Proposition 13 has overstayed its welcome.
I say this as my colleagues Marc Lifsher and Evan Halper bring word elsewhere in the paper today that Gov. Arnold Schwarzenegger wants to impose a fee on property insurance premiums as a way to help close the state's estimated $14-billion budget gap.
That's just dandy, isn't it? A surcharge on insurance that's based on a property's replacement cost, and hence much of its market value. That may not be an honest-to-goodness property tax increase, but it's about as close as you can come without getting your hair mussed.
I know I'm asking for it by even suggesting that Proposition 13 is doing more harm than good. But this topic resurfaces from time to time, and this should be one of those times.
Schwarzenegger is expected to declare a state of fiscal emergency this week to deal with the budget mess. He proposed a constitutional amendment in Tuesday's State of the State address to give him more power over California's finances.
It's pretty simple, though. Either we spend less money or we raise revenue, or both.
All things considered, our friends in Sacramento aren't going to suddenly discover the value of frugality -- unless packed schoolrooms, broken bridges and crumbling levees are your idea of satisfactory quality of life.
So that means we need to get our hands on some extra cash. And like it or not, that means taxes. That's a bad word, I know. But it's how things work in the real world.
Proposition 13 is as good a place as any to start if we want to raise some serious coin and we want to do it soon.
"It's terrible economics," said Lenny Goldberg, executive director of the California Tax Reform Assn. "We have the heaviest tax on new investment and no tax on windfall."
What he means is that Proposition 13 allows the state to reach deep into the pockets of people and businesses that buy property at market value. But it does precious little to get a piece of the action from those with long-held properties that have soared in value over the years.
Quick refresher: Proposition 13, passed by voters in 1978, caps taxes at 1% of a property's assessed value. That value can go up only by 2% a year. Properties are reassessed any time they're sold. Then the 2% annual limit kicks in again.
Proposition 13 is frequently referred to as the third rail of California politics because it's so dangerous for a lawmaker to touch. And that's certainly understandable. I don't know of a single homeowner who'd willingly sign off on a potentially huge increase in property taxes.
