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Disaster in Success

June 26, 1988

The California tax revolt launched 10 years ago with voter passage of Proposition 13 has been a stunning success when judged strictly by the reduced size of property-tax bills for some California homeowners. From almost any other aspect, the anti-government crusade has been disastrous for California. The structure of government has been undermined. California's sense of community and social fabric are being torn apart. The economy is riddled with hidden costs.

Proposition 13 and its spinoffs, including the Gann spending limits on state and local government, have helped spawn the slow-growth movement in California. They have rendered local government largely ineffective. The tradition of majority rule is virtually at an end, resulting in constant deadlock in Sacramento.

The cumulative effect is California's conversion from a special place of opportunity for all into a land of haves and have-nots. There are colonies of those who have it made. Then there are others who are being priced out of the housing market, if not out of the California dream altogether.

The effect of these measures has extended far beyond their original intent, in part because of a lack of public leadership and the courage to challenge the defects in Proposition 13 and the Gann spending limits. This vacuum is occurring just when California most needs vigorous, visionary government to deal with rapid change. Some people say that California can enjoy a rich future merely by keeping taxes low and government out of the way of business. The evidence to the contrary is mounting daily.

Keeping taxes low does not alter the needs of society. It merely transfers the cost from one group to another. Anyone who still lives in the same house as in 1978 pays only a fraction of the property tax that a recent home purchaser pays. The few people who can afford a newly built house face not only much higher taxes but also an additional penalty in the fees that are charged to the builders for the streets, sewers and schools that government no longer can afford. Development fees on each new house range up to $20,000. All of the taxpayers used to share the burden for new public works. Today the cost is heaped onto a few.

Another trend is to push the debt off onto the future through the use of long-term general-obligation bonds. Government is resorting to deficit spending because bond funds are not counted under the Gann spending limits. Since local bonds rarely can muster the two-thirds vote needed for approval, and state bonds require only a majority, the state increasingly is floating bonds for local projects like schools and county jails.

Proposition 13 and the Gann limits have fragmented government and put localities into competition with one another when they should be working together to solve regional problems like transportation and economic development. Cities and counties battle each other in Sacramento over every crumb of state aid. They compete among themselves for shopping malls, auto dealerships and hotels because those are big revenue producers. New housing is not. It only causes congestion and more demands for services that cannot be met.

Now local government faces the abridgement of one of its major functions, land-use control, through slow-growth initiatives. Such measures limit new housing but do not usually restrict commercial development. More jobs are created, but the workers have to live somewhere else. The result is more freeway congestion and even more frustration with growth.

There has been tax relief, but at a cost never envisioned in 1978. While California has dropped to 24th among the states in state and local taxes as a proportion of personal income, government has been starved from all directions. Ten years ago the first reductions hit such local programs as libraries and parks. Now they have cut into the muscle of public services statewide: education, highways, mass transit, emergency health care and even fire and police services.

A united California used to plan and build for the future and for excellence. Today a fractured California fails to cope even with the growth that it has. The hidden economic cost of the Proposition 13 movement must be demonstrated to the people. New political and community leadership is needed to persuade Californians that they will have a bright future only by investing together, not by each going his own way.

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