This report argues that the property tax shift beginning in FY 1992-93 has introduced significant new distortions into the public-private decision making process. The property tax, as a relatively static revenue source, has been a problematic aspect of California's fiscal composition since the passage of Proposition 13. The property tax shift, which created the ERAF (Educational Revenue Augmentation Fund) fund for schools, has exacerbated this already serious problem, especially for counties.
