Prop. 13 still part of California education

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Never heard of Proposition 13,” said Scott Jackson, 19, a sophomore English major, with a quizzical look on his face. “What is it?”

Chances are that many CSUN students have never heard of the groundbreaking proposition passed before most of them were born. Those that have heard of it probably don’t realize that the 1978 initiative drastically changed the way California government and education are financed.

John Bailey, a 24-year-old senior art major, had heard of Proposition 13, but didn’t know what it was about.

“That’s where they changed the racial profiling, right?” Bailey said.

Proposition 13 is one of the most famous and controversial propositions in the history of the state, and the repercussions of the initiative still affect all Californians.

Proposition 13 restricts property taxes to 1 percent of the 1975 property value, with no more than a 2 percent increase in the tax permitted every year. The proposition made raising taxes in California difficult for the Legislature to accomplish because the body would have had to achieve a two-thirds passing vote instead of 50 percent.

Before the proposition, property taxes in California averaged a little less than 3 percent of property values, with no limits to how much the tax could be raised every year, according to the Howard Jarvis Taxpayers Association.

The passage of Proposition 13 instantly made California have one of the lowest property tax rates in the country.

Proposition 13 was placed on the ballot through the California ballot initiative process, a clause in the California constitution that allows voters to place a proposition on the ballot and, if passed, into law.

Proposition 13 was passed by 65 percent of voters, with 70 percent of those registered voting in 1978, according to the California Secretary of State office. Proposition 13 lowered property taxes by 57 percent in one year, a dramatic reduction in money for cities, counties and schools, according to the California Secretary of State office.

California schools felt the impact of the reduced taxes immediately.

Gail Thomson, 59, a retired Los Angeles Unified School District official who previously worked with troubled high school students, said money for school programs dropped drastically after the passage of Proposition 13.

“Before 13, the district could afford to spend money on kids who were in trouble,” Thomson said. “After that the state cut everything. Kids were just written off. It was awful.”

While some school programs suffered, there were others who gained from Proposition 13.

Homeowners who have owned their houses since the passage of Proposition 13 are likely the ones that have benefited the most.

Donald Howard is a 78-year-old retiree who walks three times a week around the inside of the Oaks Mall in Thousand Oaks. He remembers not only voting for Proposition 13, but also gathering signatures for it.

“Proposition 13 worked out for me I gotta admit,” said Howard, leaning against the railing of the upper level of the mall on a break from his exercise routine. “My (property) taxes dropped like a rock. I still live in the same house and because of (Proposition) 13, I pay taxes in the hundreds, where someone who buys the same house next door would pay thousands.”

Many Californians like Thomson believe that California would be a better place without Proposition 13. She believes that without the tax restrictions of Proposition 13, the state would not be in desperate financial straits and schools would have enough money to provide school children with a good education.

But state government finance experts are not so sure.

“It is hard to say what the world would look like if there was no Proposition 13,” said Marianne O’Malley, a local government fiscal policy analyst at the Legislative Analyst’s Office, which provides nonpartisan advice to the California Legislature.

O’Malley said that while school funding declined after the passing of Proposition 13, the state made up much of the decline in property tax funds by compensating with money from the general fund.

“Before (Proposition) 13 California was among the highest as far as money spent per kid,” O’Malley said. “Now we are among the lowest, and a lot of people put the blame on Proposition 13, but that is an oversimplification of things.”

The state of California receives most its money through three methods: property, sales and income taxes. While property tax increases were frozen by Proposition 13, the Legislature and the people of California can always raise more money for schools using sales and income taxes, O’Malley said.

She said raising taxes is far more difficult because of the two-thirds legislative super majority required by Proposition 13.

Jim Wilson, chief consultant for the California State Senate Education Committee, said issues involving the effects of Proposition 13 are more complicated than most people believe.

He said that while overall funding has been reduced because of Proposition 13, it has had less of an impact than generally believed.

Before the 1970s, schools and community colleges in California received most of their funding from local sales taxes, Wilson said. Due to three court rulings called the Serrano v. Priest cases, school districts were required to roughly balance how much money is spent on their pupils, according to Wilson.

The state government was forced to spend about the same amount of money per child in both high- and low-income districts.

“The state had already begun to take control how school districts get their money,” Wilson said. “When (Proposition) 13 came along it reduced school funding by around 10 percent immediately, but the state soon compensated. Nowadays schools get about one-third of their money from property taxes, and pre-(Proposition) 13 it was around two-thirds of the funding.”

Wilson said he believed that the biggest change caused by Proposition 13 was the complete loss of local control. Before Proposition 13 and the Serrano v. Priest ruling, counties and cities could raise their own property tax rates to give more money to their schools. Now, it is more difficult for local governments to raise money to help local school programs, Wilson said.

There have been other propositions that have made dramatic changes to school funding, such as Proposition 98, according to Alan Auerbach, professor of tax policy and public finance at UC Berkeley.

“(Proposition) 13 alone limited property taxes and therefore likely has contributed to reduced school funding,” Auerbach said. “But there have been other propositions affecting school funding, such as Proposition 98, which determines how much the state must give to the education budget, and an important court decision, the Serrano decision that required roughly equal per pupil funding across districts, that make it difficult to determine the effect of Proposition 13 by itself.”

Auerbach said Proposition 13 has made owning a home in California much more affordable, though he believes it would be better for California and the state’s students if the law did not exist. Proposition 13 does not have any obvious impact on UC or CSU funding, because they are not funded through property taxes, Auerbach said.

California is the only state that assesses property taxes by the value of a person’s property when they buy a house and not the present market value, O’Malley said.

O’Malley used the example of her own housing situation.

She bought a house in 1985 for $125,000 in the suburbs of Sacramento. Because of the restrictions of Proposition 13, she now pays about $2,400 annually in property taxes.

Her neighbor, who recently moved into the house next door, which is the same size, pays double the amount of property taxes because her property taxes are determined by the current market value. The same house owned by someone since the mid-70s would only pay about $500
a year in property taxes, she said.

“Proposition 13 works out for me,” O’Malley said. “But if you are a new homeowner you’re going to be paying for the full possible amount of property taxes. Prop 13 really benefits older homeowners, and new homeowners pay for that. Is that the most just way to finance your government?”

Homeowners who have had their homes since the 70s, like many of those who do their early morning exercise around malls all over the state are the ones who seem to benefit the most from Proposition 13.

As time goes by, a new homeowner’s property tax rates rise at a far slower rate than many other states, O’Malley said.

Donald Howard said he knows that longtime homeowners like him are the real winners of Proposition 13.

“Without that law I could never afford to stay in the house that I love. I would have been forced to move to somewhere else because of rising property taxes so it’s great,” said Howard, smiling.

Robert McDonald can be reached at robert.mcdonald.605@csun.edu.