End of the Proposition 13 Era?

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Tuesday’s election results were not even in print when questions arose whether the Proposition 13 era in California history had come to an end. Tax-resisting California began a generation ago in 1978 when the famous tax cutting measure was overwhelmingly passed by the voters. The Mercury News claimed in a post-election story that the passage of Proposition 30 was “a symbolic end to a 34-year period in California history, which began when the state’s voters stoked anti-tax prairie fires across the nation by passing Proposition 13.”

Of course, the common link across the three-decade-plus era is Jerry Brown – governor when both Proposition 13 and Proposition 30 passed.

There is evidence that a page has been turned in the Golden State. Not one, but two statewide tax increases were passed by voters on Tuesday along with a large percentage of taxes on local ballots. The Los Angeles Daily News, the newspaper of the San Fernando Valley, which was the hot-bed home of the Prop 13 property tax revolt, headlined Friday: “Valley Shifting Further to Left.”  Only a small percentage of current voters remember the trepidation that taxpayers faced when receiving their property tax bills prior to Prop 13.

If the Democrats are successful in nailing down the supermajority in both houses of the legislature, which now appears likely, they can put Prop 13 constitutional changes on the ballot without the governor’s signature

Efforts to raise revenue would probably come first through new fees or rate changes on current taxes. However, Proposition 13 is more than a tax law – it is an iconic symbol of Californians’ attitude toward taxes. There are many in the tax and spend community from legislators to public employee union leaders who would love to knock Proposition 13 off its pedestal.

Already there has been conjecture in a Wall Street Journal editorial and in Dan Walters’ Sacramento Bee column that Proposition 13 could be a target of the new supermajority, especially focusing on a possible change in the property tax rules for commercial property. In his Sunday San Francisco Chronicle column, former Assembly Speaker Willie Brown wrote: “Might I suggest that his (Jerry Brown) next bold move be to enlist Warren Buffett for a joint effort to reform Proposition 13?”

However, before anyone jumps off the ledge of a tall building consider a few points.

Proposition 30 is not equivalent to Proposition 13. The greater part of the tax increase in Prop 30 was a tax on someone else – rich taxpayers. The tax, as we were told over and over, was temporary. Prop 13 offers tax protection to a wide range of taxpayers. Homeowners, renters, and businesses all benefit from Prop 13. The supermajority vote requirements for passing new taxes also protected taxpayers.

Even if a Prop 13 change was narrowly cast on business property, the effect on small businesses and the cost of doing business passed on to consumers would cast a much wider net over the taxpayers than the high-end income tax changes of Prop 30 did.

Taxpayers welcome Prop 13’s taxpayer protections. Polls still record about a 2 to 1 approval of current voters for Prop 13.

David Wolfe, Legislative Director for the Howard Jarvis Taxpayers Association, whose main mission is to defend Prop 13, says, legislators who squeezed by their opponents to help create the new supermajority are not going to run off and vote for a repeal of all or part of Prop 13 unless they plan on being one-term wonders. Wolfe insists, “The legacy of Proposition 13 hasn’t changed.”

A changing electorate could well have different views on taxes from a previous generation. However, it seems a leap to say that Proposition 13, itself, is in danger because of the recent election results.

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