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Thursday, Mar 28, 2024

Legacy of Prop. 13 : Initiative, Referendum and Reform

September 9, 1850, January 3, 1911, and June 6, 1978 are arguably the three most significant dates in California history. President Millard Fillmore, on September 9, 1850, signed into law the act making California the 31st state in the union, though most Californians did not learn of the event until October 18, 1850, when the steamer Oregon steamed into San Francisco Bay draped with a banner proclaiming “California Is a State.” On January 3, 1911, Republican Hiram Johnson, the 23rd governor of California, delivered his inaugural address. Johnson went straight to what he thought was the critical issue facing the people of California, asking, “How best can we arm the people to protect themselves hereafter?” Johnson answered his own question by proposing direct democracy, saying, “I recommend to you, therefore, and I most strongly urge, that the first step in our design to preserve and perpetuate popular government shall be the adoption of the initiative, the referendum, and the recall.” He added, “And while I do not by any means believe the initiative, the referendum, and the recall are the panacea for all our political ills, yet they do give to the electorate the power of action when desired, and they do place in the hands of the people the means by which they may protect themselves.” Johnson’s reforms lay largely dormant until 1978, more of a threat held over our elected officials than actual tools of reform. However, all of that changed when two relatively unknown activists, Paul Gann and Howard Jarvis, sponsored a ballot initiative, Proposition 13. In oversimplified terms, Prop. 13 caps property taxes at 1 percent of the assessed value at the time of purchase. Californians at the time were fed up with skyrocketing property taxes that in many cases were forcing people (especially the elderly and those on fixed incomes) out of their homes, and on June 6, 1978, we passed Prop. 13 by a resounding 65 percent. This despite the fact similar measures had failed in the past, and that it was opposed by all California power structures, starting with then-Governor Jerry Brown and right through key government, business and academic leaders and almost every major California daily newspaper. The impact of Prop. 13 was immediate and far-reaching. Californians realized that they could make decisions opposed by virtually everyone they had elected to represent them. The Big 3 (Initiative, Referendum and Reform) took hold in many other states and became the way Californians do business, highlighted by the 2003 recall of then-Governor Gray Davis. Prop. 13 had and still has a huge impact on California tax structure. As predicted, local revenues fell as a result of the drop in property taxes and California used up its surplus to bail out counties, cities and towns throughout the state. Sales taxes became critical as a new source of revenue, leading to the huge malls, big- box stores and auto centers that we see today. As Prop. 13 has long served as a rallying cry for the “power of the people,” it also quickly became the whipping boy for the “more revenue” crowd. With the state looking at a deficit closing in on $20 billion, every possible new or increased revenue source is being reviewed. I asked Joel Fox, who served as president of the Howard Jarvis Taxpayers Association for twelve years, what he thinks of Prop. 13 today. Said Fox, “Prop 13 still provides certainty to all property taxpayers about their tax bills, so it is still a good idea.” Fox reminded us, “Imagine a situation in which you have been living in your house for 10 years and someone buys the house next door for twice what you paid for yours. Without Prop. 13 your taxes would instantly double.” A $15 billion deficit cannot be solved with cuts or with tax increases alone. We are almost out of tricks (bonds, selling the lottery, borrowing, etc.) and will soon have to make difficult decisions that politicians try to avoid. Most Democrats refuse to acknowledge that California has a spending problem while most Republicans refuse to acknowledge that we have a revenue problem. All their energy is spent blaming each other and none of it is spent coming up with honest solutions. The 30-year anniversary of Prop. 13 reminds us a bit about our history. It reminds us that we really do have power over the people we send to Sacramento. And along with the current subprime housing crisis, it reminds us of what a core value home ownership is to so many Californians. As we look for ways to increase revenue during these difficult times, it strikes me that Prop 13 should be left as it is: a beacon of good direct democracy, a reminder of our ultimate power and perhaps most important, a safe haven for home owners. Scott Harris is a political commentator. Read his columns and contact him through his Web site, www.ScottHarris.biz or email him directly at [email protected]

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