The impact of Proposition 13 and the inequities it’s created along San Francisco’s Gold Coast has long been a topic of conversation and debate amongst the plugged-in crowd.

Today The Bay Citizen tackles the topic with examples of annual property tax bills along Broadway that range from $4,965 for 2900 Broadway to $336,100 for number 2799.

And of course the annual tax bill of $7,722 for 2901 Broadway (which is currently on the market for $45,000,000) is front and center as well.

59 thoughts on “Proposition 13 In Practice Along San Francisco’s Gold Coast”
  1. can’t throw grandma out of her $50M house.
    regardless, Prop 13 is wildly popular and thus in this case people are getting what they asked for.
    even more fraught with abuse is the practice of corporations setting up trusts to put RE in, and then selling the trust but not the actual RE to another party.
    this way the corps can keep a low tax rate forever, since they never die.

  2. Forget Grandma, it’s all about the Grandfather, as in grandfather clause.
    I bet lots of people would agree to a more fair tax as long as it applies to the next guy.

  3. Prob 13 is perhaps the least defendable and most damaging tax concept in the country. It simply doesn’t provide the appropriate revenue for a city and creates massive disincentives for logical/rational behavior. It should be phased out over a 25-40 year window with every increasing rates on each vintage. Oh well.

  4. As much as I don’t like the inequities promoted by prop. 13, I fear the lack of restraint our politicians have to arbitrarily raise property tax rates at will, especially in an economy like we have today, with the justification that all property owners are rich and thus it would only be fair to raise property taxes in this economy.

  5. That author did a decent analysis of the effects of Prop 13. In addition to the numerous other issues, people always forget that part of its effect was to give up local control in favor of those idiots in Sacramento who are running the ship aground:

    The determinative emotional issue for California taxpayers is not tax fairness or horizontal equity, but rather the knowledge that property tax raised locally won’t necessarily be used to enhance the schools or any services in their communities. Until the 1970s, property taxes were collected locally, and local schools were funded with that money. Prop. 13 turned the property tax into a “state tax,” Sheffrin notes, with all revenue now diverted to Sacramento, which then metes it out to local governments and school districts according to arcane formulas.

  6. I was talking to a guy who’s helping lobbying to keep prop 13 (no details, I work for the guy).
    Question 1: How about the injustices created by the system (a tax on the young)?
    Response: You can’t throw older people out, that wouldn’t be right.
    Question 2: Yes but people used to scale down come retirement age. Now they’re keeping their place for tax reasons, not because they need them. Does this make sense?
    Response: I’ll be happy to be able to afford to stay in my home when I retire.
    Question 3: How long have you owned your place?
    Response: 15 years
    But you’re 25 years from retirement!
    In short, the same old self-interest that perpetuates the inequalities created by prop 13.

  7. g is right. Prop 13 plainly reflects poor policy and provides horribly inefficient distortions. But imagine what SF property taxes would look like if we let the board of stupes, or even a 50% majority (2/3 of whom rent), raise property taxes at their whim. It’s a necessary evil, I’m afraid.

  8. There’s a lot of guesswork on what those homes are actually worth. The author emphatically states that various address are worth in excess of 20 million when they are clearly not. To gather a “rough market rate,” she uses the per foot tax base for one of the highest sales in the history of the city. 2799 Broadway, which was also newly constructed, also sold in October of 08, not 8/09, a totally different market. I personally wouldn’t trust the city to come up with fair values for these properties.
    Is prop 13 unfair? Sure it is… But if Grandma’s taxes are raised, then I want mine lowered significantly.
    Anyway, all this whining about the Gold Coast homes seems pretty irrelevant since Sperling’s annual tax bill totally compensates for Dodie’s.. lol…

  9. I see NO problem with Prop 13. It has saved the home ownership option for thousands of Californians. It served its purpose in protecting, in a personal case, my father and mother who lived in their one and only house for 55 years and did not have tons of disposal income after retirement. If their property tax had continued to increase as it did in the early 70s they would have been forced to sell their home and rent. That prospect was not great in the disruption it would have brought to a pair of 80 year olds. They loved their home and it brought them piece of mind and a sense of stability.

  10. You’re kidding me – $7,722 annual tax for that mausoleum at 2901 Broadway (on the market for $45,000,000) while I pay twice that in the Inner Sunset? Welcome to San Francisco, I’ll say. I better work late today to make up the shortfall in taxes.

  11. So what is the injustice? That the new buyers pay so much in taxes? Because guess what, the tax-crazed politicians would do nothing to change that. They would just prefer to gouge every home owner as much as they possibly can.
    Under prop 13 taxes are allowed to go up according to inflation, which is totally fair, whereas without it, a homes theoretical “value” would trigger massive tax increases and force people out of their homes.
    Get a clue.

  12. I saw yesterday the effects of the evil twin of Prop 13 in SF: rent control.
    The place is an REO, 4 X 1000sf units, renters have been there for 30 to 40 years with the rent you can imagine (400 in 1982 that becomes 650 today).
    There have been no apparent repairs or improvements that you can see for 30 years (apart from emergency work following complaints, and many were actually left unresolved). Mold, unaddressed roof leaks, structural issues (that I could see), inadequate bathrooms, illegal additions/repairs done by renters, no heat, dry rot, the works.
    You can easily see how this place got that way. No money in = no money to maintain.
    Prop 13 gave some reprieve to the landlords for a few years. Sure, your tax will be lower. But in the mean time construction costs skyrocketed. Basic repairs slowly got out of reach to some landlords as renters dug their heels in deeper and deeper.
    What I think will happen in the next 20 years: most places can stand a certain level of disrepair and deferred maintenance. Many people will still live in them as long as the roof doesn’t collapse and it is 70% cheaper than market rate. Prop 13 is 30 years old. Places that haven’t been repaired for 20 years are still standing and are inhabited. I think a lot of rental buildings will hit a wall at some point when structures will start to be affected. Wood is wood, plumbing is plumbing. There’s so much you can defer until it hits you back really hard.

  13. No one should be taxed out of their principle residence. Prop 13 should be adjusted to ONLY protect a principle residence. No 2nd, 3rd or 4th properties and no commercial property should be protected.

  14. “Under prop 13 taxes are allowed to go up according to inflation, which is totally fair, whereas without it, a homes theoretical “value” would trigger massive tax increases and force people out of their homes.”
    Clearly, that’s what occurs in every other place I’ve lived that doesn’t have Prop 13. The strawmen here are pretty silly. Having a proper property tax encourages efficient use of property instead of what we have here.

  15. It served its purpose in protecting, in a personal case, my father and mother who lived in their one and only house for 55 years and did not have tons of disposal income after retirement.
    This can of course be dealt with in non-Prop 13 ways.
    How does allowing people to pass on their house to their child at the same tax rate keep grandparents in their home?
    How does allowing a corporation to put RE in a trust and then sell the trust keeping the RE at the low tax basis keep grandparents in their home?
    Nobody wants to see grandma thrown out of her home. But there are other ways to go about this.
    Here is just one example:
    we could change the law so that the tax accrues but is not collected while people live in their homes. Then, upon the sale of the home the owed tax is drawn from the proceeds of the sale of the home. IF the proceeds are not enough to pay the tax then the tax is forgiven.
    The owed tax would be SENIOR to repayment of all mortgages. (thus, lenders would figure that into their loan decisions…)
    In this example, Grandma would buy a house with a tax basis of $1,000 a year
    As people around her drive up the value of housing, she may “owe” a tax bill of $3,000 a year, but she still only pays $1,000 a year. ($2k/year is thus “owed”)
    after 20 years when she dies the house owes $2k/year x 20 years = $40k.
    the house is sold and the $40k comes out of the sale and goes to the govt. then the mortgage is repaid. Then the heirs get what’s left.
    just sayin…

  16. 1 – So far, all the prop 13 supporters I see are long-term home-owner.
    May I ask how many years the following have owned their home:
    Old San FRancisco
    2 – What if we get rid of prop 13?
    – The market would be fluid. There would be increased supply and falling prices in some segments. Grannies would have to downscale. People keeping old bachelor pads as pied-a-terres in the city would have to sell or rent.
    – With falling prices would come a lower tax bill on average.
    Just saying. How about we all pay for what we use as long as we can afford it? Taxes should be equal, not generation-based.

  17. ex SF-er, it’d be brilliant to have it be senior to mortgages. If the real problem is keeping grandma in her house, there are many other ways to handle it that are better than a wide reaching, highly distorting, highly inequitable, highly wealth-entrenching, local-power-removing measure like Prop 13.
    Anyway, it seems like it would take a constitutional convention to amend Prop 13 to something sane. Maybe if the legislature keeps running massive deficits, we’ll get there quicker.

  18. My difficulty with prop 13 is that my intuition tells me very expensive properties change hands less frequently than cheaper properties. This means that the less wealthy are more likely to pay a higher share of their income in taxes, and probably a higher share of the taxes, making property taxes regressive.
    A conservative would reply that selling your home is usually a matter of choice not necessity, and that we all have the same opportunity to not sell. A progressive would be outraged at the inequity.
    I am not outraged at the inequity so much as I am at the potential disinterest in the community (e.g. school system) that a person paying a very little share of property tax is likely to have. Having a city composed of many renters and wealthy owners underpaying tax is recipe for political apathy and disaster when it comes to local taxes paying for local budgets. How many landlords in SF also live in SF?

  19. People seem to think that the only option is to immediately re-assess and increase the tax on “grandma”.
    Vancouver has a simple property tax scheme
    100% for investors
    67% for primary residences
    33% for over 65
    But that would require too much thought to ever be implemented in CA.

  20. ex SF-er, it’d be brilliant to have it be senior to mortgages.
    thank you. I’m sure the benevolent people in finance won’t think so. all the more reason to do it.
    I’d like to just make a few observations
    IMO Prop 13 has little to do with keeping grandma in her home. It has a lot to do with major moneyed vested interests that use that excuse to get their handouts on the sly
    one can be FOR keeping grannie in her home, and AGAINST prop 13 as instituted.
    Getting rid of Prop 13 does not necessarily mean that aggregate property taxes will go up or down. One can change Prop 13 in a way that keeps revenue neutral, or positive, or negative.
    Of course, Sacramento would love to just raise all the old people’s taxes up while leaving the young’s taxes up… but that doesn’t have to happen.
    one could in theory end Prop 13 Jan 31 2011… and then add up all the property tax revenue collected for 2011 under Prop 13, and then mandate that 2012 property tax revenue would need to be within 5% of 2011 revenue.
    then work backwards from there to get the property tax rate.
    if you did it this way all the “underpayers” would see a rise in their property tax, and all the “overpayers” would see a drop.
    of course in reality it would need to be phased in over time… which is why I like my idea of allowing for accrued/deferred property tax.

  21. Posted by: lol at May 26, 2010 11:59 AM
    I found a similar instance are you talking about Capp street?

  22. “One can change Prop 13 in a way that keeps revenue neutral, or positive, or negative.”
    Yes, and in fact other jurisdictions have solutions for this that weren’t used because the CA proposition system usually lets moneyed interests get what they want.
    I’ve lived places where valuations went up and property tax bills stayed the same for a period of time because the jurisdiction lowered the tax rate to compensate for the next year or two or three. Usually the valuations were approximately every 8 years, although the claim was 5-7.
    Of course, that was also with a truly local tax, not with the crazy system we have here, and also with places that were better at balancing budgets than here. Local politicians are often more responsive than state politicians, although I’m not sure what to think of the Board of Supervisors.
    Note that Prop 13 also makes revenues from property tax more volatile because in boom years where many houses trade hands, there are many more re-valuations, but in dead housing years there are fewer.

  23. 1. i imagine the threat of a higher capital gains tax in the next few years will prompt some of the old timers to sell out now, partially correcting the problem.
    2. i do not necessarily agree that market-rate taxes would make a long-time owner’s home “unaffordable”. At a 1.2% tax rate and $39 million in home equity you could get an HELOC to pay your taxes for a long long time.

  24. Dear stucco-sux,
    Your assertion that I need to “Get a clue” is a perfect example of the selfishness of people in this city. I work long hours to carry a billionaire and I need to get a clue?

  25. 23 comments on tax but not much about spending.
    question: is the state spending more per capita (inflation adjusted) than before prop 13 went in?
    i don’t know the answer.
    my guess is yes, given we’re still running a deficit despite:
    >prop 13 adjusts for inflation
    >state income tax rates keep going up (and lots of wealthy residents)
    >state oil taxes (i think)
    >state tobacco taxes
    >state lottery funds (it will shower our schools with money, remember?)
    where does the tax revenue all go? i think that’s what we should be debating.

  26. The formula for these things is always the same.
    First, the public supports taxes because they feel their community benefits. Progressives decide that the rich are benefiting more than the poor, and decide to redistribute those taxes.
    Progressives are politically stupid because most of them don’t pay the taxes they so desperately enjoy redistributing. They are simply incapable of thinking more than 5 minutes forward because they always redistribute money that isn’t theirs and can’t see how people who actually pay that money will react.
    What happens later is that support for the tax dissolves when people see them being redistributed.
    Prior to the 1970s, property taxes were distributed to the schools, so support for property taxes was high. It was your civic duty to pay for schools, as even older people had once gotten the benefits of them, when still older people were supporting their kids, so the older people grumbled, but paid.
    In the 1970s, three issues occurred which absolutely eliminated support for property taxes. Serrano vs. Priest declared that California schools could no longer have funding disparities from property tax revenues. Later, ethnic students were bused into white schools. At the same time, women entered the workforce, doubling incomes and allowing property prices to rise dramatically. Tax revenues went way up and were promptly redistributed out of the communities from which they were collected, with formerly broad support.
    “Ha ha,” the progressives thought. “Now we will redistribute all that tax money! Our Utopian solution allows rich people to pay to educate the whole state!”
    And that was the end of support for property taxes in California.
    So the schools the poor people get to attend are a joke, and the rich send their kids to private schools. The progressive solution destroys the very system it was trying to equalize, because it completely loses the support of the people who fund it.
    Health care is next. After a few conservative legislatures, the free health care given away to all won’t even be good enough for my dog, and the rich will go to Mexico to get the care they need. The middle class will effectively have no options, and will get worse care than if the system were left alone. The poor will finally have access to health care: for a dog. The conservatives will set up the funding constraints so that it will be impossible to ever remove them and that’s how it will be forever.
    It’s just the nature of things.

  27. mikey woodz,
    I won’t answer this question (which is just as good as answering it), simply because I am not professionally competent to judge the extent of the damages nor can I say if they are major or minor. That’s just what I saw from where I stood. But even for a non-professional this looked like deferred maintenance issues that were becoming major repair items.

  28. The other issue which has only sort of been touched on here is that there just aren’t that many SFHs in San Francisco. I would argue small SF landlords would be disproportionately affected by a prop 13 repeal or modification. Wouldn’t it have a greater impact on rent-controlled tenants than those of us in SFHs? What would landlords who have owned since the 70s do in this case? They can’t raise rents and I’m not sure many of them would borrow against their properties. I imagine many would try to get out of the rental business entirely if there was a wave of property tax increases on the horizon. I honestly have no idea…

  29. prop 13 and rent control are a perpetual trap.
    – At once you want it because it looks like a good idea
    – Then you want it because you need it
    – Then you want it because you have no other choice
    – Come up with the last step. My bet: CA becomes insolvent 365 days a year.
    Bringing us to the cliff with good intentions.

  30. lol, I’ve owned my place for 10 years. But don’t get me wrong. I’m absolutely not in favor of prop 13. It is absurd and unfair and I’m amazed that its constitutionality was upheld. My only point above was that we need to put some check on those like the SF supes who have no interest in distributing the tax burden fairly or behaving in a fiscally responsible manner, and while prop 13 is a blunt, ugly tool, if it were to go away we’d need something else that serves this function.

  31. if it were to go away we’d need something else that serves this function
    And why is that? Are Californians so special and precious that they have a entitled right to subsidized taxation once they have stuck around long enough?

  32. By “serve this function” I don’t mean “limit tax increases on my property” I mean “limit tax increases generally.” I’m all for distributing the tax load differently. But just look around the world and see the crisis that’s brewing from undisciplined taxing and spending policies by governments at all levels. Prop 13 is a big check on such poor government, and it still is not enough as established by California’s fiscal mess.

  33. Well, I would say that our crisis is
    – 50% overspending: Guvt workers sometimes paid more than private sector? WTF? The typical 90K/Y Bart janitor comes to mind. Aren’t job security and great medical/retirement more than enough to compensate for your “service”? This is confiscation!
    – 50% undertaxing: when people say NO to more taxes (sometimes disguised as good intentions like prop 13) but YES to more spending, guess what happens. Don’t get me wrong, I hate taxes just like anyone. But when I hit the nasty holes on the street I know that I am partly to blame for the dismal state of our roads. I have what I pay for.

  34. arnold prefers cutting education, transportation, police/fire, park spending to changing Prop 13.

  35. It would definitely make sense to remove all commercial and investment/rental property from prop 13 since it was allegedly instituted to protect homeowners, not business. I wouldn’t be surprised if the primary loss of property tax revenue was due to corporate property taxes being frozen, basically making Prop13 nothing more than a corporate subsidy that residential homeowners unwittingly maintain. We actually looked into creating a corporation to own our house in order to freeze property taxes but it’s pretty much impossible to do so with residential property. Only commercial buildings get that benefit apparently.
    I think rr asks an interesting question regarding how many landlords actually live in SF. Our landlord lives down the peninsula, he inherited the house we rent from his parents and pays

  36. Making the law be about taxation of a principle residence during a single lifetime would help.
    Experience has shown that aging in place is a risky strategy that is strongly correlated with unhappiness. This is balanced against the unpleasantness of being uprooted in later years, but it is not at all clear that the government should be using tax policy to encourage people to make use of the least successful known strategy for dealing with the inevitability of growing old.

  37. oops. 2950 bway is in the wrong location on that map…
    it seems like common sense to ditch the corporate/entity and family legacy aspects of prop 13. it makes sense to protect an individual from being priced out of their home due to inflation, but it shouldn’t carry on past the life of an owner…
    also, though. seems like that would be a struggle. rich families and corporations fund elections. it doesn’t saw what the Gettys are paying, but given their guest list yesterday, obviously there’s a lot of influence there.

  38. Whoops – the above sentence should read:
    Our landlord lives down the peninsula, he inherited the house we rent from his parents and pays under $600/year in property taxes.
    I think A.T. has a good point though – our city and state governments really don’t know how to manage money.
    I should know, I worked for a CA state agency for about 10 years total (off and on). I left because the whole culture has an incentive to spend money, it was all use it or lose it, no one was interested in trying to save money. I stuck it out as long as I could, I really believe in changing from within and thought I could influence how money was spent but after a point I just couldn’t stomach it any longer so I left and went back to the private sector.
    The culture of CA government is simply not focused on doing more with less. They do it if they have to as is currently the case but given the option to spend more, they always will, based on my limited experience.

  39. It never ceases to amaze me how many folks are against Prop 13 only for the reason that they pay more taxes than their neighbor who has owned their same place for 10+ years. Why is the inability of State and local government to manage and control their spending only a secondary consideration? In other words, most folks don’t care how much they pay in property taxes as long as their nieghbors are equally burdened? Wow. No wonder this country is so screwed up.

  40. Proposition 13, rent control, excessive government worker benefits/pensions, and the like are all problems caused by what seems to be a somewhat basic process. Some group sees some sort of “need” for their own little special asset and gets something legislated to protect it for life. It typically comes with some perk for certain commercial or union interest; who else is able to campaign or lobby for it? Everyone else has to pay for it.
    It’s all fine and good (though kind of silly) if everyone has their own little slice carved out. But over the years, the cumulative effect has put younger generations in a rough spot, because they typically have none of these grandfathered-in advantages and must therefore pay for everyone else. At some point, they are no longer be able to support the system because there is just too much weight to bear.
    Not that I’m offering solutions or anything. (No one would vote for me anyway!)

  41. JK,
    Typical tunnel vision caused by an entitlement.
    1 – Govt spending and prop 13 are not connected. You can blame the spending side deficits on the Govt but prop 13 has nothing to do with it. Govt does not control the distortion of property taxes. They can’t really increase nor decrease it in any way.
    2 – Sure, blame people for wanting some equality. Heck, stop it right there, because those same people will also want freedom, the right to vote, pursuit of happiness, freedom of religion and who knows what if they’re at it…
    Say you have 3 people on the same block. 2 pay 2K/Y and the 3rd guy pays 20K/Y, all for a similar house. I say all should pay 8K. Same income, equal tax.
    Anything wrong with that?

  42. JK:
    your argument doesn’t make sense.
    Prop 13 didn’t restrain how much money the State got through property taxes due to the fact that there was massive housing appreciation. this translated to massive tax receipts for the state to spend.
    if we wanted, we could reduce the amount of taxes collected if we reworked the way we do things.
    For instance, the law could have been written as “overall revenue from property tax receipts shall rise no more than CPI, with a max of x% per year”
    this would have capped increases in State revenue from property taxes to x% per year. incidentally, it would also have significantly reduced how much people pay in property tax.
    but that isn’t what was done.
    in other words, your treatment (Prop 13) doesn’t address your problem (runaway state spending).
    it’d be like if I gave you an antibiotic for a broken foot. Sure, an antibiotic is a treatment. Not so much for a broken foot though.
    I tried looking, but couldn’t find historical figures for State Revenue from Property Taxes. my guess: the revenue exploded from 1978 until at least the mid 2000’s due to house price appreciation.

  43. I am all for Prop 13, one of the best laws as far as I’m concerned. The problem isn’t Prop 13, its the runaway spending by the state. When property values were rising dramatically, they never said “Oh this is too much, lets give it back”. Nope they spent it on mostly ill-advised programs, putting nothing away for when everything would return to the mean.
    Sure there are examples of people paying little in property taxes, but there are people overpaying in the case of housing bought during bubble years.
    The state government is too fat, and they need to go on a diet. The vast majority of state services are linked to population and not anything like CPI, and from my understanding property taxes under Prop 13 are allowed to increase a little each year, and HIGHLY doubt that the cumulative increase in population outpaced both the rise in property value and the small increase allowed each year (let alone all of the other increases in taxes/fees).
    Besides, I think the average time someone owns a home is something close to 7 years, if that is the case, then the 95% property values are reset every 7 years – seems reasonable to me.
    Having lived on the east coast in an area without a Prop 13 like law, politicians always raised property taxes, because that was the main source of revenue for the municipalities. My parents when they retired had a $16,000/year property tax rate for an average 3-bed house in a good neighborhood. Now they are having trouble paying the taxes alone. Keep in mind that when they bought the house back in the late 80s, taxes were only $4,000. A quadrupling in taxes wasn’t justified, especially since salaries did not quadruple. The same drunken-sailor type politicians would do the same here in CA.
    Controlling spending is the only answer.

  44. “Having lived on the east coast in an area without a Prop 13 like law, politicians always raised property taxes, because that was the main source of revenue for the municipalities.”
    So why not go for an approach like Massachusetts where the total property tax growth is limited, but like property is taxed in a like manner? The world really isn’t a choice between prop 13 and runaway spending.

  45. “A quadrupling in taxes wasn’t justified, especially since salaries did not quadruple.”
    But their property value probably did close to quadruple. As it is, your parents appear to be paying larger amounts of property tax so you can inherit a bigger house. A conventional property tax system encourages them instead to sell, move to a smaller place, and put a larger property to more productive use. And if we determined, as a society, that it was a good idea for retirees to stay in their original homes, for whatever reason, we could devise a way to do that without creating Prop 13.
    There are much better ways of constraining government spending and preventing grandma from moving out than Prop 13. ex SF-er keeps developing good ideas, and the Prop 13 advocates don’t really listen. Instead they choose to defend the albatross that mainly benefits the extremely wealthy and corporate interests, while screwing over everyone else and reducing California’s future prosperity.

  46. The price of the house has not quadrupled, perhaps doubled. Either way that should not influence the tax rate, since asany point out on this site, it’s over-valued.
    As for pricing it similar to like housing, I don’t necessarily disagree but what is that amount, and “like housing is so nebulous” again as many on this site point out.
    I just read an article in the SF examiner saying they are considering a special tax to fix potholes in the city -ANOTHER tax that they are considering levying on homeowners. Where does all the
    money take in actually go? Until they can demonstrate efficacy and efficiency why should more money be handed
    over to them?

  47. Typical Socketsite blather.
    Prop 13 does not allow property taxes to increase with inflation, it allows a maximum of 2%. So homeowners pay less and less tax real taxes, and even worse, are allowed to bequeath their subsidy on the next generation. We are creating a class of landed gentry, who enjoy all the benefits of home ownership, but are not expected to pay for it. It is the typical over-entitled California Middle Class mentality.
    Don’t tax him, don’t tax me, tax that man behind the tree!
    Taxes should rise with GDP, not at inflation adjusted per capita values. Most of what government does (public safety, education, social services) is labor intensive, so it should rise with wages, not inflation. California overall spending as a proportion of GDP has dipped slightly since Prop 13 has passed. The myth of out of control government spending is one of those Conservative myths. Repeat a lie often enough and I guess you will get fools to believe it.
    California used to be a great state, the envy of the world, with the best public universities, awesome transportation systems and canals that made the deserts bloom. We truly stand on the shoulders of giants, people like Governor Pat Brown and Chancellor Clark Kerr. A generation of “I’ve got mine sucker, screw you” libertarianism has almost bankrupted the state and ruined most of our greatest institutions.

  48. Great post, NVJ.
    To be true, there’s abuse in spending. Look at the 100K+ salaries in this city. Very few private sector companies will have this kind of salary (self) distribution. Private sector salaries are slammed right now, sign of a painfully efficient market. Where are the Guvt’s paycuts?
    But we also need to look at our habit of saying no to taxes. Or even having elected officials giving tax cuts we cannot afford as a reward for an election.
    The Deflation Gods want their due. Your smaller 401(k), your 0.7%CD, your underwater house and last but not least all those back taxes (aka tax breaks) we thought would never be due. Once the IOUs are rejected fr good, we will have to pay up.
    I say prop 13 is the first one to go.

  49. Repealing Prop 13 may give a short-term boost to the state’s finances, but what will likely end up happening is that real estate prices will crater, which will bring revenue levels down to what they are today.
    I don’t like Prop 13 either, but for anyone hoping this will increase the money that the state will pick up will be sorely disappointed in the long term.

  50. “The myth of out of control government spending is one of those Conservative myths. Repeat a lie often enough and I guess you will get fools to believe it.”
    I’m with NVJ here. The Economist recently had an article about this topic. California has one of the lowest government employees to residents ratios:
    You can argue that this is because a larger denser mass of people require fewer bureaucrats to deal with them, because you see Illinois and Florida on the list, but Nevada and Arizona are lightly populated. Similarly, Hawaii and Delaware are exceptions on the other side, being smaller but comparatively populated states vs. Alaska, North Dakota, and New Mexico.
    Whether we use those government employees well is another question entirely I suppose, and specific complaints like A.T. gives are part of the issue, as are some of the public sector unions (who apparently don’t deem it proper to stem payrises during recessions!).
    As I mentioned, maybe the Board of Supervisors is a bad example, but local governments in California in other cities and counties seem far more effective than our state government. One of the biggest problems with Prop 13 is lack of local control, and if we had more local control, I think certain things like education would be better funded notwithstanding Serrano (at the least a city/county/school district/parent could try to challenge it on other grounds).

  51. I kind of doubt that raising taxes on people who have held their homes for a long time, but lowering taxes on new purchases would cause housing prices to crater. I suspect it would have the opposite effect.
    The really pernicious thing about Prop 13 is that it makes The State exceedingly dependent on sales and income taxes, both of which are very cyclical. The last time The State of California ran a surplus and tried to save for a rainy day, Howard Jarvis went nuts and got the voters to approve a bunch of tax cuts.
    I agree A.T., it is a crying shame that California has decided to fund prisons on the back of education spending. But that is what you get when you do government by initiative. The California experience has really soured me on the idea of direct Democracy. The voters just don’t have the time or interest to do it right.

  52. “The voters just don’t have the time or interest to do it right.”
    Or another way to state this is that the general public does not have the competence to directly legislate via the initiative process.
    On its surface the California proposition seems good, “Power to the People” and all of that. But the people really don’t have the knowledge or abilities to directly legislate. And I’m not just talking about Joe Sixpack, even well educated people have a hard time understanding the full text of propositions and the ramifications of new laws. I try but end up leaning heavily on opinions from groups I respect like the League of Women Voters.
    Unfortunately a large number of voters are swayed by media campaigns backed by moneyed interests. I recall many years ago lightly funded environmental groups put two propositions on the ballot. One limited logging in old growth forests and the other was a clean air campaign. Industry interests who’s profits would be impacted quickly and cleverly responded by introducing their own parallel propositions. On the surface those “evil twin” propositions read to also be environmentally friendly. But on deeper inspection they were much weaker laws without any teeth. The real sneaky part though was that if both propositions from each pair was voted “yes”, the weaker industry backed impostor law would take precedence and disable the “real” law. So a naive voter would vote “yes” on all four laws because they thought they were all pro-environment, not knowing that they were duped into crippling pro-environment legislation.
    It is fashionable to demonize career politicians as being corrupt or ineffective. I’m sure plenty fit this description. But many (most ?) politicians are serious about their job and are quite effective at understanding their constituent’s desires and translating that into legislation.
    Direct democracy only works properly if voters can make truly informed decisions. I don’t think that is possible in the real world.

  53. Direct democracy only works properly if voters can make truly informed decisions. I don’t think that is possible in the real world.
    Certainly not with a population anywhere near the size of California’s. It would work fine if we were talking about a 40-person commune.

  54. How many house haven’t turned over in the last decade? In San Diego County it was less than 25%. This dose not take into account that more units, sfr and condo, were built or converted during the time. Just the housing stocks of 1998. And even with the role back in prices those houses are worth 2.5 to 3 times their value in 1998. Are you trying to tell me that it now cost even twice what it cost to run a city/county/state in 1998?
    The real culprits are the corporate holdings, Corps never die; they sell to each other in trusts that keep a 30 year old basis.
    Stop picking on Granny, and those of us that bagged our lunch, drove cars that had more duct tape than upholstery, only went out maybe once a month in our 20’s and are happy where we live.
    Now I would agree that the the basis should change at transfer even to able bodied heirs. Only a primary residence or a place of business. Also an escalation tied to GDP instead of the fixed % does have merit; as long as it is capped at say 10% of total yearly liability with recovery. But I also think that the county should take monthly electronic property tax installment payments.

  55. Prop 13 is a problem.
    Excessive spending is a separate problem.
    That so many voters see the two as the same problem is why we appear to be stuck with Prop 13 for the foreseeable future.

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