Financial facts do not support anti-Proposition 13 propaganda 

It’s an article of faith — indeed, blind faith — among those on California’s political left that the passage of Proposition 13 in 1978 began the state’s downward spiral.

Before voters limited property taxes, they say, California was a paradise of well-financed public services, but since then has evolved into something like Mississippi, in which a tiny, selfish overclass oppresses a burgeoning, mostly nonwhite underclass.

Indeed, one leftish critic titled his book “Paradise Lost.”

The anti-Prop. 13 propaganda always becomes louder when the economy is in recession and government budgets face big deficits, as they do now. A recent Bloomberg wire service article, in effect, blamed Prop. 13 for everything awry in California.

The problem with the anti-Prop. 13 hypothesis, however, is that financial facts don’t support it.

Let’s begin at the beginning.

In 1977-78, according to the State Board of Equalization, schools and local governments collected $10.3 billion in property taxes. The amount plummeted to $4.9 billion in 1978-79 as Prop. 13 cut the average property tax rate by more than half.

By 2010-11, however, property tax collections had risen to precisely 10 times as much — $49 billion per year — due to new construction and re-evaluation of existing property, even though the property tax rate was fixed at slightly over 1 percent.

During that same 33-year period, state general-fund revenue, principally sales and income taxes, increased sevenfold — scarcely two-thirds the property tax revenue growth rate.

Incidentally, inflation and population growth combined were about 400 percent during that same period, less than half the expansion in property taxes.

Obviously, the assertion that Prop. 13 has been an unconscionable barrier to revenue growth doesn’t hold up. But what about the oft-voiced argument that our property taxes are out of whack with those of other states?

According to Tax Foundation data, California’s property tax burden is the nation’s 15th highest as a proportion of homeowners’ personal income at 3.59 percent, well above the national average of 3.03 percent. The reason: California’s below-average property tax rate is more than offset by its above-average property values.

Another view: California’s median residential tax bill of $2,839 per year is the nation’s 10th-highest.

Those relatively high property tax numbers combine with California’s very high income and sales tax rates to give us the nation’s fifth-highest state-local tax burden as a percentage of personal income.

It’s logically impossible to assert that public budgets are in disarray because Californians are undertaxed. Political dysfunction and overspending are more likely culprits.

Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.

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Dan Walters

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Monday, Oct 20, 2014

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