Proposition 13 Paved Way for Tax Revolts Across U.S.

SACRAMENTO —  It was anger over a rising levy on their favorite beverage that inspired a band of colonists to dress up like Indians on a winter night in 1773 and pitch crates of tea into Boston Harbor.

More than 200 years after the Boston Tea Party, Californians just as furious over their property tax bills marched to the polls and defiantly passed a radical tax reduction called Proposition 13, triggering a national tax revolt.

Americans in each instance sent a clear message: They were fed up with taxes.

In the case of the Boston Tea Party, a new nation soon emerged from under the shadow of British rule--a nation, incidentally, of coffee drinkers.

How history will remember California’s Proposition 13 is not as clearly defined.

In this, the 10th year after its birth, ripples from the Great Tax Revolt continue to be felt across the land. But the anger appears mostly to have subsided.

Critics of Proposition 13 still abound, particularly around the schoolhouse and in some near-bankrupt California counties. Even its champions concede that it has at least one troublesome flaw that needs repair: its unequal treatment of people who have bought their homes since its passage.

Adopted on June 6, 1978, Proposition 13 immediately drained nearly $7 billion from local government coffers and schools. It clamped a 1% lid on property tax assessments, rolled them back to 1975-76 values and limited increases to just 2% each year unless a property is sold.

Now, 10 years later, some relocated homeowners are paying two or three times the taxes paid by neighbors who have stayed put in similar houses.

The financial smack that Proposition 13 dealt to cities, counties and schools was eased during the first year by a bailout of more than $4 billion from a huge state treasury surplus.

Fueling the Fire

The politically embarrassing surplus--fueled by double-digit inflation--angered Californians who were at the same time saddled with soaring tax bills.

Furious that politicians were stumbling over more money than government needed, voters embraced Proposition 13 by a 2-1 ratio in the face of near-unanimous opposition from the state’s political Establishment.

The voters’ reward was a cut of nearly two-thirds in property tax bills, amounting to hundreds and even thousands of dollars for individual households.

Today, Proposition 13 is saving California property owners about $15 billion a year. Its offspring, a 1979 initiative that limited public spending, produced a late-blooming prize: a $1.1-billion tax rebate that gave Californians up to $136 each during the Christmas season.

Services Affected

At the same time, however, some public libraries have closed, cities have levied new fees and special taxes to raise money, and school districts are imposing controversial fees on new homes to pay for more classrooms.

Frustrated rural counties, with fewer options for raising money, are wondering if they can simply shut their doors in response to growing red ink.

In the first year after Proposition 13, state experts reported that 100,000 public jobs were wiped out. In the city of Los Angeles alone, the payroll today is 4,000 paychecks smaller than in 1978.

Crimped by the spending limit, the state’s highway fund--godfather of the world’s most modern and extensive freeway system--faces a multibillion-dollar shortfall as congestion clogs its aging arteries.

The Joint Legislative Budget Committee recently called Proposition 13 “the single most significant change made in the way governments, at all levels, operate in California.”

While community colleges, parks and libraries initially were singled out for big cuts, the committee reported, “more recently, public health and welfare programs have been significantly reduced.”

Mild-mannered Paul Gann, now 75, who teamed with Howard Jarvis to put Proposition 13 on the ballot, said he remains proud of his role in unleashing the modern tax revolt.

State Officials Faulted

“People say we should leave (fiscal affairs) up to public officials and I say, ‘My God, look what they’ve done to us,’ ” Gann said in a recent interview.

“I hate to see libraries close and nobody cares for a good education more than I do. But . . . there comes a time when the people who create an obligation have to be as responsible as the people who are forced to pay off the obligation.”

“Death and taxes are inevitable,” was the belligerent battle cry of Jarvis, who died in 1986 at the age of 83, “but being taxed to death is not inevitable.”

Grover Norquist, president of Americans for Tax Reform in Washington, said Proposition 13 “told us you can win; you can beat the Establishment.”

“Something has to happen to get people mad,” he said. “They haven’t lost the ability to get mad.”

One of the most significant milestones of the anti-tax movement came two years later, in 1980. Like the country’s first tax revolt, it occurred in Massachusetts, a state derisively dubbed “Taxachusetts” by an electorate that passed tax-slashing Proposition 2 1/2 with a solid 59% of the vote.

“We couldn’t have done it if Proposition 13 hadn’t passed in California,” said Barbara Anderson, executive director of Citizens for Limited Taxation, a driving force behind the measure.

“We are a very conservative state that way. Massachusetts is not as adventurous as California. Certainly, the big argument we used was, ‘California did it, and they didn’t fall into the ocean.’ ”

Won’t Put Up With It

Mills Crenshaw, a radio talk show host and board member of the Tax Limitation Coalition, said voters also have vowed not to “put up with it anymore” in Utah, where lawmakers recently enacted the biggest tax increase in the state’s history.

“The people have risen up en masse and are furious,” he said.

Petitions being circulated in Utah would qualify four initiatives for the November ballot, including one to roll back tax increases enacted by the Legislature during the last session.

Tax rebellions also are brewing in Florida, Oregon, Texas and New York. In Illinois, a Proposition 13-style measure is pending in the Legislature.

“This is what people want here in Illinois,” said James Tobin, president of National Taxpayers United of Illinois.

In remarks reminiscent of the crusty Jarvis, who relished taking verbal potshots at officeholders, Tobin said of his state’s elected leaders: “Their tax-thieving ways are simply too much. Illinois politicians have been able to steal money from us left and right. The issue here is liberty.”

The still-flickering Proposition 13 flame, however, has not sparked brush fires everywhere.

In Oregon, anti-tax crusaders are working on their fifth initiative to limit property taxes. The previous four were defeated, including one that lost by a narrow margin last year.

“We keep trying,” said Mary Lou Jessup, president of the 10,000-member Oregon Taxpayers United. “We don’t discourage easy.”

California voters, meanwhile, seem sated in the aftermath of their historic uprising. Proposition 13, combined with a flurry of state tax cuts hastily enacted by stunned politicians, saved them $106 billion as of 1986.

Some Californians have heeded requests to give their recent tax rebates to schools. Even more telling, said pollster Mervin Field, just 5% consider high taxes a pressing state problem, down from the 30% of 10 years ago.

During the last decade, Field said, the mood of the electorate has shifted so radically that 71% of Californians now favor raising local taxes if needed for public safety, to build roads or improve schools.

As their tax-cutting fever has cooled, Californians have begun to believe they are getting a better bargain for their tax dollars, concluded Field, who has surveyed opinion for 40 years.

He said that despite the arrival of tax rebate checks, Californians’ support is eroding for the 1979 limit they clamped on government spending.

“Contributing to this more tolerant view of increased government spending is the perception that various levels of state and local government are doing a better job in making efficient use of tax dollars,” he said.