Jeff Chiu/AP Photo
A Department of Elections voting clerk takes ballots dropped off by voters across from City Hall in San Francisco, October 20, 2020.
Some elections are largely about reversing past elections. Should Joe Biden win next week, it will be at least partly due to voters who now lament either their support for Donald Trump in 2016, or for third-party candidates, or their decision not to vote. Four years of Trump have chastened or, more likely, horrified them into a reversal.
Elections don’t usually reverse decisions made 42 years earlier, but that’s just what might happen in California next week. Proposition 15 on the California ballot will repeal key elements of what has usually been called the third rail of California politics: Proposition 13, which state voters enacted in June 1978 as a way to reduce their property taxes. The most recent polls show Prop 15 with a narrow lead, but the opposition has been climbing over recent months.
Liberals have been chafing at Proposition 13’s effects on the state for decades, but they’ve never believed Californians would vote to increase taxes on their homes, and certainly not at a time like today, when home values have been soaring. What they’ve favored for the past 30 years or so is a “split roll,” repealing Proposition 13 only for commercial and industrial properties, while leaving it in place for homes and apartments. That’s what Proposition 15 would do, assessing business properties at their market value, while exempting home-based businesses and businesses whose assets or properties are worth less than $3 million.
Proposition 13 was the brainchild of Howard Jarvis, a crotchety right-wing mouthpiece for property-owner groups and a former member of the John Birch Society. The measure cut property taxes to 1 percent of the 1978 valuation of all properties, corporate and residential, and largely froze it there unless the ownership changed hands. The force behind its rise was the stagflation-afflicted economy of the late 1970s, which saw inflation levels increase substantially while wage income had begun to stagnate. Property values, and thereby property taxes, led the inflation parade in California. It came as no great surprise that the measure passed, though few had predicted the nearly 2-to-1 margin it obtained.
Then-Gov. Jerry Brown, the Democratic legislature, and most of the state’s leading corporations and largest employers came out against its passage, all noting how disruptive it would be to what was at that time a largely thriving state. But homeowners, alarmed at the prospect of still higher property taxes, voted heavily for the measure. Their ranks included no small number of Democratic homeowners.
But that’s only part of the story behind Prop 13’s enactment. What particularly infuriated many voters was that, at the time the measure was before them, the state was sitting on a $7 billion budget surplus (the equivalent of about $28 billion today), which the frugal (some would say pathologically frugal) Gov. Brown had squirreled away in a rainy-day fund. Led by state Sen. Nick Petris, a Democrat from Oakland, progressives in the legislature, believing that the passage of Proposition 13 would constitute a Category 5 rainy day, proposed to rebate that $7 billion to taxpayers to offset their property tax increases. Brown, however, wouldn’t budge. Nothing was rebated, and the rains came.
As soon as the measure passed, Brown budged—in the wrong direction. The measure had been on the June primary ballot, and Brown was standing for re-election that November. Taking no chances, he embraced it fully at a press conference at Jarvis’s side, receiving in return Jarvis’s quasi-endorsement for re-election. It was quasi because, while Jarvis expressed confidence in Brown’s willingness to enforce the measure, he also expressed confidence in the willingness of Brown’s Republican opponent, state Attorney General Evelle Younger, to do the same. But with unified Democratic backing and Jarvis’s blessing, Brown handily defeated Younger.
Brown’s conversion to the tax revolt didn’t stop there. Proposition 13 had put wind in the sails of the post–New Deal Democrats who were coming to believe, as President Bill Clinton was later to proclaim, that “the era of big government is over.” Positioning himself for what was to be his short-lived primary challenge to President Jimmy Carter in 1980, Brown went so far as to endorse another malignant Jarvis idea: enacting an amendment to the U.S. Constitution requiring the federal government to balance its budget every year. One can only imagine how the nation would have coped with this year’s pandemic had such an amendment been on the books.
The Democrats who trod down Brown’s path—a list that includes such luminaries as Gary Hart, Paul Tsongas, Bill Clinton, and the many dozens of House and Senate Democrats who voted for Ronald Reagan’s massive tax cuts on the rich in 1981—generally offset their fiscal derangement with progressive social policies. Brown, for instance, made California the only state in which farmworkers could bargain collectively. His fiscal policies, however, condemned their children to substandard public schools.
Prior to 1978, the property tax had been the chief way that local governments and school districts funded themselves.
In a sense, that template—progressive social policy, fiscal inadequacy—has defined California since 1978. California had been the envy of the world in the post–World War II era, prospering under the governorships of Republican Earl Warren and Democrat Pat Brown, Jerry’s father. But after Prop 13, it began a slow but wrenching decline. Prior to 1978, the property tax had been the chief way that local governments and school districts funded themselves. Afterward, according to the state’s Legislative Analyst’s Office, local governments saw a meager 36 percent increase in revenues between 1978 and 2013, while local governments in the other 49 states saw a 69 percent increase.
Particularly hard hit were California’s once-storied schools. Prior to 1978, California had long ranked in the top five of the states in per-pupil spending. Following 1978, with property tax revenue (the primary funding source for most school districts) falling, the state’s ranking fell to the bottom five on that list and stayed there for more than 20 years, until legislators crafted some semi-expedients. Even with those expedients, however, the state has never come close to its pre-Jarvis standing. And since 1978, the percentage of low-income and non-English-speaking children in those schools, who would have benefited from more robust resources, has risen sharply.
As the state’s public schools became starved for funds, with class sizes steadily increasing, more children from upper-middle-class and upper-class families transferred to private schools, walling themselves off from the crumbling education structure. Worse yet, Proposition 13 and some Proposition 13–inspired follow-up legislation made it almost impossible for school districts to increase their funding through issuing bonds. The wave of Jarvis laws required such bond measures to be approved by two-thirds of the school districts’ voters.
This led to a vicious circle of declining support for public schools, particularly in Southern California, where student bodies were becoming overwhelmingly Latino (the Los Angeles Unified School District has been at least 80 percent Latino since around 1990), while many of their parents were immigrants. The voters in those school district bonding elections, by contrast, were heavily white, with relatively few children in public schools. Not until the mid-1990s, when immigrants had attained the time required to become citizens and Latinos began voting in greater numbers, did school bond issues begin passing.
What happened to California schools is emblematic of what has happened to California generally over the past 40 years. The third great wave of immigration to the United States affected California more than it did any other state, at the very time that the kind of resources the state was able to devote to smoothing this epochal transition were plainly inadequate. Nor were those resources adequate to the disruptions caused by the end of the Cold War and the decimation of the aerospace and other Pentagon-related industries that came in its wake. With the decline of these key California industries, which had employed more Californians than any other, the state compensated by generating an enormous number of low-paying retail and service-sector jobs.
Proposition 13 played a role in that, too. Blocked from raising revenues from property taxes, cities and counties turned to raising sales taxes and to policies that increased the number of retail establishments. Rather than enacting policies that fostered residential or manufacturing construction, cities and counties promoted policies that favored the construction of malls—both mega and strip. Jobs in retail soared, while the incomes of workers employed in retail and eateries remained meager. In recent years, an unintended consequence of municipalities’ preference for new retail over new housing has become clear, as the state’s housing dearth has reached catastrophic proportions.
That template—progressive social policy, fiscal inadequacy—has defined California since 1978.
In recent years, higher rates of voter participation from the state’s racially diverse working and middle classes have turned California from a purple state to perhaps the nation’s bluest. The success of ballot measures eliminating the two-thirds vote to pass a state budget in 2010 and increasing income taxes on the wealthy in 2012 showed the possibility of beating back the forces that sought to cripple the state through its own constrained tax and budget rules.
It was with this in mind that progressive organizers, who for decades had been contemplating putting a split-roll initiative before the voters, decided that this was the year. It may be that the pandemic’s effect on businesses will convince just enough voters that they shouldn’t raise business taxes now; statewide No on 15 ads have focused on struggling small businesses, even though the top 10 percent of landowners will pay 92 percent of the new revenues, according to one study. Still, the measure is narrowly leading in the polls. By passing Prop 15, Californians will show they’ve decided that the era of Howard Jarvis’s small government should finally come to an end.
For more on Proposition 13, you’re encouraged to read Revolt of the Haves, an account of the measure’s enactment published in 1980. It was the first book by a young journalist named Robert Kuttner.
