Let’s call the original Proposition 13, passed on June 6, 1978, exactly what it is – the most successful affordable housing initiative during the past 42 years in California.
Forget the historic perspective for a moment and look at the here and now.
New homes prices in the Central Valley have increased more than12 percent in the last three years. Ask someone who owns a home they bought three years ago for $400,000 within two blocks of where new homes are being built today whether it would hurt if they were paying almost $400 more in taxes than the amount they are paying a year based on the two percent cap under Proposition 13. Worst yet, if all of the new homes within two blocks are the “big” fully loaded homes in the new development that sold for $660,000 instead of $450,000 they would be paying in excess of $2,000 more a year in taxes.
Those who want to change Proposition 13 keep harping about how unfair it is, but compared to the property tax system in place prior to the passage of the ballot measure it is much more equitable.
Of course, they will come back with how it isn’t fair how someone who has lived in a house they’ve owned for 30 years are paying substantially less in property taxes to help pay for services than someone who has just plunked down $700,000 for a home.
That may be true, but those people who argue the fairness issue when it comes to funding services are at the vanguard of efforts currently underway in the name of promoting affordable housing to cap or put a moratorium on fees cities can charge growth for municipal facilities such as fire stations, parks, and schools. Given cities under state law and court rulings can only assess fees on growth for their fair share of the cost of providing municipal infrastructure, that means growth would be subsidized by expenditures made over the years assessed on existing homeowners who paid for parks, schools and such. It is the same argument that they use in a bid to do away with Proposition 13 protections when it comes to municipal services, that new growth pays a larger tab so therefore they are subsidizing existing residents.
What makes the endless battle over Proposition 13 absurd is it is based on the argument that somehow the tax measure has crippled the ability of local and state government as well as the schools to collect money.
There are countless studies by legitimate organizations and university economic departments that you can google using the words “states with the highest tax burden.” They may use different parameters but one thing is for sure – California is always in the Top 10 and goes as high as No. 3 in some studies.
Whether we are in the bottom half or less in areas such as spending on education is not an issue of not having enough money as it is how people in Sacramento opt to spend it. Proposition 13 has not weakened schools or local government. It is the ever expansion of government functions in Sacramento that’s the culprit.
The latest spending plan by Gov. Gavin Newsom is a perfect example. He wants to create four new state agencies. They include:
• The Department of Better Jobs & Higher Wages to oversee workforce housing;
• Department of Early Childhood Development as an umbrella agency overseeing existing state agencies that deal with early childhood issues;
• The Office of Health Care Affordability to address medical costs, and
• The Department of Cannabis Control to regulate the marijuana market.
All of those proposed departments are tackling functions state agencies are supposed to be doing already. If they aren’t doing the job then reform them, get rid of them or consolidate them. The answer isn’t adding even more costly bureaucracy!
Proposition 13, over the years, has been turned into the boogeyman of California politics for those who seek to blame the “lack” of funding for specific government endeavors or the failure for a state program to perform to expectations.
No one in their right mind would believe a promise by a politician if voters approved a measure to undo Proposition 13 that Sacramento would back off from dictating as much to local government that is traceable to steps the state took in 1978 after the measure passed or that they would roll back or eliminate other fees and taxes put in to replace the lost property taxes.
Besides the impacts of Proposition 13 aren’t enjoyed just by people who have owned their homes for decades.
People who weren’t even born when Proposition 13 passed and have only owned a home for a year or so – especially in high growth areas like Stanisalaus County or ground zeros for gentrification such as San Francisco – benefit from the measure.
It has successfully capped property tax increases to a maximum of two percent unless a home changes ownership at which time it is reassessed at the sale price. And then next year if property values go up 10 percent within a two block area due to resales and new home construction, instead of the homeowner’s tax bill going up 10 percent it is capped at two percent.
The only way taxes can even increase at a rate higher than two percent besides regaining lost value as it did during the Great Recession is if it sells, a majority of property owners in a specified area votes for a parcel tax or if the majority, 55 percent or two thirds depending join the measure vote for bonds or a tax override.
There is nothing stopping local government from making the case for property tax increases and letting people decide.
The reason that it is unpopular with politicians is such taxing measures tied to property have to have specific restricted uses before most people will consider buying into them.
Go ahead and ask a retired person who has owned their home for years and getting by on Social Security and little else whether they think Proposition 13 has helped with them being able to afford to stay living in their home. Ask younger families who have bought a $450,000 home in a high growth area like Manteca that has seen housing value jump by as much as 10 percent in one year whether their home is more affordable in the second year they are in it with a $4,590tax bill than it would be with a $4,950 tax bill. A $360 property tax difference for just one year is a big deal when it comes to making sure people can afford to stay living in their houses.
There is little doubt Proposition 13 has made housing more affordable for millions of Californians. Considering how high-tech salaries are bleeding into what were once moderate housing markets up and down the state, Proposition 13 at its heart is an effective affordable housing measure.
This column is the opinion of Dennis Wyatt, and does not necessarily represent the opinion of The Ceres Courier or Morris Newspaper Corp. of CA.