By my count, Governor Jerry Brown mentioned Proposition 13, the nearly 40-year old property tax reform, three times during his press conference presenting a new state budget. Brown’s discussion of Prop 13 came in the context of the fiscal world California lives in because of the mandates of that tax measure.
But when Brown was asked if he would tackle changes to Proposition 13 by commenting on a spit roll property tax proposal or other measures that deal with Prop 13, he said, “The fact is there is more property tax collected than ever.”
A fact often ignored by those who want to amend Proposition 13 is that California governments are flush with cash despite Proposition 13’s tax limitations. In fact, property taxes alone have increased 1000% since 1978 according to the Legislative Analyst.
Brown’s new General Fund budget is a record $131.7 billion, a 4.1% increase over last year. The entire state budget is $190 billion, which includes bond revenue and special funds.
Responding to a question on how the governorship has changed over the 40-plus years Brown served his four terms as governor, he began by saying, there is more money circulating now. Because of Proposition 13, Brown said the legislature is more involved in local decision-making and local funding today. He argued for local empowerment but crafted his budget considering the realities of California’s tax structure.
The governor argued that the state moved to a less stable tax situation relying more heavily on income taxes and capitol gains taxes. Unlike 40 years ago, he said, the state now faces more up and down budget cycles.
Given the way California now collects taxes, Brown said the state must rely on a budget surplus rainy day fund for dips in the economy. He said that is why California needs to collect a large surplus. Brown is taking advantage of the strong revenue numbers to fully fund the rainy day fund at $13.5 billion.
However, he employed that same reasoning of potential volatile budgets to reject returning any of the surplus to voters through tax cuts.
Republican Assembly members Vince Fong and Matthew Harper have introduced tax cut measures in the legislature.
Brown also expressed concerns that the new federal tax bill would hit high-end taxpayers in California and tempt them to leave the state. He is banking on a new congress after the 2018 elections to reverse the new tax policy.