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Revolting Developments

September 30, 1990

Gladwin Hill's review of "Small Property Versus Big Government: Social Origins of the Property Tax Revolt" by Clarence Lo (Aug. 5) does nothing to reveal the actual origins of the Prop. 13 revolt. It perpetuates a myth, that in the '60s and '70s local government in California was corrupt and wasteful.

According to Hill, Lo's research consisted of the collection of examples of taxpayer wrath. There has never been any doubt about taxpayer attitudes. There was the actual causal syndrome, however, embedded in arcane economics and in local and state government taxation procedure, which Lo appears to have neglected.

The events preceding the Prop. 13 election were the result of the convergence of several unfortunate California trends and practices:

--Marked inflation beginning in the early '60s, eventually increasing local government (and other) costs by a factor of three.

--Steep inflation in real-estate values in the '60s and '70s, greater than the inflation rates affecting the economy.

--The practice, at least in L.A. County, of only reassessing real property at four- or five-year intervals.

--The great importance of the gasoline-tax subvention to city and county budgets in the early '60s.

--The failure of the legislature to increase the fuel tax in step with inflationary trends; the failure to provide a mechanism to insure that motorist and truck-user fees were equitably reassessed on a continuous basis.

The gasoline tax is a gallonage tax; gasoline consumption remained roughly constant during the period. Its contribution in adjusted dollars to city and county government budgets decreased rapidly with inflation. The resulting gap in municipal finances was filled by increased yield from the property tax.

The increase in property-tax yield was fortuitous, principally pushed by concurrent steep inflation in real-estate values. But the increased tax bills fell on only a few unfortunates whose property had been reassessed at the wrong time. Those who could not pay the suddenly increased tax lost their property. Homeowners were frightened; Jarvis stoked the frenzy with tales of waste and corruption. The rest is history.

Except for one thing. The problem is still there in the taxation practices and legislative morass of the state government, and it is still causing mischief. . . .

Twelve years have passed under Prop. 13 provisions. It has provided some benefits to some taxpayers; it has also created great inequities. It has resulted in undermanned police and fire departments, underfunded school and library districts. Perhaps that is what the voters wanted; no one can be certain.

One thing, however, is certain: The basic causes of the pre-1978 difficulties are still there. And they are still creating many of the problems facing the American people.



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