Waking Up To The Inequities Of California's Prop 13
Universal Press Syndicate
LOS ANGELES - I did about half a Rip van Winkle on California, coming back to live here again after almost a decade in New York, Washington and Europe. When I left, this seemed a young place to me, with people ever on the move. When I came back last year, I saw that California had aged more than I. It is in many ways an old place now, with people who have no intention of moving.
What happened to California was no accident. I happened to leave not too long after state voters had approved Proposition 13, a ballot initiative that was basically a scheme by the people who got here first to preserve their lifestyle and life savings at the expense of newcomers.
I came back to see that Prop 13, called the Jarvis-Gann initiative when it was approved by voters in 1978, was finally being challenged (on Tuesday) in the U.S. Supreme Court. The plaintiff in the test case (Nordlinger vs. Hahn) is arguing for simple justice - in legal terms the phrase is "equal protection of the laws" - saying that there is something wrong with laws making one American pay 10 times as much in property taxes as his next-door neighbor in an identical house on an identical lot.
That is one of the effects, some intended, some unintended, of Prop 13 after 13 years. The most publicized clause of Prop 13 was that taxes on all homes and businesses in the state were frozen at 1 percent of the assessed value of a property in 1975 - until it was sold, and then the new owner had to pay 1 percent of the purchase price.
Stephanie Nordlinger, a lawyer who bought a home here for $170,000 in 1988, was paying $1,700 a year in property tax - 1 percent of the price - when she discovered that the average tax bill of her neighbors in identical houses was $376. The houses on her street had not been sold or resold over the years, and the owners were paying 1 percent of 1975 prices plus an inflation surcharge capped at 2 percent a year.
Other examples of inequity were more dramatic. The little houses at 923 and 927 Nowita Street near the beach in Venice are almost identical, but the assessed value and taxes are not: The owner of 923 Nowita, a 727-square-foot house that sold last year for $335,000, pays taxes of $3,413 a year, while the owner of 927, which has 909 square feet, bought the house in 1959 and pays taxes of $291 a year.
That's the way it is now, and it's getting worse every day. One effect of that is the same as the 40-year continuation of rent control in New York City after it was initiated in 1945 as an emergency measure when veterans came back to scarce housing. Rent-controlled or Prop 13-protected, people have no economic incentive - quite the opposite, in fact - to leave large apartments and homes after their children are grown and gone. Growing younger families are driven farther and farther away from the jobs at the center of the city or are forced to pay higher and higher prices for housing because so much is being held off the market.
The second unintended effect of Prop 13 was that government, particularly local governments and school districts, have been driven to find or create more and more exotic (and often unfair) ways to raise revenues - user fees and new special-purpose government agencies to evade the Jarvis-Gann provisions that tax increases for existing municipalities and agencies must be approved on referendum by a two-thirds vote.
The final unintended consequence is that California is falling apart. There have been several mini-Jarvises over Rip van Reeves' 10 years away, spending caps and such that make it more and more difficult to fill potholes, much less to build and maintain freeways or maintain what used to be a jewel of democratic governance, California's free education system from kindergarten through such great schools as the University of California at Berkeley and the University of California at Los Angeles.
Howard Jarvis and Paul Gann are gone now, but the evil they did lives on in the hearts of homeowners who resent paying for the education of children after their own are safely grown. There is still a Howard Jarvis Taxpayers Association here, run by a fellow named Joel Fox, who defends the inequities of Prop 13 by saying he understands why new homeowners resent paying higher prices than their neighbors, "but they will feel better in a few years because the next buyer on the block will pay even more than they did."
Nice people! The complaint of Jarvis-loving California homeowners in 1978 was that they could not afford to buy their own homes after annual real-estate price increases that averaged a booming 30 percent a year until the recession that hit here a year or so ago. That is still true, but what it really means is that they had become rich just by sitting home and not moving during the boom years.
It is amazing to me that no challenge to the fairness of Prop 13 made it to the Supreme Court until now. But checking back on my years away, it was obvious that California politicians who were legislators and California politicians who were judges did not want to move, either. They were not only afraid of Jarvis and Gann, they were afraid of their ghosts, too.
(Copyright, 1992, Universal Press Syndicate)
Copyright (c) 1992 Seattle Times Company, All Rights Reserved.