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The Joint Venture Proposition 13 Paper

Uploaded: Feb 11, 2012
Here is the link to the Joint Venture Index of Silicon Valley including the Special Analysis I wrote on Proposition 13.

The purpose of the paper was to explain Proposition 13 from a historical perspective and how it works now after the housing market crash.

There are no recommendations to repeal Proposition 13 in the paper or at the Joint Venture conference yesterday.

There is one fact we all have to deal with.

For 30 years from 1978 to 2008, assessed values and property taxes arose steadily averaging near 8% per year, much faster than inflation or income gains.

That stopped in 2008 as 1) housing prices declined; 2) new construction plummeted and 3) the gains in assessed value from changes in ownership also fell sharply. This is the "new normal" for at least the next several years.

That leaves local governments with two general taxes (property and sales) that will grow more slowly than the economy, even with the recovery accelerates.

This prompted Joint Venture to call for a conversation on local government finance including, but certainly not limited to Proposition 13 reforms.

Local Journalism.
What is it worth to you?

Comments

Posted by stephen levy, a resident of ,
on Feb 11, 2012 at 2:05 pm

stephen levy is a registered user.

[Web Link ]


Posted by Sean, a resident of ,
on Feb 11, 2012 at 2:24 pm

"For 30 years from 1978 to 2008, assessed values and property taxes arose steadily averaging near 8% per year, much faster than inflation or income gains.

That stopped in 2008 as 1) housing prices declined; 2) new construction plummeted and 3) the gains in assessed value from changes in ownership also fell sharply. This is the "new normal" for at least the next several years."

Simple question: Local government got used to an 8% gain per year, now they are limited to about 2% per year; why can't they live within their means? What will they cut, in order to make it work?


Posted by Ron, a resident of ,
on Feb 11, 2012 at 11:20 pm

If Prop 13 is repealed, there would be a lot of homes that have for sale signs in front of them. Many retirees live in the area and would not be able to afford the new tax rates. This wwould mean that because of the influx of homes for sale that the property values would go down as it would be a buyer's market. Your million dollar home would probably sell for half that amount because there would be many more sellers than buyers. The sellers would have to move out of the area where housing would be affordable. Probably out of State.
This would bring a new problem to those governments that depend on our tax dollar. Because of the new property values, the taxes would go down and the Cities would be in even greater financial trouble.
The solution is to let the Prop 13 stay in place and through attrition the homes would be sold at currant prices , if not more, and the Cities would gain from the sales taxes and also from the newly created tax rate for that home. That would be a win, win solution.


Posted by There's-No-Such-Thing-As-A-Free-Lunch, a resident of ,
on Feb 12, 2012 at 9:04 am

> Local government got used to an 8% gain per year, now they are
> limited to about 2% per year; why can't they live within
> their means?

To expand on this point a little. This 8% a year means that property prices doubled almost every ten years. Tax revenues associated with property went up accordingly. Governments, rather than thinking clearly, and increasingly controlled by employee labor unions, spent this increased revues on salaries, and committed vast sums of future revenues on deferred salaries--commonly called pensions. Expenditures for infrastructure were deferred, or ignored. Most governments (local, county and state) have never shown any taste for asset management programs that put all government assets on a life-cycle planning basis, investing a certain percentage of their revenues into reserve accounts to replace/refurbish assets when the life-cycle is over.

> What will they cut, in order to make it work?

It's as easy as voting out the people who created the problem. The difficult problem is educating the voters that government is not about redistributing wealth, or handing out "goodies", but managing the publicly-owned assets, and recognizing that "better is the enemy of good".

If we could ever teach ourselves that "there's no such thing as a free lunch". That's the really hard problem to solve here.


Posted by SRB94303, a resident of ,
on Feb 12, 2012 at 11:36 am

"To expand on this point a little. This 8% a year means that property prices doubled almost every ten years. Tax revenues associated with property went up accordingly."

Property tax revenue did not rise 8% a year. That would require all properties to reassessed every year. Property revenues could go up 100%, but if there is no turnover, revenues will be flat.

However, I do agree that governments have been too non-confrontational with their workers. It was far too easy to buy peace now in exchange for expensive promises that would come due when the elected officails were long gone.


Posted by There's-No-Such-Thing-As-A-Free-Lunch, a resident of ,
on Feb 12, 2012 at 12:07 pm

> Property tax revenue did not rise 8% a year.

Yes, they did. And in some cases, more than 8% a year. The 8% number is a good average since about 1970.

> That would require all properties to reassessed every year.

Well, let's look at how Prop.13 works:

1) All properties are reassessed every year by 2%.
2) Properties are reassessed when the property is sold, at market values for residential properties, and with a much more complicated formula for commercial properties.
3) Properties are reassessed when a significant percentage of the property undergoes "development"/"redevelopment" (like adding a second floor to an Eichler).

Both commercial and residential properties have been changing hands since Prop.13 became law, and there has been a significant amount of redevelopment here in Palo Alto, much of which involves knockdown/rebuilds of older homes/buildings.

In Santa Clara County, thousands upon thousands of new homes/multi-family dwellings/commercial properties have been built since the Prop.13 passed. All of these were assessed at current, market, values-which drove up property tax collections. And of course, millions of new dwelling units have been built in California since the middle '70s.


> Property revenues could go up 100%, but if
> there is no turnover, revenues will be flat.

The 2% yearly multiplier insures that revenues are never flat. The assessed value will double every 37.5 years, at a yearly 2% increassed assessment rate, by the way.


Posted by Paul Losch, a resident of ,
on Feb 12, 2012 at 12:48 pm

A bit of history, and some observations.

Howard Jarvis was an apartment building property owner. The way Prop 13 was written favored commercial property owners, who turn over their ownership less frequently, and have some legal devices that they can use to avoid adjusted property values even when a merger, an acquistion, or the like take place. As a result, the per centage of property taxes paid by commercial property owners is, if I have the correct understanding, around 40%, compared to 60% when Prop 13 passed. One can agree or disagree that this is a good or bad development. My main point is that Jarvis wrote the proposition to favor commercial property owners, not personal property owners.

I was a newly minted Harvard Business School graduate in the year Prop 13 was on the ballot, and I voted against it. Why? Because I saw it as leading to less control at the local governmental level of sources and uses of funds, and more of it crawling upstream to the state and national level, only to trickle down again. Guess what? That's exactly what transpired. Has it shown to be a better way to conduct civic business? I don't think so. It took some years for this to become apparent, but it is out there unvarnished nowadays.

There is no dispute that many people who are long time home owners and now in retirement and fixed incomes need to be protected. There is a way to do that, while at the same time finding a more equitable way for more recent property buyers and commercial property owners to pay for the services provided by our cities and school districts.

There are so many folks who are entrenched supporters of Prop 13, despite its flaws and consequences, that I am doubtful that this obsolete policy will be done away with in my lifetime. Still, I credit Steve and the Silicon Valley leadership folks in putting the issue back on the table. Let's wait and see how many ostriches come out and put their heads in the proverbial sand about this matter.


Posted by There's-No-Such-Thing-As-A-Free-Lunch, a resident of ,
on Feb 12, 2012 at 1:25 pm

> A bit of history

And for those who want the unbiased version--

History of Prop.13:
Web Link

Prop.13's Roots Go Deep:
Web Link

> The way Prop 13 was written favored commercial property owners

That's why it appeared as: Proposition 13--"People's Initiative to Limit Property Taxation" on the Ballot.

> favored commercial real estate owners?

How .. every property, once assessed, was taxed and assessed the same way--equally! It is true that Jarvis was the initiator of the measure, but so what? Sooner or later, someone would have come up with the idea.

And as to revenues "drying up", the General Fund for the State took a small dip in 1979, the year after Prop.13 kicked in. However, every government agency immediately realized that Prop.13 only shut off the spigot on property tax increases. New fees, fines, and taxes appeared over night, and the revenues for every state agency has gone up dramatically since 1978. For instance, the revenue for the City of Palo Alto was about $28M in 1978. Today, it's about $140M+ a hefty amount of spending in the capital budget too, shoots the spending upwards considerably.

Where has all of that money gone? Well, today, there are about 500 employees out of about 1100 who are making over $100K a year. In 1978, no one was making anything like that kind of money. The population in Palo Alto has increase maybe 7,000 people in the last 35 years--yet the spending has gone up by a factor of 7! And don't forget, all of these $100K employees have a promise of $2M-$10M in pension payouts, once they retire--guaranteed by the taxpayers.

The problem is not the revenue--it's the out-of-control spending!







Posted by SRB94303, a resident of ,
on Feb 12, 2012 at 1:27 pm

"The 2% yearly multiplier insures that revenues are never flat. The assessed value will double every 37.5 years, at a yearly 2% increassed assessment rate, by the way."

By the way---The 2% increase is not inflation indexed, and the more recently purchased properties run the risk of being reassessed at a lower value. Therefore planning cannot be based on the overly optimistic scenario of a perpetual 2% real increase increase in revenues. A few years of high inflation (a major impetus for Prop 13) will send the system crashing to the ground.

My biggest problem with Prop 13 at the Palo Alto level (not such big problem for most communities) is the growing stream of incoming students living in rental properties that are assessed far below market values. Palo Alto schools are already funded at a much lower level than schools in most other (non-CA) communities of comparably priced homes.


Posted by John, a resident of ,
on Feb 12, 2012 at 1:28 pm

At the time that Prop 13 was promoted by Jarvis, runaway government spending increases were considered a sacred right of the government sector. Jarvis stopped it, and he should have a statue built for him in Sacramento.

The problem is not Jarvis, it is, as always, the appetitie to spend by the government.

Prop 13 is here to stay!


Posted by There's-No-Such-Thing-As-A-Free-Lunch, a resident of ,
on Feb 12, 2012 at 6:26 pm

> Palo Alto schools are already funded at a much lower level
> than schools in most other (non-CA) communities of comparably
> priced home

The California Dept. of Education produces a lot of financial/performance data for California schools, but does not produce any information about housing costs in the 1100+ school districts.

In Santa Clara County, the PAUSD reported it was spending $13.3K per student (with other money not reported), which turns out to be the highest in SCC for all but one other school district, which seems to have perhaps 80 students. In general, for schools with 9K-12K students, the typical per-student expenditure is between $6K-$8K--which is significantly lower than than the PAUSD, which is the highest per-student spending in the state for school districts in this size range.

The idea that per-student spending should be dependent on housing prices was determined to be unconstitutional in the early 1970s, based on the results of Serrano-Priest, which required the State to take over school funding and to insure that all students received roughly the same amount for their education.


Posted by Walter_E_Wallis, a resident of ,
on Feb 14, 2012 at 4:13 am

Walter_E_Wallis is a registered user.

Index government compensation to tax collections. Instead of a fixed pay rate, pay them a percentage of revenue.


Posted by Perspective, a resident of ,
on Feb 14, 2012 at 4:52 am

Ron: Your point about the glut of houses that would end up on the market, lowering all values, is correct.

In addition, even once the glut is gone, buying prices would remain lower because sane people would not buy homes that are going to double in value every 10, or probably now, 20 years, thus quadrupling their property tax by the time they retire and have much less. ( Assuming they buy at 30 years old, and retire at 70). The taxation would keep a lid on home values.

This would drop everyone's home value even more than the recession has.

All of you "newbies" complaining that it isn't fair, who would you feel about losing value in your new investment?

Tax revenue would drop, as taxes go up and lower prices. Think long term.

You bought knowing the rules of the game, you will benefit from being able to financially plan, like the rest of us have for the last 40 years.. We ALL bought "paying more than the ones who have owned longer", knowing that we could count on stability in our finances in our own home.

Stop envying your neighbor. I have become convinced that envy is the root of all our economic ( and political) troubles in our country. "Though shalt not covet" is looking smarter and smarter to me as good advice for a stable society.


Posted by Sugarloaf, a resident of ,
on Feb 14, 2012 at 10:08 am

The defenders of Prop 13 ignore what Paul wrote about Jarvis's primary purpose of 13: lower the burden on commercial property owners and shift it to residential owners.

Sell it to the masses with scare stories about grandma.

Commercial owners paid about 60% of the taxes, residential about 40% prior to prop 13.

Over the decades, the burden has shifted form 60/40 to 40/60.

Jarvis wasn't interested in fairness or small government - he wanted someone else to fund the state and schools, not him and the other large landowners.

Remove the loopholes that keep commercial buildings from being reassessed when they transfer.


Posted by stephen levy, a resident of ,
on Feb 15, 2012 at 12:44 pm

stephen levy is a registered user.

No one associated with the Joint Venture paper on Prop 13 is proposing repeal. In fact I don?t know any substantial effort focused on repealing Prop 13 and especially the provisions that help older homeowners.

So people who have been worrying about that can relax. It is not in the cards.

In addition our paper was not focused on the ongoing debate about the size of government or about public employee retirement benefits and local government finance.

So posters who want to carry on about spending problems and public employee unions can continue to do so if they wish but it is not relevant to the issues we are bringing forth for discussion.

While the issue of residential versus commercial shares of assessed value was raised in the paper that, too, was not the focus of what I wrote and there are no recommendations on this topic although posters seem to have a good grasp of the issues and possibilities for change in this part of Prop 13.

A good description of the issues we are raising is in an opinion piece that appeared on Sunday by Emmett Carson and Russ Hancock.

[Web Link ]

One of the threads on Prop 13 contains some bizarre and false characterizations of Emmett?s vision and the focus of the Silicon Valley Community Foundation. Most of their grant funding is focused on the ?99%? not the ?1%? and most of that on the bottom 50%. Here is a recent grant award for math ed.

[Web Link ]


Posted by stephen levy, a resident of ,
on Feb 15, 2012 at 1:07 pm

stephen levy is a registered user.

In this post I will try to refocus the discussion for readers who are interested in the issues raised in the paper.

After Prop 13 was passed reducing local property taxes by 60%, cities across the state responded with a large array of new and increased taxes?on utilities, hotel occupancy, business licenses and property transactions fees?as well as new and increased development fees.

We exchanged one fairly simple tax structure for a new and more complicated and ever changing tax structure.

For many years after these initial changes property taxes rose from their new low base and the local government tax structure was relatively stable.

Then the housing bubble burst, followed by a deep recession, and a new wave of local government tax increases were approved by voters including increases in hotel and business license taxes but also some parcel taxes and sales tax increases for cities.

Palo Alto adopted a parcel tax for schools as part of a movement that reintroduced higher taxes on homes on other properties that were not prohibited by Prop 13.

The point of the paper is that local governments have a tax base that will almost certainly grow more slowly than the economy or the cost of public services even if substantial reforms in retirement benefits are approved.

Sales taxes have grown more slowly than the economy over the past 30 years as consumers spend more of their income on non taxable services.

And now property tax growth is in the ?new normal? of low growth caused by 1) a drop in home prices, which is not expected to be reversed any time soon, 2) a dramatic drop in new construction, also which is not expected to return to peak levels soon and 3) a sharp drop in gains in assessed value from sales of property as a) many 1970s and 1980s purchased homes have been sold once already and 2) many homes now are worth less than the purchase price so future gains on sale will be small or nonexistent.

This is the new normal.

Local governments do not have tax bases that rise with or faster than the economy. We do not tax services including many Internet transactions. And local governments do not benefit directly through taxes on income or capital gains.

The ideal tax system is a broad base with low rates where the tax base keeps pace with the growth of the economy and demand for public services.

Our current tax base fails miserably on these criteria, which is why the paper calls for an examination of whether a different tax structure would be better for the 21st century economy.

If you like the current system where slow growing tax bases prompt frequent rate increases we don?t see the world the same way and you are probably not interested in tax reform.

If you think government spending is too high and public employee unions are the cause of the problem, you are also probably not interested in tax reform to improve the efficiency of the current system.

But if you think it is time to rethink local government tax structures, that discussion should not exclude Prop 13 although it should go way beyond considering Prop 13 reforms.

My personal ideas are shared below.


Posted by stephen levy, a resident of ,
on Feb 15, 2012 at 1:50 pm

stephen levy is a registered user.

I think the easiest way to broaden the local government tax base and lower rates is to extend the sales tax to services including Internet purchases and lower the overall sales tax rate. This has nothing to do with Prop 13 but is my first choice in the discussion I hope we will all have.

Another idea is for the state to share income tax revenues to local governments on a per capita basis.

With regard to Prop 13, I think the goal is to preserve property taxes as an important part of the local tax base.

I would consider limiting property tax rate increases to some growth rate tied to the economy, replacing the current 2% limitation on annual increases.

If the property tax system is not carrying its weight in local taxation, other taxes will be raised instead. People who think keeping property taxes low will stop other taxes from rising to make up for the revenue loss are wrong on the facts.

That is why the paper calls for a discussion of the new realities of local government taxation so whatever happens is not haphazard but the result of considered choice.

Remember that there are ways to protect low income or fixed income households from an undue burden-paying back taxes at the time of sale is one way to get around the cash flow problem. And remember that not all older owners live on fixed or low incomes. I do not see why working, more affluent older residents like me should get tax breaks while new businesses and homeowners pay the highest rates.

It is certainly possible to consider a different set of rules for income producing property since you don?t have the Prop 13 problem of ?throwing granny out of her house?. Some kind of more frequent assessment in between sales might be a good idea although there may be implementation challenges.


Posted by Anne, a resident of ,
on Feb 15, 2012 at 5:25 pm

Stephen, your comments leave out many important considerations. Tax monies are being wasted. If schools districts in San Mateo County consolidated you wouldn't need 23-24 district offices. The future of California counties will see consolidations of fire and police departments. Redundant costs are unnecessary! Right now, Millbrae is signing over their police duties to the County sheriff's department. This is sound political/financial planning.
Another point is that many elderly wouldn't and shouldn't be taxed more heavily on their homes which they bought in the 70's, 80's and 90's. That is a punitive and unnessesary tax. Also, they are grandfathered into this lower rate. Read escrow documents which accompany real estate purchases.

The business of community finance is not only chasing rising revenues with taxes but to take a good long look at cutting back on redundancy.

You may be in a special group of wealthy retired individuals. You need only visit the poorer areas of San Mateo County to see what poverty looks like.

Rising taxes could homogenize the community to look like just the one percent.


Posted by Skeptical46, a resident of ,
on Feb 15, 2012 at 9:03 pm

Those (like Ron and "Perspective") who say that repeal of Prop 13 would lead to a glut of houses and declining property values are, in my opinion, incorrect. The fact that buying a new home resets your tax to an effectively higher rate actually inhibits people from buying homes. Many people stay in the same home (even if they would like to move to a new area), because they don't want to reset their effective tax rate.

And those currently paying ridiculously low effective property tax rates (often retirees and other long-time residents) generally have much higher equity in their homes, often 100%. So they have plenty of asset value to be able to pay property taxes. It's actually kind of humorous to hear people worry about the economic welfare of these poor folks whose home values have increased 10-fold or even 50-fold (such as many original Eichler owners) and are now sitting on $million+ assets. Is it ill fortune to have you home value rise so rapidly? Even without Prop 13, the taxes would be dwarfed by the rising property value.

2008-era purchasers, however, often have little equity in their homes (may even be under water), and yet have to pay effective tax rates that can be 10x or more than their neighbor.

"Fairness" would be that we all pay the same effective tax rate. Or, one could reasonably propose that we pay not on the assessed value of the home, but on the assessed *equity* in the home...after all, what you truly *own* is just that equity value.

Any honest evaluation of Prop 13 exposes it inherent unfairness. But it is probably close to impossible to simply repeal it because that would result in sharply higher taxes on most people. We'd have to do some kind of "revenue-neutral" (or close to it) adjustment where some people see higher effective rates, and others see lower effective rates...and people would want some assurances that the rates would not increase much from there.

Or perhaps some clever lawyers will put together an argument that it is unconstitutional or otherwise illegal, and just have it invalidated.


Posted by stephen levy, a resident of ,
on Feb 16, 2012 at 5:31 pm

stephen levy is a registered user.

Anne

For whatever level of public services you want to fund, having a system where the main general revenues are property taxes (in the new normal of lower assessed value) and sales taxes on goods.
Better to have a system where the tax base grows in line with the economy.

We can debate the level of government another time--the Prop 13 paper is about developing a local government tax system better adpatred to the 21st century economy.

And not all seniors are poor just as not all homeowners have equity in their home. In terms of Prop 1, why should affuent seniors get a break on property taxes while less affuent younger buyers pay the highest taxes on comparable property.

And this is a statewide discussion, not just about Palo Alto.

Posters can dream all they like that voters here and elsewhere will suddenly rush to adopt their views on waste and public employees.

But if recent elections are a clue to what voters want, these posters might want to put some attention into whether they prefer revising Prop 13 or extending the sales tax to services or would they prefer higher sales tax rates or a city parcel tax.


Posted by John, a resident of ,
on Feb 16, 2012 at 6:53 pm

"Better to have a system where the tax base grows in line with the economy."

The corollary it that it is better to have a government with a budget in line with the econoomy. Stephen Levy has no interest in reducing the size of government. He just wants to pump up government funding. When reduced to his base beliefs, he thinks Greece is a great government model.

Prop 13 is here to stay, no matter what Levy,and his buddies, have to say about it!


Posted by Anne, a resident of ,
on Feb 17, 2012 at 10:07 am

Stephen, if you throw out a topic on a blog you will get everyone's opinion. I have real trouble with pompous people. There needs to be more weight placed on consolidating agencies to save taxpayers' money. The emphasis on raising revenues is so overdone. Taxpayers money is being wasted! I still invite you to tour poor areas in your affluent county.


Posted by retiree, a resident of ,
on Feb 19, 2012 at 11:26 am

?And those currently paying ridiculously low effective property tax rates (often retirees and other long-time residents) generally have much higher equity in their homes, often 100%. So they have plenty of asset value to be able to pay property taxes.?

This argument doesn?t hold water. Retirees may have plenty of equity, but they can?t live on asset value. Should they sell their homes to get the equity?


Posted by stephen levy, a resident of ,
on Feb 20, 2012 at 2:44 pm

stephen levy is a registered user.

Changes in the tax structure at the state or local level, if they occur, will almost certainly be the reuslt of votes by residents--either in statewide initiatives such as the ones we will have in November or the ones regularly and increasingly on the ballot in local elections.

With property tax revenues expected to grow much more slowly than in the past, residents will be faced with cuts in services or findign higher tax revenues.

This will be true even if we have great success in reining in the growth of public employee retirement costs--that's the way the math works.

Personally I think the best way to restrucure local taxes is to move toward having faster growing items like spending on services and Internet sales in the tax base so overall rates can be lower and still produce revenues that keep pace with the economy.

But many residents will be interested in revising Proposition 13 and local property taxes to offset the loss of revenue growth expected in the coming years AND to reverse perceived unfairness in Prop 13.

There are residents and posters who think they can avoid these choices or that miraculously people will agree with their view that waste is rampant and taxes should never go up.

They are entitled to their opinions and fantasy but residents in many cities and special districts are adopting new taxes in the face of the recession and declining property tax revenues and growth.

Any rethinking of Prop 13 could protect low income households if desired whether these are "senior" HH or others. And people with equity but no cash flow can have their tazes paid when the house is sold or by getting a reverse mortgage.

Poverty today is much higher for children than for older residents and so forcing someone to sell their house should never be a reason to avoid reforming Prop 13--expecially with the new surge in parcel taxes that have been put forth as a way around Prop 13.

In a way this discussion is like the one at the naitonal level between people who say the national debt should be addressed but only through spending cuts, the people who say both taxes and spending are part of the solution and the people who pretend we can solve this without pain.

The fact of dramartically lower property tax growth throughout California cannot be imagined away or imagined to be solved by poster solutions that have no broad support.


Posted by retiree, a resident of ,
on Feb 20, 2012 at 3:57 pm

LTE in Chronicle: Web Link

It's how the money is spent

Regarding "Proposition 13 is outmoded," Feb. 12 Web Link

... we now spend 30 percent more on a per-student, inflation-adjusted basis than we did just prior to Prop. 13's passage - a time when there is broad agreement that California's educational product was top notch. Could it possibly be that the problem today is not lack of taxpayer dollars but how those funds are spent?

Jon Coupal, president, Howard Jarvis Taxpayers Association, Sacramento


Posted by ret, a resident of ,
on Feb 20, 2012 at 4:02 pm


> "... new surge in parcel taxes that have been put forth as a way around Prop 13."

And some of those parcel taxes may no longer be deductible next year:

Web Link
Don't take away California property tax deduction
Sunday, February 12, 2012
For decades, California property owners have deducted the full amount of their property taxes from their state income taxes - a commonly taken deduction but not a legal one. Now the California Franchise Tax Board intends to enforce the law, which allows taxpayers to deduct only some of the property taxes.


Posted by SRB94303, a resident of ,
on Feb 20, 2012 at 5:57 pm

" we now spend 30 percent more on a per-student, inflation-adjusted basis than we did just prior to Prop. 13's passage - a time when there is broad agreement that California's educational product was top notch. Could it possibly be that the problem today is not lack of taxpayer dollars but how those funds are spent?"


What exactly does this this 30% per student increase mean? I am assuming it is an aggregate figure. In 1978 school spending per student varied wildly between districts. Now, per student spending is identical for most districts because it comes from Sacramento, rather than local funding.

Also isn't a simple inflation adjustment analysis kind of meaningless? The cost of living in California (notably housing), particularly the Bay area, has gone up much more than 30% in inflation adjusted dollars? Since you need to pay school district employees a living wage and the major component of the district budget is labor, I don't see the current prop 13 funding levels as very high.


Posted by There's-No-Such-Thing-As-A-Free-Lunch, a resident of ,
on Feb 21, 2012 at 8:34 am

> In addition our paper was not focused on the ongoing debate about
> the size of government or about public employee retirement benefits
> and local government finance

This means that the paper, and any conclusions based on it, are flawed.

Without doing a full analysis of the growth of government since Prop.13, a complete analysis of the infrastructure backlog for all of California, which would include each of the 2500-odd special districts, and any/all new projects (like HSR) that might pop up in the next 20-30 years, then any "tinkering" with Prop.13 is nothing more than a way to increase the funds available to government without any linkage to the spending side of the equation.

Spending is the problem in California, not revenue generation. Several posters have pointed out that reductions and consolidations in various government agencies, outlandish pension awards/guarantees, and too many pie-in-the-sky projects (like HSR), have driven the State past the brink of bankruptcy. Without admitting these issues, and committing to something akin to a 12-step rehabilitation, increasing the tax base amounts up to little more than institutionalized theft.


Posted by Anne, a resident of ,
on Feb 21, 2012 at 9:59 am

Stephen suggests we keep encumbering the taxpayer by chasing the taxes upward to cover the expenses. I don't believe that. Just in a very well run businesses or households, you consolidate and cut wasteful spending. And there is plenty of wasteful spending going on in San Mateo County. Example, if San Carlos had gone with Cal Fire they would have saved over a million dollars for San Carlos taxpayers.


Posted by anne, a resident of ,
on Feb 22, 2012 at 9:18 am

Cut waste, fraud and inefficencies of Government and you won't have to raise taxes at all.


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Your contribution to the Holiday Fund will go directly to nonprofits supporting local families and children in need. Last year, Almanac readers and foundations contributed over $300,000.

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