Conference back40::soapbox

    Group Urges Reversal of Prop. 13 
    
    
    Robert B. Gunnison, Chronicle Sacramento Bureau 
    Sacramento 
    
    California should scrap property-tax cutting Proposition 13 and the
    two-thirds margin required for passing a budget to reverse an
    ``antiquated and incoherent'' system that breeds legislative gridlock,
    a bipartisan independent commission said yesterday. 
    
    After two years of study, the California Citizens Budget Commission
    made 31 recommendations for a comprehensive reform of the way
    California state and local governments do fiscal business. 
    
    
    Among the changes proposed in the commission's report: review
    government programs, make more state financial information public and
    require lawmakers to leave Sacramento after July 1 each year to spend
    more time with constituents. 
    
    ``California's current fiscal policies are solvable,'' the report said.
    ``Without a thorough revamping of California's antiquated and
    incoherent budget procedures, however, they remain beyond effective
    reach.'' 
    
    Certain to be controversial is the recommendation that Proposition 13,
    enacted by voters in 1978 to limit property taxes, be overturned and
    local governments be allowed to raise local property taxes. 
    
    The constitutional amendment rolled assessed valuations back to 1976
    levels, set the tax rate at 1 percent of the cash value of property and
    limited increases to 2 percent annually. 
    
    Passed overwhelmingly when property assessments were climbing
    astronomically and the state enjoyed a fat budget surplus, Proposition
    13 blocked local governments from setting property tax rates. 
    
    The commission said the lack of local control over property taxes has
    made cities, counties, schools and special districts increasingly
    dependent on a shrinking supply of state aid to make up their financial
    shortages. 
    
    
    ``If localities and schools are given more financial autonomy, local
    voters will have a greater say in resolving trade-offs between taxes
    and government services in their communities,'' the report said. ``This
    approach would rebuild the vitality and responsiveness of local
    government.'' 
    
    Objecting was Joel Fox, president of the Howard Jarvis Taxpayers
    Association, named after one of the co-authors of Proposition 13. 
    
    ``Local governments have more money today per capita than they did when
    Proposition 13 passed,'' he said in an interview. ``Their solution
    seems to be more taxes. I don't think that's fair.'' 
    
    Another target of the report is the two-thirds vote requirement for
    enacting a state budget. 
    
    Because no political party has enjoyed a two-thirds majority in the
    Legislature in recent years, passage of a budget requires support of
    the minority party. In 1992, passage of the state budget dragged 64
    days into the new fiscal year because a two-thirds majority could not
    be reached. 
    
    ``There is no evidence that the two-thirds vote requirement does
    anything to slow the increase in state spending,'' the report said.
    ``Instead, it allows a minority to frustrate the will of the
    majority.'' 
    
    Other recommendations include: 
    
    -- Halting the practice of ``off- budget'' loans, like those used in
    1992 and 1993 to advance $1.5 billion to public schools. The loans have
    been ruled illegal by a Superior Court judge, although the case is on
    appeal. 
    
    -- Barring short-term borrowing for any purpose other than to cover
    cash needs and repay prior- year debts. 
    
    -- Providing more information to the public about the state's finances.
    ``Voters cannot participate in making difficult decisions unless the
    underlying information is accessible to them,'' the report says. 
    
    The commission is headed by A. Alan Post, former legislative analyst;
    Robert Monagan, former Republican speaker of the Assembly; and Kevin
    Scott, former executive director of the Commission on State Finance. 
    
    Its recommendations have been forwarded to the California
    Constitutional Revision Commission, which is scheduled this summer to
    propose an overhaul of the much-amended document. 
    
    Published 3/1/95 in San Francisco Chronicle

    Group Urges?
    
    Wow, lots of dirty words in that article.

    My property taxes certainly went up QUITE a bit more than 2% last year,
    it nearly doubled.  When I called the Property Taxation administrator,
    I was told that due to Prop ?? [can't remember], they were allowed to
    raise taxes.  
    
    I'm not sure I agree that prop 13 should be overturned.  Keeping
    property taxes low is what makes buying a home in this area somewhat
    affordable to your middle income families.
    
    

    I always thought Prop 13 only applied to homeowners who bought their
    house in or before 1978.  Anyone who bought after that was fair game
    for any property tax levied.  Thus, people who had houses bought before
    1976 paid taxes only on the 1976 value of the house where as people who
    bought after that paid on the full value of the house.
    
    Also, I thought that it was possible to pass the house down through
    generations so that the parents could sell the house to the kids and
    the kids only had to pay taxes on the 1976 value.
    
    Thus, if you were old and rich enough to buy a house in 1978, or were
    lucky enough to have parents that did, you make out like a bandit.  If
    you bought later, TS.
    
    I would think this would work against people buying houses.
    
    Lisa

    > Thus, people who had houses bought before 1976 paid taxes only on the
    > 1976 value of the house where as people who bought after that paid on
    > the full value of the house.
    
    not quite.  It started that way; tax bases were rolled back to 1976
    levels.  But what happened was that taxes were always set at the level
    when you bought your house, plus a tiny little annual increment.  They
    limited that increment to the assumption that you would only be taxed
    on an appreciation in value of one percent per year.
    
    If you bought in 1985, you paid taxes at the '85 rate.  If your home
    appreciated 200% by 1990 (many did that and more) your tax rate went up
    5%.  This has had two huge effects.
    
    The tax assessments do catch up when property sells.  This has hugely
    affected the market for housing.  People no longer sell a house when
    they outgrow it, and move into larger quarters, or better
    neighborhoods, as you would expect.  Instead, they upgrade, add-on, to
    an extent simply unimaginable.  So the housing market is hugely
    istorted, and the tax base never catches up.
    
    Secondly, with the tax base never catching up, and the state in
    recession for most of the last 4 years (unemployment finally back down
    to nearly national average) communities have no money for services.
    The Jarvis people say that communities have more income per capita than
    they did in 1978; big deal!  Services cost 2 or 3 times to deliver just
    with normal inflation since 1978!  Salaries aren't just slightly more per
    capita compared to 1978, expenses certainly aren't, housing certainly
    isn't; the entire market around here is distorted due to Prop 13.  Its
    hurting the schools, its hurting the roads, its hurting the
    infrastructure, and the state is simply not what it could be with
    proper investment in these areas.
    
    DougO

    ...and Prop 13 did nothing to protect *any* homeowner against "special
    assessments (like the infamous Mello Roos taxes paid by persons buying
    homes in newer neighborhoods!).  'Round here, although the "base" tax
    rate is about 1.6%, the Mello Roos can add another 3-5% to your taxes. 
    
    And, of course, Prop 13 also did *everything* to punish those of us who
    cannot afford (or simply do not choose) to own a home.  We get killed
    in income taxes every year, owing more to the State than we do to the
    Fed.  This, because Prop 13 (according to someone I spoke to at the 
    Franchise Tax Board) also made some mandate or other about keeping 
    the withholding rates low, but did *not* do anything to control the
    income tax rate.  Sneaky, huh?
    
    Personally, I wanna move to the Vegas Valley, land of neon, low
    property tax (try 0.6% on average) and non-existent income tax.  Sales
    tax rate (considered by Nevadans to be high) is 8%.  I'm paying that,
    *and* income tax *and* (through my very high rent) property tax!!
    
    Sign me...
    
    Disgusted and Broke,
    
    M.
    

    > Also, I thought that it was possible to pass the house down through
    > generations so that the parents could sell the house to the kids and
    > the kids only had to pay taxes on the 1976 value.
    
    no way.
    
    DougO

    Hurting Schools???????   What happened to "Lotto for Schools"???
    
    I never believe these twisted politicians when it comes to finance. 
    They pull at the heart strings of anyone who cares for children through
    this the "schools are hurting!" 
    
    What improvements have been made since Lotto was brought in?  Where has
    the money gone?  I get my potatoes fried just thinking about where that
    money has gone.  It's gone everywhere but to the schools.  
    
    

    More than half of lotto does go to schools.  But the state cuts its
    share by exactly the same amount, so schools haven't benefitted at all.
    
    Even worse, the per-pupil expenditure has fallen from tops in the
    nation to around 44th in the last twenty years.  Everybody else 
    knows you have to invest in schools, except those [unprintables] in
    Sacramento.  But Prop 13 has tied their hands.
    
    DougO

    Why does it have to be through property taxes dougo?
    
    Pot #24 = Schools
    Pot #02 = vacation funds
    Pot #03 = holiday funds
    Pot #15 = Cal Trans
    
    From what I read in the San Jose Mercury approximately one year ago,
    the Lotto funds go into #24 and then is dispersed from there into other
    accounts.  
    
    Why not give the money to the schools and quit drawing from Lotto to
    fix the roads, that's why we voted in those bonds!
    

    Lotto isn't nearly big enough to fund the schools, Nancy.  Thats a red
    herring.  Lottery was passed with enough loopholes that the legislators
    could raid it at will.  They have.  That isn't the point.  Lotto isn't
    the point, either.  The point is that the property tax is the best way
    for localities, who are barred from so many other tax options by state
    and federal pre-emption, to maintain local services; yet with prop 13
    they are prevented even from doing that.  If California doesn't figure
    out how to fix the fact that municipalities simply cannot afford to
    invest in the future anymore, the present is only going to keep getting
    uglier.
    
    DougO

    
    California has a constitution ?  Is it written in fingerpaints ?
    
      bb

    DougO are you a property owner?

    on a Digital salary!!!!?  In the Silicon Valley?
    
    DougO

    
    Prop. 13 created two different classes of people in California.
    Those brought and those who can't afford to buy house hate those under
    the protection of Prop. 13.   The Prop 13 only allow the maximum
    of 2% increase on property tax.  Think about the inflation is at
    least 3% recent years and can be more than 10% in bad years.  How
    can the property tax catch up with inflation?  That is why the state
    and communities are in financial difficulty.  
    
    Why should the recent house buyers pay the lion share of the community
    services?  Don't those old house owner enjoys the community services
    also?   The Prop 13 should be repealed.  But how?  Those old house
    owners are the majority.  And I can't understand why the supreme court
    won't rule it unconstitional.  May be themself are old people and
    don't want to hurt old people in Calif.   Also,  there are exceptions
    the low tax status can be passes over when you buy new houses.  I also
    believe it can be passed over to your sons and daughers under certain
    conditions.
    
    Why don't we pass a Prop. that we don't have to pay tax at all except
    those who are unfortunately born after year 2000?
    
    I always think the U.S. is the land of tax fair.  Not so,  we need
    another tea party revolt.
    
    

    Prop 13 was enacted so homeowners could not get taxed out of their
    houses. Property taxes are calculated on a % of the sale price. This
    is the same for everyone, with the exception of the "family" clause.
    What is so unfair about that? Why should homeowners be the only source
    of revenue for the state/county/city. There is pleanty of money
    collected.. |The problem is corruption, waste and fraud. You too can 
    own a home. Save, work overtime, have two incomes. Buy , fix up, sell,
    make a profit, buy again. You'll make it...just takes time.

    
    The problem is the Prop 13 should be based on current market value.
    Not the unrealistic 1975 or 1976 value.  It should be fair on
    everyone, not biased against young and poor.  The state doesn't
    get all his money from property tax.  You know there are sales
    tax, income tax, etc.  If you don't like the current Calif's high
    tax, waste, over-regulation, hugh welfare benefit, etc, vote for
    Republican candidates next time.   Also I don't vote for those candidate
    claiming their support Prop 13.  I even call their office to
    demand an explanation of their support.
    
   > You too can own a home. Save, work overtime, have two incomes. Buy ,
     fix up, sell,
    
    Fine, I brought a house at highest price, losing $100,000 over the
    years and still paying high property tax.  There is no relieve at
    sight.   Now a lot of communities are talking about increasing fee
    attached to property tax.  Guess what, most of those fees are proportional
    to your property tax.  So again, I am paying more than my old 
    neighbors.                

    .16
    
    
    YES YES YES YES!!!

    > Property taxes are calculated on a % of the sale price. This is the
    > same for everyone, with the exception of the "family" clause. What is
    > so unfair about that?
    
    Fair or unfair isn't the question.  Effects are the question.  The
    effects have been to distort the ability of localities to provide
    services in proportion to the requirements of the local property base,
    and to distort the market for housing by providing a tax incentive not 
    to move.  That may be "fair" but it certainly isn't good public policy.
    
    DougO

    
    Well, if all this is true in Kal, it surprises me not.  Note that
    in the Bay State, prop 2.5 is based on "100% evaluation", which
    was required by our state courts.  Assessments still get a bit out
    of date, but from time to time your property tax BASE is reset near
    market rates.  The tax-rate-per-thousand is what is controlled by
    two+half, and even then, there is an override, which from to time
    is put to use.
    
      bb

    re .17
    	I did vote for Republican. In Ca. I am outnumbered by sheep
    	that need to be taken care of by the Gvt. I still don't see your
    	point. Elected officials were on a tear that would have the effect
    	of taxing people out of the homes they owned, my parents included.
    	They had to be stopped. If you bought your house in the height
    	of the market, you gambled and lost, now we all should pay? I 
    	think not.
    

    Gee, perhaps Mr. Ru bought his house because he decided to start a
    family and his apartment wasn't big enough.  Perhaps he should have
    waited to have a family until the housing market hit a trough, then he
    wouldn't have had lost his "gamble".  Perhaps people actually buy
    houses to live in them.  What a concept.
    
    This is the way I get that Prop. 13 works, I don't live in CA so
    correct me if I'm wrong.  There are two adjacent houses in a
    subdivision.  They are both currently valued at $300K.  People in house
    1 are a couple in their mid-50's who bought their house for $50K back
    in the late sixties, and are still living there.  Suppose the house was
    worth $85K in 1976, they are paying taxes based on $85K plus 2% for
    each year in between now and then.  People in house 2 are in their
    mid-thirties and bought their house in 1986 when they started a family. 
    They paid $400K.  Now they pay taxes on $400K (sale price of the house
    when they bought it) plus 2% for each year inbetween.  So even though
    the houses are adjacent, of equal value, and are receiving equal
    community services, House 1 pays about 25% of the taxes that House 2
    pays.
    
    Likewise, town 1 has same current total property value as town 2.  Town
    1 has 90% people who bought before 1980, town 2 has 90% people who
    bought after 1985.  Apparently the tax revenue from town 1 will be much
    less than town 2 because of WHEN people bought their houses.  So town 2
    will have better services, and property values will increase.  But then
    the taxes will increase and no one will be able to afford to move
    there.  But they can't move into town 1 becaues no one is selling their
    house.
    
    This close?
    
    Lisa
    
    

    .21
    	I bought every one of my houses to live in. I don't know where you
    got any other idea. If someone decides to start a family at the height
    of the housing market and their apt is too small why penalize me, my
    parents, my grandparents etc... All i'm trying to say is a goverment
    should not be allowed to tax people out of the houses they own. Mr Ru
    knew the rules when he bought his house.
    
    Mr Ru...have you gone to the assessors office and fought to get your
    taxes lowered based on the declining value of your home? Try it. I did
    and it was not that much hassle for a substantial savings.

    .last
    Decreasing your property tax is possible and worth fighting for. Look
    at your tax bill..did your taxes go up because of "improvements"?
    
    If some proposition passed that enables them to appraise your house 
    annually shouldn't your taxes decrease with the market? Probably
    could but they are not going to advertise it. Go in to the Assessors
    office with your tax bill in hand and an appraisal.

    Lisa Gassaway, that was a reasonable interpretation of the way the
    current law works.  
    
    Nancy, on the other hand, needs a few pointers.
    
    > DougO if you are not a property owner then of course you must think if
    > a person owns a home they can afford to keep up with the taxes as
    > property inflates in this valley???
    
    Actually, I'm not a property owner, but I do pay a portion of the
    property taxes for the place where I live.  My girlfriend who owns a
    condo and I split our living expenses proportionally based on our
    incomes.  But as to your question about what I "must" think, I'm aware
    that people sometimes own a lot more house than their current incomes
    will support.  Stace used to; she had to sell a big, inherited house
    she and he ex lived in, and now owns a condo.
    
    > As they said ever try to get decrease in your property tax based on the
    > devaluation of real estate?  It's near to impossible.  
    
    That isn't what they said, if you read the note just previous to yours. 
    And I also know it to be untrue; the property tax on Stace's condo went
    down this year, which was appropriate because its lost 35% of its value
    since she bought it at the top of the market.
    
    > I own a home on probably 1/3 to 1/2 the salary you pull from this
    > company...
    
    I doubt it, you have no idea how badly I'm underpaid ;-).
    
    But did you buy that home on that salary, or on a joint income?  If you
    don't happen to have the income to sustain the investment that you took
    on, my advice is to downsize, as Stace had to, as many people have to.
    
    > I'm confused about this Prop 13 issue.
    
    I know.  I'm here to help.
    
    DougO

    
    I did go to the accessor's office and did win abatement on
    my property tax.  Yes, I brought my house at height of house
    value and I have no complain about losing money on my house.
    (it is not a gamble when buying house for live in).
    What I don't like is the unfairness of Prop. 13.  There is no
    way my old neighbor will ever catch up with the tax I am paying.
    May be my house has dropped value at most 25%, but my neighbor's 
    tax is still about 1/2 to 2/3 of mine.  And we all going up at
    the rate of 2% per year of distorted access value(his 2% is lower
    than my 2%).

    DougO - some of us (probably including Nancy) cannot afford (space-wise
    and safety-wise) to downsize.  Is it even reasonable that Nancy should
    have to move to a much smaller home in a (probably) lesser neighborhood
    with (probably) lesser schools because of property taxes that were
    reasonable two years ago?
    
    I can not buy a house.  The two incomes in my household, including
    hubby's overtime, gross us about $68K.  We are currently supporting 4
    people (2 working adults, a school age child and a senior citizen) on
    that.  The biggest reason I can't buy a house is that the income taxes
    in this state of ours are becoming ridiculous, which IMO is because of
    Prop. 13 -- we are keeping certain property taxes low, and
    income taxes, especially from those of us of *don't* have
    home-ownership to itemize and deduct, are making up the difference.
    
    

    I can't buy a house either.  I don't like the terrible housing market
    here...me and a few million other people are far too much demand
    chasing far too little supply, with the end result being that the
    supply costs ridiculously too much.  But thats because we millions all
    want to live in this wonderful mecca we call the golden state.  Its
    been a great place to live, but of course the tax revolt has resulted
    in terrible imbalances in costs of services vs what the communities
    actually have available.  I notice that Nancy didn't answer my question
    about how she made that investment in the first place.  I don't feel
    sorry for people who make those kinds of choices.  This market is going
    to shake out, and it is going to be painful, and such market
    distortions as Prop 13 are going to increase that pain.  It may
    eventually drive me out of this region.  But that's the way it works.
    
    DougO