reflections

Prop 13 is killing us

On November 1, 2005, I submittted this to the Morgan Hill Times as an Op Ed Column. They seem to have chosed not to run it. So, it is now posted here. The results that were documented for Santa Clara County have also been documented in San Francisco and Los Angeles Counties.

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When Proposition 13 was implemented in 19778-78, it was heralded as the way to save the family home. No more would home owners, especially seniors on fixed incomes, be forced to move or to sell their homes just to avoid tax increases. Since that is approximately the time that I purchased my home in Morgan Hill, I have had the benefit of Proposition 13 for a long time.

Now, we are not only dealing with the benefits of Proposition 13, but also the problems of Proposition 8. Between the two, they have opened up enough loop holes for corporations and other businesses that our Governor could drive his Hummer through, as he famously chided Ariana Huffington in one debate.

The result of these loopholes and other measures is a change in who bears the burden of local, real estate based taxation. In 1977-78, the valuation in Santa Clara County, and with it the tax burden, was divided about 50/50 between single family residential – condominium owners and business or other collective ownership. In the Santa Clara County Assessors's latest Annual Report covering 2005-2006 fiscal year, that division has shifted to 67% of the tax burden falling on the home owner and only 33% falling on other holders.

In many cases, this might only be because businesses have been better positioned to take advantage of Proposition 8 rules to lower their evaluations. In other cases it has been possible for business interests to change ownership gradually so as to never trigger the sale of a property and its revised assessment.

The net result is the fact that we, the home owners are being asked to pay more and more or to give up services. While the City of Morgan Hill is running a deficit, the development community is walking around smiling. While Santa Clara County is talking about layoffs for next year, we find that there is no way make things work except by raising sales tax revenue buying more things that we don't really need. . While business complain about the lack of well educated workers, the burden of supporting our schools falls increasingly on the home owner and California Schools rank near the bottom in terms of per capita student funding.

Something just does not make sense out of this. While the Howard Jarvis folks continue to agitate for less and less taxes for the home owner, they are letting the rest get off with not carrying their fair share. The Jarvis folks don't want to talk about real estate taxation on businesses. Now, they are at it again, proclaiming on their web site a : "Huge threat to Prop. 13. Silicon Valley tax raisers would dismantle taxpayer protections".

It is truly time to revisit both Proposition 13 and Proposition 8 and to close the loopholes. Maybe we can not roll things back to the way they were, but we surely should be able to find a way to fund City and County Government without putting such a heavy tax burden on young families who are buying their first new home.

Yes, we have to make hard decisions about what services we want to have from government and then how we are going to fund them. But keeping the status as it is forces governments into making short range decisions for short range revenue gain when they should be making decisions with a view on the sustainability of specific economic development and the long term health of the community.