The following are my comments before the “Getting to Reform” conference held in Sacramento this week:
I have been asked if Proposition 13 should be taken “off the table” if and when a constitutional convention is called. My answer is: Absolutely not.
How can it be taken off the table when it is the central piece of the whole fiscal discussion? How many times in this conference was Proposition 13 mentioned as part of the mix. Many believe it must be reformed. How can you have a constitutional convention and simply ignore Proposition 13?
However, I would suggest that those who want to include Proposition 13 in a constitutional convention do so at their own risk. Proposition 13 did something revolutionary. For the first time in history, it gave certainty in taxation to the taxpayer instead of the tax collector. Why would the people ever surrender that certainty?
I have never been afraid to test Proposition 13 with the voters. For twenty years I have reminded Prop 13’s critics that it takes a 50% vote plus one to eliminate or change Prop 13. We are not talking about a two-thirds vote here. Fifty percent plus one. Put the measure on the ballot and see what happens.
If an attack comes against Proposition 13 it likely will not come directly. More likely we will see an attempt at a split roll to tax commercial property at a higher rate or more frequently than residential property.
But, once voters realize the impact on jobs and small business owners and minority business owners they will probably not support a split roll. If you think that by raising property taxes on that tall building in San Francisco you are socking it to the big corporation, think again. Because within that tall building are many small businesses renting space. And, they signed triple-net-leases, which allows any tax increase to be passed on to them. If taxes are raised on businesses they will either try to pass them on to the consumers or absorb them in other ways by eliminating jobs.
Should we have reforms? Sure, but what kind of reforms. In listening to the argument for the many reforms suggested here I could not help but think of the Bill of Rights added to the U.S. Constitution. The Bill of Rights was added to protect people from the government. In listening to many reformers I could not help but think they want to protect government from the people.
There are all kinds of reforms that I think worthy of support but I have not heard them mentioned here. How about we add a spending limit? Or a rainy day fund? Or a two-year budget? Can we deal with the cost of government and have pension reform?
The way to reform we are told is through a constitutional convention. My concerns are two fold. First is with the selection and education of the delegates. Second is with the effort to go through a convention just to see it undermined at the ballot.
While the selection method of delegates is still uncertain they will be selected by election or appointment or a combination. Special interests will attempt to get their allies elected or appointed delegates to control the agenda of the convention. Once selected, who will educate these delegates? If they are average citizens who must learn the ins and outs of governance and the history of governance in this state who will teach them? The teacher could have an agenda. This is a concern.
And, once the work is done will the reforms have a chance for success on the ballot. We’ve all experienced initiative campaigns where a consultant might say on page two, paragraph three, first sentence we can blow up this issue to say this item will lead to the end of civilization as we know it. What a field of opportunity for consultants when they have major reforms to oppose and focusing on one or two items could lead to the defeat of the whole package.
The focus of this conference has come down to taxation. That is not surprising. We heard a lot today about the progressive era in California history. The progressives had a saying at that time: The power to tax is the essence of government, the control of taxation is the control of government. That is why most reforms on governance lead back to the issue of taxation.
And, it seems to me that many speakers at this conference think we don’t have enough taxes and it is hard to raise taxes under our current system. That is strange since in February we had the largest tax increase in the state’s history. And what about on the local level? I looked back at some of the passing rates for local tax measures on the 2008 ballot. 69% of the sales taxes passed. 81% of the utility taxes passed. 59% of the parcel taxes passed….that’s a property tax that requires a two-third vote.
How is the system broken?
Someone once said that in American politics you cannot achieve change until the status quo is more painful than the change. I believe that was the case when Proposition 13 was on the ballot. People were afraid of losing their homes and businesses. Despite the dire predictions they were told about the consequences of passing Prop 13 they voted for it anyway.
According to the poll released this morning, we are not yet to that fearful place … the status quo is safe for now.