“We made it clear when we passed Prop 13, it was the responsibility of each citizen to protect it. It was up to them to keep the barrels of lard out of their government budget.” (Howard Jarvis, 1978)
In California, in 1978, we gave the citizens a precious gift: The ability to directly control government spending; Proposition 13. At the time property taxes had increased to the point many retirees could no longer remain in their homes. Others were losing their property to tax liens. By 1977, California government spent 8.2% more than the national norm. Public sector employment growth eclipsed that of its private sector by double digits. By 1978, 14.7% of the workforce took home checks cut by the government; twice as much as 1955. California’s pot of gold was filling up with rubber checks.
A small group of U.S. citizens inspired by KABC talk radio host Ray Briem banned together to work tirelessly for six long months gathering signatures, to pass the most historic tax reform bill in U.S. history; Prop. 13. Lead by Howard Jarvis and Paul Gann, we walked neighborhoods from daybreak to nightfall, seven days a week to get this initiative on the ballot. Despite threats if we succeeded that we’d lose utility services, police and fire protection and schools would close, we proceeded forward.
On June 6, 1978, voters approved Prop. 13 by a 65% margin that amended the state constitution.
Prop. 13 required a two-thirds majority approval for all tax increases and budgets. It reduced the property tax to 1% of the purchase price, and capped annual increases at 2%. To level the playing field, all properties were reassessed at current market value when a home or business changed ownership.
The naysayers, who had predicted doom and gloom for the tarnished Gold Coast, ended up eating crow. Since Prop. 13 stabilized communities and confidence in the business environment, as well as controlling government growth, California’s economic growth was the envy of every state in the U.S. for the next two decades. But we were soon to discover, all that glistens isn’t gold on the left coast.
“We must rid ourselves of Prop 13 if we ever wish to untie our purse strings.”
– Jerry Brown
Truman Capote once observed, “You lose one IQ point every year you live in California.” And the former Gold Coast has been proving that for decades. Prop. 13 has survived numerous Supreme Court challenges, but politicians have eaten away at the edges of this historic thesis for decades. Countless initiatives to lower the threshold for increasing taxes to expand government have been passed. By the end of 2019, all that remained of this once Holy Grail of California politics was the provision that protected homeowner and business property taxes. Everything else had vanished.
Four decades later, it looks like this world class historic Citizens' Initiative is on its last leg. Since no Republican has held a statewide office since 2006, and the left holds supermajorities in the legislature, they were able to mount the most aggressive attack against Prop 13 in 40 years. They joined with teachers and public service unions who bankrolled an initiative to remove most businesses from all protections of Prop. 13. Money received from increasing taxes would be allocated to pet projects.
Wealthy liberal backers of this $10 million campaign keenly petitioned the state to name it Prop. 13. Teachers, parents, school leaders, education groups, unions and liberal businesses all endorsed it. Gov Gavin Newsom claimed this was their best shot at limiting tax protections to homeowners only. Since general elections always turn out more voters, and with the left’s disdain for President Trump, liberal voters would embrace making businesses pay more taxes, never realizing that they will pay for it themselves.
“We either reform prop 13 or we’ll have to cut back spending.”
– Gavin Newsom
Mark Baldassare, of The Public Policy Institute said, “The perception of Prop. 13 is the same but this generation thinks it is only a vote on tax hikes. Yet it controlled assessments limiting them to 1% of value at the time of purchase. That lack of knowledge is a game changer.” You do not need a referendum to raise taxes if you can’t control assessments. And this will soon be the Waterloo for Prop. 13. And voters got a chance to demonstrate their knowledge on Super Tuesday.
With all of the liberal big spenders putting their money on Prop 13, and only one group defending it, Jon Coupal of HJTA, it was barely defeated 54.1% to 45.9%. Since members of the original Prop. 13 coalition have either gone to anti-tax nirvana or left the state, there was no movement by the citizens to defend it. While left coast conservatives celebrated, Newsom had already started gathering troops to double down on it next election. Prop. 13 only got a temporary reprieve.
W. C. Fields once said, “All you have to do is baffle them with ‘BS’.” And that is what liberals have done for years. Since 1992, when the left seized control of every state office, they have been on a campaign to destroy Prop 13. They discovered people’s ignorance about Prop 13 and have used it to dumb them down; only those who bought homes before it passed are protected? That is bogus! Prop 13’s key provision was limiting “the tax base” to 1% of the purchase, not the 2/3 majority vote for increases.
“Reform is inevitable. We only need to convince 10% more voters.”
– Len Goldberg
Proposition 13 was a political earthquake whose jolt was felt not just on the left coast but all across the nation as states passed “save our homes” legislation mimicking Prop 13. Florida, Oregon and Arizona followed soon after and amended their constitutions to constrain taxing authorities. As of today, over half of our states have restrictions on taxing property owners similar to those in Prop 13.
Property tax is the most unfair tax there is since only those who can are able to buy property and pay it. It impacts lower income high-asset owners such as retirees who have saved all of their lives so they can have a place to live. They must pay for services such as schools they’ll never use. Therefore, a larger portion of their income goes to paying this tax. States that respect their elders have passed legislation to protect seniors. Yet California won’t rest until they force them into retirement homes.
“People get used to paying higher taxes, just like anything else. All prices go up.”
– Gavin Newsom
The argument Prop. 13 wrecked California has been recast repeatedly by liberal media. Yet the left coast state’s budget climbed from $55 billion in 1980 to $97 billion in 1992; an increase of 75%. By 1980, state tax revenues had actually increased from 11% to 13%! This is not common core math.
And nobody ever mentions that 78% of all tax increases passed if the voters felt they were justified.
While the anti-tax hounds gloat about their victory, 8.5% is the slimmest margin ever to fend off an attack on Prop. 13. Until they learn the truth about the protections of Prop. 13, they are an election away from a major tax awakening! States that have millage rates don’t need a referendum to raise taxes; they just over-assess you and defy you to fight it! If left coast counties have this authority, the people will realize the value of the 1% of purchase price assessments when they get their tax bills.
A voter’s worst enemy is lack of education. And unions and teachers know this.
“There is science, logic, reason; there is thought verified by experience. And then there is California.”
– Edward Abbey