California Governor and Los Angeles Mayor Debate Reducing Proposition 13 Protections

September 1, 2011

California’s landmark Proposition 13, passed in 1978, did four key things: (1) limited the property tax rate to 1 percent, not counting additional voter-approved debt; (2) limited the annual increase in assessed property value for tax purposes to inflation, not to exceed 2 percent per year; (3) required a two-thirds approval vote in the Legislature for all tax increases; and (4) required a two-thirds approval vote by the electorate for local special tax increases. Its protections apply to all property, whether it be owned by business or by individual, or owned by those with high incomes or low incomes.

Every now and then, an opponent of Proposition 13 will propose undermining this later feature: its applicability to all. Instead of that, the opponent will propose a “split roll”—keeping the protections for low-income homeowners and maybe even all homeowners, but removing the protections from commercial property or high-income homeowners. California voters have considered such proposals in the past but have rejected them (Proposition 8 in 1978 and Proposition 167 in 1992). A 2003-04 similar effort by the California Teachers Association and actor Rob Reiner failed after they did not gather enough signatures.

In a speech last month, Los Angeles Mayor Antonio Villaraigosa became the latest of Proposition 13’s fleeting critics. From the Huffington Post:

Let’s apply Prop 13’s protections to homeowners and homeowners alone. And let’s strengthen those protections. We could take half the money we generate to fund schools and use the other half to cut taxes for homeowners – and, you know what, we can spur the housing market in the process. Phase it in over time to soften the impact on business and call it the Homeowner and Public Education Protection Act.

Governor Jerry Brown (D) quickly rejected the idea:

Having been singed 33 years ago by Prop. 13—calling it “a fraud” when it was on the ballot, then recovering by proclaiming himself a “born-again tax-cutter”—Brown isn’t about to venture near the thing during his gubernatorial encore.

“Messing with 13,” Brown told me two years ago is “a big fat loser.”

Ditto from State Board of Equalization member George Runner:

Lest anyone be confused, let me translate: Mayor Villaraigosa has no intention of “strengthening” the property tax protections in Proposition 13. Instead he wants to strip away those protections for business owners, including Main Street mom-and-pop businesses like hair salons, hardware stores and restaurants.

From Jon Coupal of the Howard Jarvis Taxpayers Association:

This of course exemplifies the disconnect between Villaraigosa and regular folks who view Prop. 13 as a protection, not an obstacle. In his manifesto, the mayor did not declare war just on Prop. 13, but on all California taxpayers.

From Teresa Casazza of the California Taxpayers Association:

It’s the single most devastating policy decision that California can make to adversely affect our economic rebound. It will significantly increase taxes on small businesses that are trying to create jobs.

More on California here, including our periodic reminder that California is not a low-tax state.

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