Don't blame it on Prop. 13

By: RICHARD RIDER - for the North County Times | Wednesday, October 3, 2007 10:50 AM PDT

For the last 30 years, perhaps the most enduring California canard is that "Proposition 13 gutted our local governments." Every imaginable failing by local government has, at some point, been blamed on Prop. 13.

Indeed, it has always been my somewhat facetious contention that, if the voters hadn't passed Prop. 13, local politicians and bureaucrats would have. After all, Prop. 13 has been the widely accepted alibi politicians trot out time and time again to explain their ongoing failure to manage their budgets and properly deliver the fundamental government services for which we pay.

Local politicians do have one legitimate beef about property taxes -- the state is confiscating a large chunk of this revenue. But that is not the fault of Prop. 13. This revenue shift is what the local politicos should be screaming to Sacramento about.

The core contention by the big spenders is that we don't pay enough property taxes -- that Prop. 13 destroyed the tax base for local government. These whiners cleverly omit the actual historical figures -- because the data destroy their argument. Consider San Diego County's property tax history.

In the year prior to Prop. 13 taking effect (1977), San Diego County property owners paid $638.6 million in property tax. The 1978 property tax revenues, which had soared 20 percent in just the previous two years, dropped back dramatically to $353.4 million to meet Prop. 13's 1 percent of appraised value limitation. Since then, property tax revenues have climbed rapidly. Within six years, property tax revenues exceeded pre-Prop. 13 levels.

This past fiscal year (ending in June 2007), total county property taxes are $4.123 billion, almost 6.5 times more than we paid the year prior to Prop. 13, and almost 12 times more than the first year Prop. 13 took effect. Even after adjusting for the county's population increase and inflation, the property tax revenue today is higher than before Prop. 13 was implemented.

Surprisingly, when a housing slump hits, property tax revenue continues to rise, as sold property is revalued upward. In this past year's slump, property tax revenue jumped another 10.9 percent. It would take many years of dropping prices before real estate revenue actually would start to decrease year to year.

Sadly, one can be confident that, even if we had paid all that extra property tax, the spendthrift politicians would still be telling us that we need to pay even higher taxes. Typically, politicians spend all they can lay their hands on and then plead government poverty.

Poverty? In the last 10 years, San Diego County real estate property tax revenue has risen more than 133 percent. In addition, our area's local building "fees" (in essence, extortion charges levied to get permission to build -- fees ultimately paid by the property buyers) are now among the highest in the nation.

Add to that increase the rapid growth of other forms of local government revenue (especially sales tax rate increases and mushrooming water/sewer charges), and it is apparent that San Diego area politicians do not have a revenue problem -- they have a spending problem.

-- Richard Rider, chairman of San Diego Tax Fighters, is a freelance columnist for the North County Times.

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Reardon wrote on Oct 2, 2007 10:19 PM:It is not too much a stretch to say that a politicians appetite is insatiable. What little control we have is Prop. 13 -- but politicians have found 100 ways around it. (Fees were just a start.) Still, it helps. I vividly recall the threats by fire and police that their units and stations would close their doors the day after Prop. 13 passed. Schools would close within a week...the sky would fall. It didn't. It wont. Politicians have found ways to get more money, but when it comes to money, too much is not enough.

Randy wrote on Oct 3, 2007 2:48 AM:Rider fights taxes until the taxing agencies find ways to line his organization's coffers!-

wigernaught wrote on Oct 3, 2007 6:57 AM:Prop 13 has never been the problem and this is an easy article for Rider to write. Randy's comments explain why Richard wrote, "building fees... fees ultimately paid by the property buyers". Taxfighters get their support base from the developers. Anyone with any knowledge of the housing market and economics 101 knows that the price of houses is decoupled from the price of construction. The housing prices have gone up 100s of thousands. Did fees go up 100s of thousands? Prices are going down now. Is that because fees are going down? If Rider had been correct, here is another issue for him to address: if all fees are dropped completely who will pay for the development costs? Not the ultimate creator of the infrastructure demand but instead most everyone else. Everyone else will be completely subsidizing the new homeowner's impact on infrastructure. Doesn't Rider believe in using the market place to set the pace of infrastructure demand? Right now we all subsidize the new development heavily. One example is the 14 billion dollar transnet sales tax. Transnet money goes to alleviating the growing traffic congestion. It is a develepor subsidy that people like Rider protect. Some taxfigher!-

Ron wrote on Oct 3, 2007 7:33 AM:Sacramento politicians are addicts, they have a "spending" addiction. At a time when tax revenues are at an all time high, what do they do? that's right!!! They think of other ways to spend even more money! When the last penny, from the very last taxpayer is taken, it will still not be enough to satisfy the appetite of spending addicts.-

Richard wrote on Oct 3, 2007 8:29 AM:wigernaught makes silly claims. Tax Fighters is funded by developers? Want to bet? I'm serious! Do you REALLY want to bet? Say, $10,000? With that amount of money on the table, I'll see that SD Tax Fighters' books are opened to a full audit. If you can find $100 TOTAL paid to SD TF by developers in the last 3 years, we'll give you $10K. If not, you pay us! As that saying goes, put up or shut up.-

Richard wrote on Oct 3, 2007 8:32 AM:SD TF wrote a ballot argument against the Transnet sales tax extension and campaigned against the measure (our side was outspent probably 400 to 1). What did YOU do wigernaught? I bet you supported the higher tax!-

Richard wrote on Oct 3, 2007 8:36 AM:Randy, name ONE tax that I have supported in the last 30 years that I've been fighting taxes. Just ONE. During that time, I've written twice as many ballot arguments against tax increases as anyone else. Check the Registrar archives if you don't believe me.-

Richard wrote on Oct 3, 2007 9:12 AM:wigernaught claims that the Transnet tax subsidizes new construction. Not hardly! Probably half the money will go for mass transit, which is useless in the new outlying communities -- used by a tiny fraction of the people. Much of the rest is used for existing neighborhood roads and repairs, but not for new housing development roads. Only a small part will improve local highways. Transnet actually WANTS more gridlock to try to force people into trains and trolleys.

Alf wrote on Oct 3, 2007 9:40 AM:Hell is freezing over! I agree with a comment by "Ron" (7:33AM). Regards, Alf.

Right on Richard! wrote on Oct 3, 2007 10:09 AM:Richard is right and we need tax fighters. Hopefully they will expand their mission to include bonds. In Escondido, we have a city bond, elementary school bond, high school bond, community college bond, health care district bond and a metro water districe bond, and fixed assesments for mosquito surveillance, vector disease control and MWD water standby charge. The local governement, school districts and hospital find a way to carve out their dollars by getting people who don't own property to vote to pass bonds that people who do have property pay for!

Richard wrote on Oct 3, 2007 11:07 AM:wigernaught makes the specious claim that the cost of doing business is not reflected in the price of a good -- that high developer fees do not drive up the price of houses. Wrong! It not only drives up the price of NEW houses -- the higher building costs results in less product (houses) being built, which further drives up the price through increased scarcity. Furthermore, high building costs provides a windfall increase to older houses upon resale -- a bonus for some homeowners but in impediment to young people trying to buy.

GFN wrote on Oct 3, 2007 11:33 AM:Alf, what did you say the other day about them being pigs? I do love prop 13 because I saw how the insane property tax increases were tearing people apart. It's fair now, even though two neighbors may be paying significantly different property tax amounts.-

Richard wrote on Oct 3, 2007 1:55 PM:GFN is absolutely correct. While we homeowners all pay different levels of property taxes, we all play by the same rules. Once you buy a house, the increase in property taxes is limited to 2% annually. Without such limitations, too many modest income homeowners, especially seniors, would be forced to sell to deal with the mushrooming taxes, as seen in New Jersey and other "anything goes" property tax states.

Escondido surfer wrote on Oct 3, 2007 2:25 PM:Prop 13 is unfair. Why should Chevron and every other multinational corp get a break meant for homeowners. Since they rarely sell property, they enjoy out of proportion benefits. Unfortunately with our profligate lawmakers, it is impossible to bring equity to property taxes. They would use any opening as a chance to cram more money down rat holes.

Richard wrote on Oct 3, 2007 7:07 PM:Given that California has one of the highest state corporate income tax rates, and arguably THE highest personal tax rate, I don' think corporations are getting off easy.

Karl wrote on Oct 3, 2007 8:07 PM:Escondido Surfer, Huh? How does commercial property enter into the arguement? Have you read Prop 13?

josil wrote on Oct 3, 2007 10:44 PM:all of government and their hangers-on live off taxes. that includes the feds, the state, the county, cities and all their subsidized cultural, economic, and special interest groups, and all the contractors who live off of the above groups. unfortunately, the desire for funds to support the above is unlimited. they always want more and they generally do not care who they hurt(usually, their offspring...who get to pay off the debt generated by their parents)

jvc wrote on Oct 3, 2007 11:06 PM:We all know the value of Prop 13 in helping Granny who lives on a fixed income in her half-million dollar home but what about the rest of us who are only taxed 2 percent per year even during a booming real estate market when this property is not reassessed beyond the 2 percent! Prop 13 is fundamentally unconstitutional because there is no equity to property values once they are sold! On another matter, are we to believe that this columist is not bias in his story as chair of Tax Fighters!

Richard wrote on Oct 4, 2007 6:52 PM:JVC, Prop 13 IS constitutional. The forces of darkness took it to court, making your "unconstitutional" claim, and lost big-time. Prop 13 is fair in that all get treated the same -- taxed at 1% of purchase price plus a max 2% increase per year. On that other matter, am I biased? YOU BET!! In case you hadn't noticed, this is a COMMENTARY, not a news article. Challenge my opinion, but the facts speak for themselves. If you wish to REFUTE my facts, best of luck!

kmc wrote on Oct 5, 2007 6:56 AM:Richard, does tax fighters have a website?-

Richard wrote on Oct 5, 2007 12:52 PM:Sadly, we do not have a website, as it's too much trouble to keep up. But it may still happen, at least for archival purposes. I DO have a "Rider Rant" free email distribution service for anyone who is interested. Send one or two a week, each multiple topic...

jvc wrote on Oct 5, 2007 11:21 PM:Let us take one example of what prop 13 has done besides the state's discretionary spending of less than 15%, it has forced library funding of less than one dollar for each student and California ranks 51st in the country ,behind Puerto Rico in the ratio of licensed librarians to students- what a contrast of commitment by our taxpapers! Taxfighters are very harmful to our way of life because they do not want to support our government that gives us all the benefits that we could not buy as individuals!

Reardon wrote on Oct 6, 2007 9:10 AM:To JVC: Libraries are a tax supported lifestyle for the wealthy in La Jolla, Del Mar, RSF, and Rancho Bernardo (etc.) -- wherein a single-parent Mom working as a waitress in Chula Vista gets to buy Fortune magazines for elderly gentlemen to read. There are more than 600 tax supported libraries in San Diego County -- most of them in schools which are off-limits to the tax-payers who fund them! Fewer than 10% of people EVER see the inside of a library! The first libraries were privately-owned (Think Ben Franklin) and open by subscription, and that is how libraries in up-scale communities should be -- I have no objection to public libraries in lower middle-class areas, but my friends in RB, LJ, Del Mar, etc. can really afford to buy their own newspapers -- but libraries are just a public-supported elite "club" with comfortable chairs in many areas. Make those libraries subscription-based, and use the tax money to keep libraries in other areas open 24/7 if needed. Think outside the box, and don’t mess with Prop. 13!

jvc wrote on Oct 6, 2007 2:28 PM:Reardon - now you are bordering on the absurd! I think with your abilities you could write something worthwhile just by getting rid of your biases and keeping an open mind and having some measure of compassion for the greater good!Your compassionate conservatism without deeds just make you look like the common demagogue! And oh, read a good book once in a while,maybe, from one of your prestigious libraries where you are not apt to bump into the poor among us!

Richard wrote on Oct 7, 2007 12:59 PM:jvc, speaking fo absurd -- you make the absurd comment that the funding for libraries is less than a dollar per student. I presume you meant just the state funding. Historically libraries have always been locally funded. Why should the state fund local libraries? Even so, back up your assertion with a refenence. And what does any of this have to do with Prop 13, when the property tax revenue has been mushrooming?

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