San Francisco Chronicle: Fiscal crisis puts Prop. 13 up for discussion

[marmar]

Fiscal crisis puts Prop. 13 up for discussion
Joe Garofoli, Chronicle Staff Writer

Monday, June 29, 2009


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(06-28) 20:41 PDT -- About this time every year, as the Legislature and governor wrestle over how to pass the state budget, somewhere, somebody blames Sacramento's stalemate - and the state of the California's mediocre schools and crumbling roads - on Proposition 13.

The wail usually echoes unanswered for a simple reason: Thirty-one years after California voters overwhelmingly passed the law that fixed the rate of property tax increases and required a two-thirds majority of the Legislature to raise taxes and approve state budgets, polls show that Prop. 13 is as popular as ever.

But this year, with California and the nation in the throes of the worst economic crisis in decades, some provisions of the 1978 measure - which curbed revenue for key state programs, particularly public education - may be open for discussion.

No changes just yet; just discussion.

One major challenge: There is no roadmap for changing Prop. 13. While the measure inspired a popular revolt against property taxes in the years after it was enacted, no other state has the same mix of property tax limits and the two-thirds majority required to pass budgets and increase taxes.

Although voters in Massachusetts and Oregon approved laws inspired by Prop 13, those measures don't face the same hurdles. .........(more)

The complete piece is at: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/29/MNUJ18EHVH.DTL&type=politics&tsp=1

[Odin2005]

1. Prop. 13 needs to go.

Perfect example of a bad referendum enacted by the anti-tax frenzy of the stupid mob.

[Winterblues]

15. Parts of it maybe but not the whole thing

The part about stabalizing the millage rate should stay. It is no different than establishing limits on how much interest a bank can charge. The part about two thirds needed to raise any taxes needs to go. It has no benefit and lots of restrictions..

[dynasaw]

2. Poor Piece of Legislation

No "sunset" clause. There should have been a ten year provision attached to it.

[anigbrowl]

12. It isn't legislation. It was a constitutional change

Being part of the constitution, it can't have a sunset clause because constitutional provisions are meant to be permanent.

Which doesn't make it any less poor of an idea, but does suggest you don't really know how we do things in CA. I really wish people would take a few minutes to bone up on what they want to discuss, because it gets tedious explaining the legalities over and over and over.

[ProgressiveProfessor]

3. That is wishful thinking at best

SFGate is dreaming again. Yes there are more people talking about it, but they are all politicians, wannabe politicians, or involved with government. They have been talking about it since the day Prop 13 was made law. Maybe the discussion is a little louder, but that is about it, and those who can change it are not participating.

The voters in CA have a long history of distrusting politicians and their government. The one stick they wield in California is funding. I don't see them changing that overnight.

The above does not mean I agree with what is happening to my home state, but the fixation on Prop 13 is a smoke screen for the other issues.

[rvablue]

7. The fixation on Prop. 13 is not a smoke screen.

It is the main reason CA is in the situation it's in right now.

If CA keeps Prop. 13, there will continue to be massive deficits and shortfalls, as the article suggest.

It was a 30 year ride getting to where CA is right now, and the only thing that will even begin to turn the tide, is repealing Prop. 13.

I'm not saying the voters or the legislature either have the will to do. But it's going to have to happen eventually.

[ProgressiveProfessor]

8. There are a lot of other issues, Gann iniative and other that don't make the soundbites

There needs to be a wholesale reworking of things, done in a manner that the voters will trust and accept. Right now I do not see that on the horizon.

[madamesilverspurs]

33. Yeah, and Dougie Bruce was the moving force

behind Prop 13. When things STILL didn't go his way, he switched parties and stomped out of California, transplanting himself in Colorado where he has had similar impact. He was temporarily in the state legislature, where he famously kicked a photographer and generally made an ass of himself. We'd love to see him outta here. Any masochists out there willing to take him in?

[glennont]

4. You're crazy

Retired people could no longer pay their property taxes because the value of their homes kept rising. Soon whole stable communities of people were forced out of newly desirable areas so the young and rich could move in. Don't you think it's a little crazy to burden homeowners again at a time when housing is already in crisis and people pocketbooks are empty. Are you looking for an even larger implosion of foreclosed properties dragging your home values down. 13 is good because it gives stability in planning when buying a home, only crybabies think its unfair.

[marmar]

6. Who's crazy? The San Francisco Chronicle?

WTF are you talking about?

[ProgressiveProfessor]

9. San Francisco Chronicle does do a lot of wishful thinking

[cliffordu]

11. lol.

Pretty fucking funny.

[anigbrowl]

13. but partly true

I'm not that much in favor of prop 13, but there's a reason why it was passed. Think about it, you buy a house, why should the amount of tax you pay keep going up every year and possibly outpacing your income growth - indeed, very likely? Now maybe if you apply for a 2nd mortgage or something your property taxes should be recalculated at that time, or I would maybe favor a progressive tax based on the value of your house, or a tax on the profits you make when it's sold...but when you buy a house, you don't really know what the real estate market is going to be like in 10 or 20 years. If your neighborhood gets much cooler a decade from now and property prices go way up, then so would property taxes...BEFORE you have realized any gain from living there. That's like demanding people pay income tax before they make any income.

and no, I don't own a house, so I'm not thinking about my own tax burden here.

[JVS]

16. How come it's a major injustice when the property tax goes up with the value of the house...

but it's not only ok but even seen as positive when someone gets more money by selling their house at many times the original value?

I understand that moving isn't fun, but if your house is worth 10 times what you paid and you're upset because your taxes now are higher than your income, sell and reap the profits. Boo hoo hoo, I just made a fortune using a house for years on end. :nopity:

[ContinentalOp]

17. So people should be forced out of homes that their family may have owned for generations? -nt-

[JVS]

18. They have a choice. Sell and reap large profits or stay and pay larger taxes

Many others would love to have that problem.


Why should everyone else who hasn't lived in the house for generations be expected to subsidise their property tax staying low?

[anigbrowl]

21. So you want to tax people's profit BEFORE they make it?

That's ridiculous. How about I'm the IRS and I ask you to pay next year's income tax up front? Somehow I don't think you'll go for that. You realize this means if you own a house and I build an amenity (like a supermarket) near you, your taxes will go up as a result? Or that if you're renting, the increased taxes will be passed on to you?

[JVS]

22. I want to tax them on the value of their property. end of story

Fucking homeowners are so pampered it isn't even funny. If your car were to appreciate in value, would you bitch about higher insurance premiums?

[anigbrowl]

25. Why? The owner has no direct control over that.

Insurance is a meaningless comparison. You don't consume more services because the value of your house changed.

[JVS]

27. Actually if your payment is that same as in 1980, you are probably consuming more services...

than you did then even though you pay the same amount. How about at the very least a cola adjusted payment increase if we can't tie it to property value?

[anigbrowl]

31. I'm OK with indexing it to inflation or something. It's not that taxes should never go up.

[anigbrowl]

19. But what if you don't want to move?

I specifically mentioned the idea that the proceeds from the sale of a house could be taxed, so don't get on my case about that. Up to the moment you sell or refinance, you are not deriving any financial benefit from the value of the property increase.

You, on the other hand, are arguing that people should be taxed on the likely market value of their home even if the increasing taxes force them to sell it and move out. That is hopelessly regressive.

Prior to prop 13, property taxes were set by the county and related to the cost of providing services. Prop 13s worst aspect is that it means ALL money flows to Sacramento and is then doled back out to counties by the state. It is badly in need of review, but not in the manner you are proposing, which seems to assume all house purchases are purely speculative.

[JVS]

20. Then pay up.

There is no free lunch. CA is currently subsidizing people's property taxes for the mere fact that they've lived there longer. If you want to make some exceptions for the poor, fine, but this is by and large a boon for a privileged class (homeowners) at the expense of the entire state.

[anigbrowl]

23. You're full of it, and have no argument. Pay up with what? The extra income you're not making?

What you're proposing does not help poor people. A first home isn't a speculative investment, because if you sell it, you still need to find somewhere else to live. So you're basically arguing for a tax on savings.

[JVS]

26. The people who benefit most from prop 13 are rich people. Poor people don't own homes as often...

and usually not in the high value areas. If you want property tax relief for low incomes, write legislation for it, but prop 13 protects the rich even better than the poor.

[Hell Hath No Fury]

28. My family benefits --

from Prop. 13.

My working class Mom bought the SF house in 1964 for $34k. Our 2 bedroom/1 bath 876 sq. ft. house with garage is now worth upwards of $500k. She didn't buy the house for an investment, she bought the house to live in the city she was born in and raise a family. She bought a home. My Mom is retired and on a fixed income. There is no way in hell she could afford to keep the house if she were forced to pay taxes on the market rate.

Most of my friends from high school who remain in the City can only do so by staying in the family home -- it would be too expensive for them to stay here otherwise.

I believe there is some room for improvement on Prop. 13 -- but never think it doesn't help real working class people in California.

[ContinentalOp]

30. Clearly your mom should be forced out to make way for a bunch of out of state assholes

who are looking to make a quick buck in the Silicon Valley gold rush. :mad:

[rvablue]

32. Hell Hath, based on your personal story you fail to see the calamatous downside of Prop. 13.

If your story --- or your mother's story -- were the ENTIRE outcome of Prop. 13, who in their right mind could complain.

Prop. 13 should have been written to protect people like your mom. Those living in a PRIMARY residence.

Unfortunately that wasn't the case. Go take a peek out your window. See that aparment building and that office complex and that mini mall?

The millionaire and billionaire owners of these INVESTMENT properties are not paying their fair share. Many of them scooped up properties after Prop. 13 passed at a fraction of the cost of what they are currently valued at and are paying 1979 or 1981 or 1983 (I could on...) tax rates on them.

You know what else got more expensive? The cost of operating schools, paying cops and firefighters, maintaining roads, etc. And the money is just no longer there in the municipal tax base.

The state of California is basically subsidizing local school systems because of this.

And those "working class people" whom you speak of that reap so many benefits of Prop. 13, well, they're not. Budget deficits for years and years have been propped up with state income taxes, SALES TAXES, and BS fees and charges here and there and everywhere -- all of which place most of the burden on the low, working and even upper middle classes.

[Hell Hath No Fury]

34. I am a working class San Franciscan --

so I do see the downside -- I am completely aware of everything you speak of, which is why I said that some tweaking of Prop. 13 is in order.

I was simply responding to the inane claim that the wealthy of California are the primary beneficiaries of Prop. 13.

[rvablue]

36. The wealthy are the prime beneficiaries.

Your mom got to keep her house. That's great.

Meanwhile, the real estate barons are filling their pockets with profits. They're charging 2009 rents for stores, warehouses, officse, and apartments and paying 1979 taxes on their properties.

So, while they've gotten richer and richer and richer every year since Prop. 13 has passed -- as they would have anyway, but not at such an exhorbitant rate -- the municipal tax bases throughout California have eroded to the point of calamity.

And, FYI, Prop. 13 can't be "tweaked." It can either be repealed in it's entirety or stand as it is written.

[JVS]

14. "13 is good because it gives stability in planning when buying a home,"

actually it's bad because it helped to further inflate a housing bubble. When everyone is afraid to move because then they won't pay the property tax that was assigned 30 years ago, it leads to a very tight market where new development is nearly the only way that new entrants to the market can be accomodated. Also, widows living alone in 3 br houses helps tie up housing and drive up costs.

[Gormy Cuss]

35. The changes considered most these days won't affect the seniors.

Nothing is likely to be done to change Prop. 13 provisions but the current discussion revolves around two areas: eliminating or reducing the super majority provision and exempting business properties from Prop. 13 protection. The latter is sorely needed because the commercial real estate changes ownership in ways far different from residences, with shares sold rather than the whole specifically to preserve the Prop. 13 basis.

[Johonny]

5. They would be wise to separate the two issues

Try to overturn the property tax and the 2/3 majority vote separately. Because there's a whole lot of stupid fighting for the property tax. I'm not sure the 2/3 majority over turn would have as hard a time passing.

[Brother Buzz]

10. Repeal Prop 13 and I'll lose my house and land on the street. That's a fact, Jack.

I'm a sick old goat surviving stage IV cancer with no health insurance, no income, and totally depleted savings. When people start talking repealing prop. 13, I want to climb into a hole and die. I trust someone will cover me over; that's the best I could hope for.

Times have been better.

[Divine Discontent]

24. how horrible. all I can do is send prayer to God for you/or good vibes & tell you

that I hope I NEVER read that you lost your home. Best to you...

[Hell Hath No Fury]

29. I hear you Buzz --

Prop. 13 keeps people like you and my Mom in their homes -- plain and simple. Try staying in your home as a senior when your fixed yearly income is $24k and your taxes are $6-$7k -- it just doesn't work.

[ContinentalOp]

37. Close the corporate loophole.

Sign the petition
http://www.closetheloophole.com/index.php