Thirty years last ago Friday, on June 6, 1978, Californians passed Proposition 13, the “People’s Initiative to Limit Property Taxation.” It helped California homeowners, but is now blamed for many of the state’s woes.
Owning a home has always been part of the American dream. During the latter part of the 1970s, the inflationary Carter Era, property taxes were soaring in California, to the point that they created hardship. Bill Stall, press secretary for then-governor Jerry Brown, explains that the taxes were “especially hard on senior citizens and others living on fixed incomes.”
Proposition 13 rolled back assessments to 1975 levels, and these could rise no more than 2 percent per year, capped at 1 percent of a home’s cash value. It also mandated a two-thirds majority to raise any state tax, and easily secured a place on the June 1978, ballot. During the campaign, state officials, particularly Gov. Brown, opposed the measure in apocalyptic terms. Jesse Unruh, state treasurer and a Democrat, pointed out that California enjoyed a budget surplus of $5 billion. A full 65 percent of state voters approved Proposition 13, a landslide by any definition.
Proposition 13 cut property taxes, but a tax cut of any kind, contrary to what many politicians and pundits imagine, is not a gift or subsidy. Homeowners simply were allowed to retain more of the funds they had already earned. Proposition 13 freed more money for food, mortgage payments, medical care, transportation, tuition and other family needs. Those who bought homes in ensuing years enjoy the same limitation. Even so, the measure gets a bad rap in Sacramento from those one might call the pillage people.
This group, primarily politicians and pundits, supports ever-encroaching government and construes whatever tax increases may be necessary to bankroll it as automatic and beyond discussion. In this view, people must live within limitations, but not government, so naturally Proposition 13 incurs their wrath. Consider this account by Peter Schrag of the Sacramento Bee. Proposition 13, he writes, “triggered the national tax revolt and marked the first major triumph of latter-day me-first individualism and market theology over the communitarian ideals and civic concern that moved the country to its greatest achievements during the Depression and the years of World War II.”
Proposition 13 actually constrained greed on the part of government. That is, it constrained government from taking more of what people earn, not to offer them new and better services, but to compensate for its own excessive spending and budgetary mistakes.
Meanwhile, Stephanie Greenwood, editor of “10 Excellent Reasons Not to Hate Taxes,” (yes, that’s the actual title) published in 2007 by The New Press, blames Proposition 13 for education woes. The measure, she writes, “drastically limited property tax increases . . . the change coincided with a rapid drop in student achievement.”
The drop in achievement had actually been going on many years prior to Proposition 13 and is more related to junk-thought, low standards, social promotion and bilingual education. High education spending does not guarantee high test scores. Private and charter schools outperform government schools on much less money. If there were truly a dearth of money for K-12 education, as educrats continually claim, we would not see $200-million-plus boondoggles such as the ill-fated Belmont Learning Center in Los Angeles.
There’s no denying that California faces serious financial problems. Those problems are due to excessive spending, bloated bureaucracy, an unfavorable business climate, waste and corruption. The problems are not due to Proposition 13, which turns 30 as members of the Baby Boom generation begin to retire and live on fixed incomes. With food and fuel prices soaring, they will rely on Proposition 13 to remove the unpleasant surprise of their property taxes following “California’s often exuberant housing prices into the stratosphere,” as Mr. Stall puts it. Any attempt at reform should keep that in mind.
If the pillage people believe property and income taxes are too low, they are free to pay an extra thousand or two out of pocket. They could also launch a ballot measure titled “Government Initiative to Raise Property Taxes” and see how state voters respond. It would be better simply to support limited government and lower taxes, as California voters did 30 years ago.
K. Lloyd Billingsley is the editorial director of the Pacific Research Institute.