Proposition 13: A 33-year legacy of tax savings

By Jon Coupal

Older residents and others on fixed incomes were being forced out of their homes because property taxes were going through the roof. So were tempers, until the governor stepped forward to limit property tax increases to an annual 2 percent.

Sound like California in 1978? Hardly. In 1978, when homeowners were being forced into the street by unpayable property tax bills, then-Gov. Jerry Brown sat on his hands. No, the paragraph above describes events in New York state last month.

Gov. Andrew Cuomo reached an agreement with legislative leaders to limit tax increases and provide New York property owners the same security against arbitrary taxation enjoyed by Californians under Proposition 13. That the 2 percent cap – the same limit as provided by Prop. 13 – was selected is probably no coincidence. Prop. 13 has provided certainty and security to property owners so that they know what their tax bill will be from year to year and can budget accordingly.

While the New York Times reported on the state’s new property tax limitation, ironically it chose this time to editorialize against Prop. 13 as having devastated California education. That a major East Coast paper with a left-of-center editorial policy would perpetuate this urban myth is not surprising. We see this all the time in California, where editors should know better.

First and foremost, Prop. 13, which was passed 33 years ago as of June 6, does not dictate how our government spends property tax revenue. It simply set a property tax rate of 1 percent and limits increases in assessed value to no more than 2 percent per year.

Prop. 13 did not shift the responsibility for education funding from the local level to the state. In 1971, the California Supreme Court ruling in Serrano v. Priest mandated that school funding be equalized for all California students. That meant education funding could not be based upon property tax receipts because wealthy neighborhoods with high property values could spend more per pupil than poor communities.

We never hear the tax-and-spend lobby discuss this ruling nor its implications. We also never hear them talk about the fact that spending per pupil has increased by 30 percent, adjusted for inflation, since Prop. 13 passed in 1978.

Another myth promulgated by the tax-and-spend lobby and a cadre of left-wing ideologues is that only those who have owned their homes since 1978 enjoy the benefits of Prop. 13.

Everyone benefits from Prop. 13. The moment California homeowners get the keys to their new home they are protected from potential annual increases in their tax bills of 20 percent to 30 percent or more, that were common under the old system. By setting a reasonable annual limit on tax increases, property owners no longer fear they will lose their homes to the tax collector.

Renters, too, reap benefits. Without Prop. 13, one can be sure that higher business property taxes on apartment buildings would be passed on to California working families and seniors living on fixed incomes in the form of higher rents.

But what about government? Prop. 13 is an advantage to government planners because it eliminates severe yearly swings in revenue, including when the real estate market crashes and crushes property values. The value reserve built into the system lets those in government predict revenue coming in, although, unfortunately, that doesn’t prevent many politicians from spending far more.

Prop. 13 remains one of the few advantages of living in California. The people understand – recent polls show Prop. 13 remains wildly popular – and most are not only wishing Prop. 13 a happy birthday, but want to see it enjoy many, many more.

Jon Coupal is president of the Howard Jarvis Taxpayers Association -– California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This entry was posted in Howard Jarvis Taxpayers Association. Bookmark the permalink.