Gov. Jerry Brown said the words "Proposition 13" last week before meeting with county leaders to discuss a realignment of state and local responsibilities. And people up and down the state went crazy.
On radio call-in shows and on blogs, foes of the 1978 initiative that caps property taxes and limits annual increases detailed why it's time to change or repeal the measure; taxpayer advocates rushed to its defense. One radio station's website told listeners that "Gov. Jerry Brown wants to dismantle Prop. 13" and invited listeners to weigh in. Commenters on this newspaper's website offered their thoughts — some angry, some happy — on both sides.
There's nothing wrong with a debate about Proposition 13. Californians have been discussing it ever since they adopted it nearly 33 years ago, and it's central to how the state functions or fails. It is not holy writ and should not be beyond review.
But Proposition 13's defenders and attackers should take a breath and read Brown's comments. He is not proposing and is not publicly considering any changes to the initiative, or to the way property taxes are calculated and assessed. He is targeting the Legislature's (and his own) 3-decade-old reaction to Proposition 13, not the measure itself. The idea is intriguing — and fraught with hazard. The details, which he is expected to unveil Monday, should be scrutinized carefully.
To understand what those details mean, Californians must remember that before 1978, property taxes paid for local government: cities, counties, schools and an assortment of agencies and special districts. Each was responsible for raising and spending its own revenue, so each added its own bite to a property owner's tax bill. There was no rate cap. Meanwhile, as real estate values jumped during the heady 1970s, property taxes went up with them.
Proposition 13 changed everything by capping taxes at 1% of the sale price when the property was acquired, plus annual increases of up to 2%. Market value became meaningless until the property was sold and the assessed value reset.
That meant deep revenue cuts for providers of local services. So in 1979, lawmakers concocted a plan, embodied in Assembly Bill 8, to bail out or backfill cities, counties, schools and other agencies with the surplus of state cash that had built up during Brown's first term in office.
Not everyone in Sacramento thought it was a good idea. Treasurer Bill Lockyer, for example, then just beginning his career in the Assembly, said it was best for local governments (and local voters) to face the deep and devastating cuts rather than delay their pain. But the bailout began.
By the end of Brown's second term, the state surplus was gone, the economy was in the tank and lawmakers began an annual convoluted shell game — sometimes taking money previously earmarked for schools to underwrite counties and reimbursing the schools, often at a lower level, with state funds, sometimes backfilling cities with special revenues, sometimes engaging in even more complex programs of bailouts and backfilling such as the 2004 "triple flip." Don't ask.
Along the way, local decision-making shifted to Sacramento. City councils and boards of supervisors became dependent on the Capitol and competed there — alongside employee unions, taxpayer groups, schools and private lobbying interests — for a piece of the shrunken tax pie.
In recent years, policymakers have begun talking about "realignment" — returning the power to make taxing and spending decisions to cities, counties, schools and other agencies. The idea, in its broadest terms, has some merit. Problem-solving would devolve to more local, nonpartisan and less-term-limited elected officials and away from Sacramento's partisan lawmakers, many with attention spans too short to consider much more than what office to seek next (and with whose contributions) after they are termed out. Such realignment has long been a central plank in the platforms of reform groups such as California Forward.
But California has changed in 30 years, and backing out of the post-Proposition 13 solutions of the first Jerry Brown era would be neither simple nor painless. Realignment might clear the state books, but that would just leave local governments to slash services or ask voters to raise taxes.
Besides, it's more complicated than that. Local voters might decide, for example, that they want to spend less on law enforcement, public safety and jails — but that won't stop Sacramento lawmakers or voters statewide from toughening sentences. And if sentences are toughened, counties won't have any choice but to incarcerate more prisoners.