This has turned out to be quite the year for anniversaries and commemorations. In addition to June 6 being the 40th anniversary of Bobby Kennedy's death it also marked the 30th anniversary since California voters passed Proposition 13.
Known today as the "third rail" of California politics, Prop. 13 placed a cap on property rates in the state, reducing them by an average of 57 percent. In addition to lowering property taxes, the initiative also contained language requiring 2/3 majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates.
Prop. 13 received an enormous amount of publicity nationwide. And it continues to be the standard bear for California's sometimes-controversial initiative process, also known as direct democracy. The decades of hyperbole between supporters and detractors of Prop.13 make it difficult for the public to decipher the truth that lies somewhere in the amorphous middle 30 years later.
The primary motivation of Prop.13 was to keep people from being taxed out of their homes. Moreover, local government and the Legislature at the time had failed to respond to the problem, which opened the door for voters to take matters into their own hands.
But where the state was then, is not where it is today. And thirty years is more than enough time to fix what ails any legislation.
As it is with most public policy, Prop. 13 also came with unintended consequences. Unlike legislation passed by the Legislature, Prop. 13 cannot be amended by a simple majority vote. The required 2/3-majority vote makes it extremely difficult to amend any negative aspects of the initiative.
Though it has been touted as a populist revolt against escalating property taxes, commercial real estate has been a major benefactor.
Under Prop.13, when commercial property is sold or merged, if the property stays technically deeded to the corporation that sold it, ownership of the property can change hands without triggering Prop. 13's provision that ties the amount of tax based on the property's resale value.
By using a "shell company" to hide behind, corporations have for 30 years benefited from a major loophole in Prop. 13, while the state has lost revenue. The result is an absurd situation where corporations owning commercial real estate could have a lower tax burden than private homeownership.
This practice is no secret; every member of the Legislature since Prop.13 was enacted is aware of it. At what point does the statute of limitations expire on this unjust practice?
Though it is indeed the third rail of California politics a serious discussion is warranted that challenges Prop.13's original premise. Is Prop.13 in its present form in the state's best interest?
According to the California Budget Project, California ranks 38th per capita in revenue generated from state and local property tax. There are 37 states that collect more property taxes than California, how have they managed to avoid widespread home losses to taxation?
Local municipalities have become more dependent on the largesse of the state since Prop. 13 was passed. Each year, as the Legislature debates the budget, local elected officials are bombarded with calls, emails, and public testimony as various constituents lobby for their particular interests.
This fuels the perception that city councils, members of boards of supervisors, and state legislators have pitted themselves against each other in a war over scarce resources. Prop. 13, along with the subsequent actions taken by the Legislature over the ensuing years, has placed the state in a defensive posture, attempting to creatively backfill the revenue losses sustained by local government.
The other impact of Prop.13 has been decades of "copy cat" initiatives that have served to tie the hands of the Legislature and most of the state budget--creating the myth that California could be better run by voter initiatives than an elected Legislature.
Prop.13 is not the sole reason for the state's financial problems. But it remains in place, untouched, and virtually unexamined for three decades. Meanwhile, the California that existed during its passage is no longer the California that exists today.
Byron Williams is an Oakland pastor and syndicated columnist. He is the author of Strip Mall Patriotism: Moral Reflections of the Iraq War. E-mail him at byron@byronspeaks.com or go to his website byronspeaks.com