Prop. 13 Nuts and Bolts

nuts&boltsBefore Prop. 13:  Fully funded, top performing schools

Imagine a world with no PTA fundraising for basic classroom supplies and programs, no local parcel tax campaigns, and no education foundations.

That was the world of K-12 education in California before the voters approved Proposition 13 in 1978.

California public schools were fully funded and top performing, in the top 5 and a role model for the U.S.

Prop. 13 Decimated School Funding  

1978, the voters approved Prop. 13, resulting in immediate drastic school funding cuts (county property taxes cut in half) and long-term severe underfunding of our schools due to the Prop. 13′s new 2/3 vote threshold to raise future taxes on a local or state level.

Shift in property tax burden to homeowners  

While Prop. 13 was presented as a protection for homeowners, the longterm result was a shift in the property tax burden from commercial property owners to homeowners, with homeowners now paying the bulk of property taxes, county by county, statewide.  In Santa Clara County, for example, even with the  Silicon Valley commercial explosion after Prop. 13, the property tax burden shifted from a 50-50 split between homeowners and commercial property owners to homeowners now paying 2/3 of the property taxes.

2/3 Threshold for New Taxes

Prop. 13 also imposed a 2/3 threshold for raising new revenues – local and state level – for new revenues.  No other state faces this barrier to raising revenues for its needs.  Other states require a simple majority vote.

Shift from stable to volatile state revenue sources

CA has tried to make up for lost property tax revenues through sales and income taxes.  These taxes, however, are volatile taxes, increasing and decreasing with the economy.  This revenue volatility is a nightmare for school districts, which need constant stable funding streams for their workforce, programs and instructional materials.

Proposed “Fixes”

  1. Restore tax “fairness” and “stability” by having commercial property owners once again pay their fair share of property taxes.  Most states re-assess commercial property taxes every one to five years.
  2. Empower local communities to raise funds – if they so chose – by lowering the 2/3 threshold to the simply majority vote, as effective in all the other U.S. states.

Proposed “Fixes”