| April 26, 1999 | CAPITOL ACTION WEEKLY | Volume 2, Number 42 |
| A free weekly newsletter brought to you by Capitol Enquiry, Inc. |
| Edited by Gabe Anderson |
| Capitol Reports by Capitol Action Staff |
|
Table of Contents * Welcome * Capitol Action * News & Promotions * The Fine Print |
| Welcome |
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| Capitol Action for 4.26.99 |
|
SACRAMENTO, Calif. -- One would be hard pressed to find any California
institutions that have been more fiscally abused during the past two
decades than the counties. And as the governor and Legislature prepare
to craft another state budget, the 58 counties probably are going to
be in for more of the same. Nobody is much surprised.
The reasons for the counties' fiscal woes are varied, but surely ground zero was Proposition 13 of 1978, the property tax-cutting initiative approved by voters that immediately slashed taxes by 57 percent, rolled back tax levels and limited future increases to two percent annually. It is difficult to overestimate the impact of Proposition 13, which voters approved to stem the tide of spiraling property tax increases. Volumes could be written on the effects of Proposition 13. But one thing is clear as the 21st anniversary of the initiative approaches: The entire financial structure of the state was affected. At first, a huge state surplus -- it was dubbed the "obscene surplus" by the backers of Proposition 13 and was one of the major reasons the initiative passed -- was used to bail out the counties as they struggled to tighten their belts. But bailout fostered the counties' dependency on the state and, to the horror of fiscal conservatives who championed Proposition 13, it vastly increased the central authority of Sacramento, which controlled the purse strings. In essence, the counties became dependent creatures of the state. That shift of power, over time, is probably the single most important political dynamic that occurred in California during the final decades of the 20th century. Proposition 13 also fostered fierce resentment among homeowners who purchased their property after the initiative was approved. That's because newly purchased property was taxed at a higher rate than the pre-Proposition 13 property, which meant that homeowners side-by-side in the same neighborhood could wind up paying sharply different taxes. In effect, older property owners were protected at the expense of their younger counterparts. County-supported services withered, and a myriad of basic services -- roads and schools are two good examples -- deteriorated in the struggle for funds. Spinoffs of Proposition 13 also made it harder for counties and local governments to raise new funds. Two-thirds votes, for example, were required to approve bonds, which meant that even though a majority of voters favored those bonds, the measures couldn't pass unless they had a super majority of 66 percent. Put another way, a minority of one-third of the voters could block most fiscal measures. And in the vast majority of cases, that's exactly what happened. The result is that money for public services became scarce indeed, even during the boom years of the 1980s. We're still paying the price for that today, particularly in education. Moreover, the attempts at the state level to stabilize the counties' funding were inadequate and even deliberately misleading, particularly in the case of the rural counties who lacked the political clout in Sacramento to protect their interests. The supreme irony of Proposition 13 is that it eroded local control, the very thing that those who voted for Proposition 13 wanted to maintain. And it also demonstrated a very simple truth that applies to politics as well as government financing: There's no such thing as a free lunch. |
| News & Promotions |
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| The Fine Print |
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