Civics Education: Proposition 13 Reform

Photo Ruby MacDonaldCoordinator: Ruby MacDonald: ruby@lwvbae.org
510-524-8961

Monthly Team Meetings, the 3rd Saturday of the month,
10 am to 12 noon, at the League office,
2530 San Pablo, Berkeley.
Check the League Calendar for dates

Next meeting, Sat, August 19, 2017, 10AM to Noon.
All interested parties Welcome! Inquiries: Ruby MacDonald, rubymacd@northwestern.edu

Our Campaign to Reform Proposition 13

Background:

Proposition 13 was passed overwhelmingly by voters in 1978 in response to skyrocketing property values and, consequently, increasing property taxes, which especially threatened older homeowners on fixed incomes. By limiting property taxes to 1% per year of purchase price and any increase in property taxes to 2% per year or the rate of inflation, Proposition 13 did ease the property tax burden of lower income homeowners. Since both residential and commercial property could be re-assessed at market value only on sale of the property, however, the capped, low rates introduced by Prop. 13 led to large state and local budget deficits which were masked at first by a booming economy. Furthermore, some owners of commercial property have continued to avoid increases in taxes which should occur when property changes hands.

Eventually, and especially during subsequent economic downturns, deficits due to the large reduction in property tax revenue resulting from Prop. 13 became significant. For example, before Prop. 13, California ranked 4th to 7th in the country in K-12 school spending . Today, California ranks close to the bottom. Many cities and counties in the East Bay and throughout the state have been forced to put parcel tax or bond measures on their ballots to fund K-12 education, infrastructure maintenance, upgrades of aging public transit systems and otherwise unaffordable public services. Students with low or moderate family income have reduced access to a higher education, as only students from upper income families can afford to attend UC Berkeley and other state institutions, which are now state-assisted, not state-supported.

To restore some of the revenue lost following Prop. 13, state and local governments began to rely on revenues from personal income taxes and sales taxes to make up for the decrease in property taxes, so that today 1/3 of the revenue collected by state and local governments comes from personal income taxes, 1/3 from sales taxes and 1/3 from property taxes. In addition, funds equal to 1/3 of the entire state and local budgets comes in various forms from the federal government. In spite of various “fixes” to address budget deficits, more could be done to reliably and fairly fund CA state and local governments. Governor Brown and many others have suggested that a complete overhaul of budget making is needed.

In the meantime, various inequities can and should be addressed. For example, similar amounts of revenue were collected as commercial property taxes and residential property taxes before Prop. 13 was passed in 1978.  Today, in contrast, commercial property taxes account for 28% and residential property taxes account for 72% of revenue collected, due in part to certain large corporations exploiting a loophole in Prop. 13! Closing of this loophole by requiring all commercial property to be regularly assessed at market value through a State Constitutional Amendment could provide an additional $9 billion in state revenue, according to a USC research study.

Efforts to Reform Prop. 13 by LWVBAE:

1) The Civics Ed Team proposed and received approval for a Reform Prop. 13 campaign as the top priority for LWVBAE in 2017-2018 at its January Program Planning meeting. The Legislative Committee of the state League had already signed on as a member of the Make It Fair Coalition of over 200 nonprofit community organizations in 2015, following introduction by Senators Loni Hancock and Holly Mitchell of a State Constitutional Amendment to require commercial, but not residential, property to be reassessed regularly.

2) In support of re-introduction and consideration of the Hancock/Mitchell State Constitutional Amendment on Prop. 13 Reform by the state legislature, the Civics Education Team began its first three projects. First, the Civics Education Team began to educate itself on Prop. 13, the need for its reform and other matters related to the budget process in California. This project is ongoing. Second, a subcommittee of the Civics Education Team began assembling a graphics-based brochure for use in educating voters about the need for Prop. 13 Reform. No brochure of this type on Prop. 13 Reform is yet available. Third, another subcommittee began preparing a caucus on the history, unintended consequences and promising reform of Prop. 13 and methods for promotion of Prop. 13 Reform in the community for presentation at the state League convention in Sacramento June 2-4.

3) Having completed two of its first three projects, the Civics Education Team has begun two new projects. First, we are partnering with the Make It Fair coalition led by California Calls and Evolve to organize a Town Hall during the month of September in the East Bay to raise awareness of and garner support for Prop. 13 Reform. This Town Hall will be one of five such events statewide and will feature panels of elected officials committed to Prop. 13 Reform and receive input from grassroots representatives on the need for Prop. 13 Reform. Second, to educate the Berkeley, Albany and Emeryville communities on Prop. 13 Reform, the Civics Education Team is organizing a Speakers’ Bureau to give presentations to any interested local organizations.