embodiment of “a man’s home is his castle...
...That’s because he went with the power, and Brown assured him he would faithfully implement Prop...
...When you buy a home, the purchase price is the assessment, and that assessment (and consequent property taxes) can increase only by 2 percent annually, regardless of real estate appreciation...
...13 limited (a) taxes on real property to 1 percent of value, and (b) increases in property taxes to 2 percent annually...
...Perhaps the most controversial manifestation of Prop...
...The Terminator could not hint at terminating Prop...
...even the revenues of the chronic complainers, city governments, had increased 20 percent—adjusted for infl ation and population...
...Jarvis was the consummate anti-politician who appealed to this populist preoccupation: Government does not need more money, it merely must stop wasting what it has...
...So it has retained popular support...
...A study commissioned by the Howard Jarvis Taxpayers Association reviewing the fi rst quarter-century of experience with Prop...
...This means that a new homeowner could be paying two or three times the property taxes of his neighbor, who has lived there a long time...
...13 ad campaign which suggested that, if not the world, then the state’s government would come to an end if deprived of higher property tax receipts...
...The truth is, it’s hard to imagine California without Prop...
...I argued that even if it lost, it would win handily among Republicans, and he needed them in the primary...
...Corporations would leave, new enterprises would not start or move here...
...I just conducted a study for the Jarvis organization of how California voters view Proposition 13...
...He was a sort of precursor to Ross Perot, but of decidedly modest means...
...As time goes by, of course, more and more of the original supporters (many were seniors 30 years ago) disappear from the electorate...
...But once they are told of its key provisions, voters opt to keep Prop...
...For all its subsequent popularity, Prop...
...It does not do as well among the roughly one-third of the electorate that is “not familiar at all” with Prop...
...Things were not that comArnold Steinberg is a political strategist and analyst...
...13 is that it treats different homeowners differently —favoring longtime owners over newcomers...
...Republicans George Deukmejian and Pete Wilson (who always supported Prop...
...For most California Republicans, though, 13 turned out to be a lucky number...
...13 passed, government would be so starved it would be unable to provide basic services...
...And if it won, it would probably do so broadly, and he needed to expand his base for the general...
...While the rest of the country slept through the Carter presidency, hundreds of thousands of Californians participated in a true grassroots petition campaign to place an initiative on the June 1978 ballot...
...Immigrants here illegally may benefit consumers or business, but government must fund, for example, the growth in school enrollment...
...13 after 1978) were elected governor and reelected (1982, 1986, 1990, 1994...
Vol. 13 • June 2008 • No. 37
