Prop 13: good luck or bad for California?

By Laura Wells

We can get better services and a better environment for our tax dollars.

Three questions should be asked when we consider how public work is financed.
1. Do people benefit, or corporations?
2. Do we pay now, or do our children pay later?
3. Do regular people benefit, or just the extremely wealthy?

Taxes good for regular people include (a) property taxes on fully assessed property, as it was before Prop 13 in 1978, and (b) income taxes with higher tax brackets for the extremely wealthy. Taxes bad for regular people and future generations include (a) property taxes as currently applied, (b) income tax without higher tax brackets, as in the current situation, and (c) bond financing.

In Green Party voter guides you find the endorsement "Yes, with standard bond reservations." Although bond financing is promoted as "no new taxes," it should be labeled as "borrow now, our children pay later." As noted in the Green Party Voter Guide in 1992, over 35,000 U.S. millionaires supplemented their income with tax exempt state and local bond checks averaging over $2,500 per week (that's over $130,000 per year tax free). They avoided paying federal and state taxes on over $5 billion which must be made up by the rest of us.

Prop. 13 in 1978 was promoted to California voters as a way to reduce taxes and to stop fixed-income seniors and others from losing their homes due to escalating property taxes. Since then, the bulk of the "tax relief" goes places the voters never intended--giant corporations. Corporate properties are rarely re-assessed since corporations don't die and seldom sell. Corporations benefit again when cities, now relying more on sales tax than property tax, compete with neighboring towns to bring in "big box" stores, stadiums, and other commercial developments rather than build houses or leave open space. Although lucky for corporations, "Prop 13" was unlucky for the rest of us and especially for the first-time home buyer--our next generation.

Capital expenditures like schools, parks, roads, and water systems are often thought to be appropriate for bond financing because they are "long term investments" like houses. In fact, the high costs came about because of "deferred maintenance." These costs could have been paid for year-by-year--rather than become a large capital expense--if properties had been fully assessed and corporations were paying their fair share of the tax burden.

The process of deferring maintenance on critical public infrastructure leads to this warning: watch out for water privatization schemes in which our clean water supply could be controlled by corporations as a profit-making enterprise rather than a publicly provided necessity of life. A crisis in our drinking water would be even more disastrous than the energy crisis Californians faced after energy deregulation was ushered in by giant corporations such as Enron, who gained access after giving large political contributions. Other countries have faced the situation of pipes getting old. They were forced to turn to transnational corporation to "save the day." The companies promised much, and yet when it came time to deliver, they declared that it was not cost-effective to provide water everywhere it had been provided as a public utility.

Until we change property and other taxes so they benefit people and local communities, not giant corporations, we are stuck with measures and propositions that are financed by bonds, which benefit the extremely wealthy, and are paid for later by our children.

Join with the Green Party in correcting this situation. Green is not only the color of trees, but it is also the color of healthy finances, and a healthy future.