It May Be Time to Let Some Revenue Through the Prop. 13 Dam
Los Angeles Times
February 11, 2003
Mr. Jarvis? Howard? Are you there?
No answer. I'm not surprised; after all, the man doesn't know me. But everyone knew about him. The man at the gate at Forest Lawn Hollywood Hills, where I went to visit the Tomb of the Tax Revolter, said he'd even heard of him, back in Sweden.
He's been dead for years, but so potent is his ghost that his image, the wattled, finger-jabbing Howard the Tax-Hacker, the Scourge of Sacramento, still shows up on campaign mailers, sometimes more often than the candidates' own mugs.
His ashes rest not far from Bette Davis and her epitaph, "She Did It The Hard Way." Jarvis, less flamboyantly, has only a standard bronze-covered niche bearing his name and dates. He hardly needs more; Californians remember our earthquakes -- San Francisco, Sylmar, Northridge. This was the Jarvis Quake, the political 9-pointer, Proposition 13.
Light those candles -- Prop. 13 is 25 years old this year.
Here's what Prop. 13 did. In 1978, property taxes were matching duo-digit inflation, and Californians on fixed incomes were afraid they'd lose their homes to the taxman. Prop. 13 immediately hacked $7 billion off state property taxes, capped them at 1% of a home's assessed value, and limited increases to 2% a year. And almost every tax since has required a two-thirds vote to pass -- even though Prop. 13 itself fell a little short of that mark.
What Prop. 13 has done to California since is subject to unending debate.
In physics, for every action there's equal and opposite reaction. Ditto statistics and Prop. 13. Which is why I went to the source, the late Mr. J.
I know 25 years isn't long where you are, but how would you assess its effect?
No answer. I should watch more of those contact-the-dead shows for tips.
Depending on the source, Prop. 13 is either a savior or a serial killer, boot camp for a fat, greedy government, or a vacuum cleaner sucking property-tax bucks out of local government where they're needed for potholes and emergency wards and libraries, and emptying them into the lap of the state government, which gets first dibs and gives back what's left, which is pitifully little. The law of unintended consequences has made Howard Jarvis' hated Sacramento more powerful than ever.
Prop. 13's fans -- including politicians like Pete Wilson, who opposed it at first -- say it's been the reins on the runaway fiscal horse. Prop. 13 is why a lot of Californians got to keep their homes and others can afford to own one.
It's why local governments have had to get creative to make ends meet, with user fees and special districts, with hotel taxes because tourists don't vote, and with garbage-collection fees.
It's why we have more box stores and strip malls. With property taxes staying in Sacramento, desperate cities became sales-tax junkies, and there's more sales tax in a Wal-Mart than in a factory or a neighborhood. Cities wage hair-pulling battles, pitted against each other by malls and box stores coyly auctioning themselves off for the biggest tax break. The sales-tax addiction explains stretches like "sales tax canyon," a 10-mile commercial strip on what was once farmland between Camarillo and Ventura.
To critics, Prop. 13 is why California schools have dropped to a low estate, why schoolkids are fat -- all those cuts in phys. ed classes -- why parks charge user fees, why prisons get built and libraries don't. Peter Schrag's book "Paradise Lost" argues that Proposition 13 began a "nearly constant revolt" against representative government, a dissatisfaction that extends to term limits, low turnout and voting haves versus nonvoting have-nots. "In terms of government's ability to function," Schrag says, "most people in government would certainly say [Prop. 13] is bad."
They evoke an Edenic pre-Prop. 13 California where schools and hospitals were spacious and immaculate, roads paved smooth as a millpond -- but USC's John G. Matsusaka, who teaches finance and business economics and who has a book coming out about initiatives, "For the Many or the Few," thinks that blaming Prop. 13 alone is simplistic.
In the year of Prop. 13, "the Legislature passed a billion-dollar income tax cut. Did Prop. 13 cause that or not? .... You ask what caused less revenue; there was a very general desire to cut spending in every state. To say somehow Prop 13 made all these [bad] things happen, as some people want to -- I'm not comfortable saying."
And California was a different state then. In 1980, we were 30th among the states in poverty rates. Now we are around 12th. In 1980, child poverty stood at 15.2%, now it's 25.1%. And poverty costs money.
Mr. Jarvis, what do you think of the split roll idea? Let's do this -- if you don't say anything, that means you're for it. I'll count to 10 .... nothing? Great.
Commercial property got 40% of the benefit of Prop. 13 right off the bat, and in the 1980s, big corporations began dodging reappraisals as property changed hands, claiming that something called a sales/lease-back deal entitled them to the same Prop. 13 protections that were meant for elderly parents who deeded their homes to their children, postponing any tax hikes until the parents died.
In the quarter-century since Prop. 13 entered holy political writ, when "no man cometh unto political office but keepeth his mitts off Prop. 13," politicians have gotten less timid. "Split roll" is edging its way into the "what-do-we-do-with-13" debate, breaking off commercial property from residential, cutting off some steaks from the sacred cow.
Gray Davis' budget guy, Steve Peace, is among those making noises about split roll, and even the Howard Jarvis Taxpayers Assn. has taken no position on it, but Matsusaka doubts voters would go for it; "I have a strong suspicion that they view Prop. 13 like a dam; it's not clear they believe you can tear a hole and just let some of the water through."
In other words, Sacramento, go ahead and try to change Prop. 13. Here's the instructions: Open noose, insert head.
Howard? Mr. Jarvis? Are you laughing in there?
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