Villaraigosa’s Revisit of Prop 13

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Politically speaking, Los Angeles Mayor Antonio Villaraigosa put himself in the gun barrel sights of millions of Californians this week when he called for an overhaul of California's Proposition 13.

The infamous 1978 ballot initiative reduced property taxes to one percent of the value of the property at the time of acquisition until the next sale.

To quote President George H.W. Bush, the mayor stepped into "deep doo doo."

Maybe so, but the real stink lies not in what Villaraigosa said but in the deteriorating condition of California ever since the proposition's passage.

Financially speaking, Villaraigosa was dead on.

Since Prop 13's enactment, the Howard Jarvis Taxpayers Association proudly boasts that the proposition has saved property owners more than $500 billion. That also means that governments have lost more than $500 billion.

Such news might feel warm and fuzzy at first, but the problem is that most people never connect the savings from Proposition 13 with the costs to society.

Local governments today are suffocating from a lack of oxygen otherwise known as property taxes. Public schools, police and fire personnel, parks, libraries and local roads all get much of their support from local taxes. Our "savings" have left us with the nation's most crowded schools, depleted public safety personnel, and reduced or eliminated public services.

By now, any homeowner reading this column may begin to suffer chest pains. After all, California's property taxes are among the lowest in the nation, a consolation given the state's high income and sales tax burdens.

But Villaraigosa isn't calling for a change for homeowners (you can breathe now). He's calling for a higher rate for businesses that have paid the same tax for more than a quarter century, assuming they remain in the same location. Is it right that Disneyland's property taxes are the same today as in 1978? Is it fair that Palo Alto-based Hewlett Packard pay
the same property taxes today as a third of a century ago?

These businesses use local government services all the time, yet their proportion of the contribution compared to homeowners who do move has gone down precipitously.

No one tax change will save California, but no single tax change would have as much impact as separating the tax burdens of homeowners from businesses.

Of course, if you're happy with California's level of services, there's no reason to rescue local governments with more revenues. But make no mistake about it, the savings from Prop 13 are much more illusory than you might think.

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