Proposition 13, the Scourge of Propositions (and a little bit about the CCC)

I was going to respond to PD Dude's excellent post, but my response got so long that I had to create a new post instead. I agree with EVERYTHING PD Dude said in his post. But more attention needs to be focused on the big "successful" proposition, Prop. 13.

But before I discuss Prop. 13, I will take one moment and point out that one initiative has actually been successful, and that is the one that created the California Coastal Commission. The California Coastal Commission has many, MANY flaws, and even in good times has been run in a troubled manner. There are areas along the beach where a homeowner cannot post a "no trespassing" sign, even if allowed, without approval of the CCC. And don't get me started about the building permit process anywhere you can see the ocean. That being said, California has a long, LONG coastline and the vast majority of it is accessible to the general public, largely with no fee, and that is not at all like most other states, where the coastline is privately owned. Without the CCC, and the initiative that created it, this would never have been possible. Thank you initiative process for this one. Now on to Prop. 13.

The initiative process is California is completely broken and in desperate need of repair. Proposition 13, the holy grail of propositions for the right wing, the anti-tax right wing, was and is a disaster for California. Why? Well, first the funds that used to be generated by localities like cities and counties were stripped from them and they went directly to the state coffers, making regional control impossible. For example, a city that is prosperous now no longer has the power to tax - it must rely on whatever the state doles out for revenue. One of the exceptions is sales taxes, in that a city gets 1/2 of one percent of all sales taxes. This creates an incentive for those "big box" stores like Costco that everyone cries about because of traffic and whatnot. The cities therefore have an incentive to have as much sales revenue going on, and as many homes being built as possible (the cities also get one-time taxes for schools and city improvements from new construction - plus Mello-Roos taxes, also on first time homes and other construction). This creates an incentive for cities to sprawl rather than build wisely. Parks, schools and libraries are built only when absolutely necessary because they cost the city a lot and have no revenue enhancement, and in fact are only built when the state pays for them (plus some help from the feds on schools).

In the meantime, property taxes for all properties not sold since 1978, including commercial properties, have been stagnant. A friend sold his house in Huntington Beach in 2000 for 600k. Until he sold it his property taxes were $362 - per YEAR!! Businesses often have not "sold" their property, so no new valuation has been done since 1978. Imagine a store in a posh are that is paying less than $600 per year in property taxes. Meanwhile, new houses right next door are paying through the nose on property taxes to make up the difference. It is irrational and unfair tax policy.

Because Prop. 13 is an initiative, only a 2/3 majority of both houses of the legislature can change it. Who has the courage to change it? In the meantime, our finances in California get screwier and screwier. That $400 speeding ticket isn't a reflection of the crime, it is a way for municipalities and counties to pay for their courts and jails. The explosion of fines that criminal defendants cannot pay (and the exorbitant and increasing court fees in civil cases) and that hampers any thought of rehabilitation (ask a PD what probation is more concerned about - rehabilitation of a defendant, or making him pay fines, and you will get a clear answer - probation wants their money) can be directly tied to Prop. 13 and the funding crises it created.

The good news is that the more dysfunctional it gets, the more gridlock comes in and the less able the state is to handle even simple problems, making the likelihood for real reform more likely. We are coming to a time when California will have no choice but to have a full-blown Constitutional convention to change the very basis of California law.

Dennis Wilkins
The Guest PD Blogger