Other Revenue Sources Should Be as “Devastating” as Prop 13

Joel Fox

Editor and Co-Publisher of Fox and Hounds Daily


You’ve heard the complaints and criticisms for four decades now on how Proposition 13 severally cut government finances. Yet, once again a report from a government agency itself says that just isn’t so.

As part of the Legislative Analyst’s Office recent report on California’s Fiscal Outlook for 2018-2019, a chapter on property taxes is titled “Property Taxes Exceed Budget Expectations.”

I would add the word “again.”

Under Proposition 13, property taxes continue to exceed expectations and outgrow population and inflation growth. Property tax revenue has grown more than 1000-percent since Prop 13 passed. A few months ago, in a CalMatters column,  Dan Walters quoted a previous LAO report: “Personal income in California – an approximate measure of the size of the state’s economy – has grown at an average annual rate of 6.3 percent since 1979. Over the same period, revenue from the 1 percent property tax rate has grown at an average annual rate of 7.3 percent.”

According to the California Taxpayers Association,  property assessments have grown over 7-percent while population and inflation combined have increased a lesser 5-percent.

The newly released LAO report on property tax collection falls in line with this history. In noting that property tax collection affects the state budget because of revenue the state must send to schools, the report states, “school property taxes will be notably higher than assumed in the 2017-18 Budget Act. We estimate that across the three-year budget window, property taxes will be up about $1.6 billion, including around $400 million in 2016-17, $500 million in 2017-18, and $650 million in 2018-19.”

Property taxes grew a half-percent higher than assumed in the budget act. Much of this is driven by property sales and new construction tied to increased property values.

Clearly, Proposition 13 is not denying governments revenue. In fact, property tax under the Proposition 13 system is the most reliable and stable revenue source in the state.

Proposition 13 has proved to be a unique law that at the same time offers individual taxpayer protection while providing steady and increasing revenues to government that benefit all.

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