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Dan Walters: 23 years later, Prop. 13 still altering California's political landscape

By Dan Walters

The Sacramento Bee

November 14, 2001

Modern California politics can be divided -- roughly but accurately -- into two distinct epochs: before Proposition 13 and afterward.

The initiative measure, enacted overwhelmingly by California voters in 1978 despite the almost unanimous, bipartisan opposition of the era's political leaders, ostensibly overhauled the financing of local governments and schools by limiting property taxes.

It did that, certainly, but it also changed the political dynamics of the state in dramatic and lasting ways. It marked the end of a three-decade-long period of expansive government that had even survived Ronald Reagan's governorship. Inadvertently, it led to a massive shift of financial and operational authority from locally elected government and school officials to Sacramento. It altered land-use policies of local governments, as they sought to maximize commercial, sales tax-producing projects. And most of all, it made opposition to new taxes a very strong tenet, virtually a litmus test, of California politics.

What happens, or doesn't happen, as the governor and the Legislature fashion a state budget each year is driven by the lingering impact of Proposition 13. Prior to 1978, adjusting state taxes to meet revenue shortfalls was merely another tool in the budgetary box, but in the nearly quarter-century since Proposition 13's passage, tax increases have been few and far between -- on the not-unreasonable assumption that California voters remain very leery of sending more money to government coffers.

The two political gadflies who jointly placed Proposition 13 before the state's voters in 1978, Howard Jarvis and Paul Gann, have long since passed from the scene, but what they wrought remains a powerful force in the state's political matrix, as a new court decision in Orange County illustrates.

Among its many tax-limiting provisions, Proposition 13 allows the assessed valuation of real estate parcels -- the value on which tax rates are imposed -- to rise by no more than 2 percent a year, regardless of what happens to the market value of any property. Routinely, county assessors have assumed that while the assessed value of any one parcel -- a home, for example -- could not be raised when the actual value declined, when market prices increased later, assessments could be raised by more than 2 percent a year to catch up, as long as the total increase was not more than 2 percent per year on average.

That's what happened to Seal Beach attorney Robert Pool, who was tagged with a 4 percent assessed valuation increase on his home in 1998 after two years of no increase because of a stagnant real estate market in his area.

But unlike other homeowners who received such increases, Pool decided to fight it, arguing in a lawsuit that Proposition 13 limits an increase to 2 percent a year regardless of what had occurred in previous years.

And this month, Orange County Superior Court Judge John M. Watson agreed, saying Proposition 13 had been violated.

It's the latest in a long string of post-1978 judicial rulings not only upholding Proposition 13 itself, but tending to interpret its provisions along the strictest, anti-tax increase lines.

Watson's decision would have to be expanded into a class-action suit and be upheld on appeal to have a broad effect, but the possibility exists that a couple of years down the line, schools and local governments would have to refund many millions of dollars to property owners, such as Pool, whose assessments had been increased by more than 2 percent a year.

The ruling came, ironically enough, as a new fiscal crisis washed over the state, this one the product of a deepening recession and the state's dependence on income taxes from the much-troubled high-technology industry. State aid to schools and local governments is already in jeopardy from the budget crisis.

And if Watson's decision is expanded to all regions and all property owners, the state may find itself on the hook because schools and local governments have no money to repay them.

Proposition 13 still has the power to alter California's political landscape.

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