Monday, October 17, 2011

How California Was Diminished by 1978 Tax Revolt - Bloomberg

How California Was Diminished by 1978 Tax Revolt - Bloomberg
California voters approved Proposition 13 to rein in property taxes that had doubled in 10 years. More than three decades later, that rebellion has mortgaged the state’s future, saddling it with the nation’s highest debt and lowest credit rating.

The measure led to reductions that dropped per-student school spending from seventh to 29th nationally, prompted cities to pursue sprawling retail development to compensate for lost revenue, and pushed the state into budget gridlock, including a $705 million revenue shortfall announced Oct. 10, by requiring two-thirds approval for any tax increase.

In 1978, conservatives told us that Proposition 13 would be the greatest thing that ever happened to California. Now the state's public institutions are disintegrating and maybe even Republicans will eventually come to understand how important public schools, colleges, parks, streets, highways, and other systems are to the functioning of an economy.

Thanks to Fred Pilot for the link.


Tyler Berding said...

The author of the article states: "It’s one of the initiative’s ironies that business people, who opposed the measure in 1978, have become its biggest beneficiaries."

This is not entirely accurate. Certain business groups were huge supporters. Howard Jarvis, the creator and primary supporter of Prop 13, was the lobbyist for the Los Angeles Apartment Owners Association, and his office was the "Yes on 13" headquarters. Apartment owners were among the initiative's biggest supporters since their properties turned over much less frequently than private homes and were among its greatest beneficiaries--a fact well-known to them at the time.

Evan McKenzie said...

That is the way I remember it, too. I was living in Los Angeles at the time and there is no doubt that the apartment owners were behind it in a big way. I also remember that a year after the election there were news stories about how the initiative passed and the state was still standing. Talk about short-sighted...