Prop. 13, 25 Years Old, Is Still Under Attack

SF GATE (The SF Chronicle) ^ | 08/04/03 | Adam Sparks

[sfwarrior]

California taxpayers are celebrating a silver anniversary, as 2003 is the 25th year since the enactment of California's Proposition 13, whose landmark victory in 1978 sparked a national tax revolt. It passed in a landslide vote, with some 65 percent of Californians favoring the measure.

The proposition slashed property taxes by limiting property-tax rates to 1 percent of the sales price of a home, and it limited subsequent increases to 2 percent per year -- a radical concept at the time.

Previously, tax rates were based on a valuation established by a county assessor. Moreover, voracious local politicians determined the rates arbitrarily. At the time Proposition 13 was put on the ballot, they were averaging about 2.7 percent of the assessed valuation.

And the assessed valuation, determined by a city official, could and did change annually with the rising real estate market. The rates were also subject to the state legislature's whim. Some properties were reassessed 50 percent to 100 percent in a single year, and owners' tax bills skyrocketed accordingly.

In practice, Proposition 13 has meant that people can remain in expensive houses even if their incomes decline. For example, a house owned by a widow living on Social Security who purchased it 10 years ago for $200,000 and has seen its valued double would, following the passage of Proposition 13, have a tax bill of about $2,400 a year. However, if the proposition hadn't passed, that same widow might have to pay $10,800 today -- a huge proportion of her Social Security income -- based on a combination of the pre-Proposition 13 rates and the current assessed valuation.

Angry taxpayers didn't just want to control the arbitrary raises in their property taxes; they wanted fiscal control in spending, too. Otherwise, wily politicians would simply just find new taxes to raise. So, back in 1979, voters, fresh from their historic Proposition 13 victory, also overwhelmingly enacted Proposition 4 -- known as the Gann Spending Limit, after citizen sponsor Paul Gann -- by an amazing 75 percent. Few controversial measures in California's history have ever received such strong approval.

Californians showed the nation they were now at the cutting edge of the tax revolt and they meant business. The Gann Spending Limit capped state spending to annual increases equal to the percentage represented by the combined growth in population and inflation. Unfortunately, in 1990, the voters passed Proposition 111, which essentially dismantled most of the protections of the Gann Spending Limit but preserved Proposition 13.

Attack and Destroy

Since its passage, and despite its popular support, Proposition 13 has come under numerous legal attacks by the Left. The assaults began even before its passage. The tax-and-spenders filed a lawsuit immediately following the initiative's passage, arguing three claims:

The measure would violate California's "one subject" rule for ballot initiatives.

The different assessments for similar houses would violate the federal equal-protection clause.

The government would be forced to breach its contractual obligations. The case reached the California Supreme Court on Sept. 28, 1978, and the plaintiffs lost on all counts. The court ruled in favor of Proposition 13 by a six-to-one vote.

Subsequently, more legal challenges materialized. Despite the fact that Proposition 13 clearly states that "cities and counties and special...

[sfwarrior]

Proposition 13 the landmark tax cutting measure is still under attack on the 25th anniversary of it's passage by California voters. This article tells why this Constitutional Amendment drives many liberal big spenders into conniptions and why they're all wrong.

[sfwarrior]

ping

[litany_of_lies]

Prop 13's biggest mistake was to treat new and existing property owners differently. Don't get me wrong, I knew about this problem in 1978 and would have voted for Prop 13 if I were living in CA at the time.

If you stay in your home, the taxable value of your property, and therefore the taxes on it, can only go up slightly each year. But if you sell, the new owner's taxes are based on current market values. This has led to absurd situations where a recent move-in homeowner is paying 4-5 times the taxes their next-door neighbor is paying, the only difference being that the neighbor has lived there since the 70s.

I really thought the courts would throw out the market-value-for-new-residents provision of Prop 13 and leave the rest intact, but an appeal went to the US Supremes and failed (I think they decided not to hear it).

It's now to the point of being an incredible injustice, with new or moved homeowners subsidizing long-time residents. It's also a real hindrance in and distortion of the real estate market. For example, my brother's family (in CA since early-80s) wants to move within CA and can afford a higher principal and interest payment on a nicer home, but his taxes would go up by thousands for no reason (it may be more than a $10,000 difference). I'm sure he would have moved by now were it not for this ridiculous difference.

How this unequal taxation is consistent with conservative principles is beyond me.

[kellynla]

Tom McClintock is on the Mark Larson show now http://www.krla870.com

[litany_of_lies]

Just so we're clear, my solution would be to knock all assessements of all properties in CA back to their 1978 levels plus the allowed 1-2% per year increases, regardless of who owns the property and how many times it has changed hands. That would fix the tax-and-spenders' little red wagons.

Also noticed that the unequal taxation claim did get heard by the US Supremes and was rejected 8-1.

[PeoplesRep_of_LA]

Holy Cow, this is in the San Francisco Chron?

Attack and Destroy Since its passage, and despite its popular support, Proposition 13 has come under numerous legal attacks by the Left. The assaults began even before its passage. The tax-and-spenders filed a lawsuit immediately

Such honesty! Such candor. The media fulfilling its purpose.

[tubebender]

You are forgetting one thing about these folks selling their older homes for big bucks is the fact almost all of them buy a more expensive home and now the owner of the old home is paying the new tax. The article states that property tax revenue has increased 10% per year since 1982 and is still increasing. I hope you are not suggesting we all pay higher income tax so people can live in more costly homes than they can afford.

[Ernest_at_the_Beach]

Thanks for the ping!

calgov2002:

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calgov2002: for new calgov2002 articles. 

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[taxcontrol]

I would like to see a constitutional amendment that would control FEDERAL spending.

[Grampa Dave]

Thanks for the post and the pings.

Prop 13 has been under attack 24/7/365 since it became law by the tax and spend liberals.

Hopefully the current Recall will become known as son of of Prop 13 and starts another revolt against tax and spenders.

[litany_of_lies]

"I hope you are not suggesting we all pay higher income tax so people can live in more costly homes than they can afford."

Not at all. See my #5.