Tax Proposition Battle Raises Echoes Of 1978 Prop. 13 Fight

Friday, 19 Oct 2012, 4:27:00 PM

Tom Elias

Thomas B. Elias, Columnist
Santa Monica Mirror Archives
Thomas B. Elias, Columnist

If some voters feel a sense of déjà vu as the fall election nears, one reason may be the battle between the tax-raising Propositions 30 and 38, a fight with strong and ironic echoes of the historic June 1978 clash between two property tax-cutting measures, Propositions 8 and 13.

Both 8 and 13 passed in that long-ago election, but because they covered much the same subject matter and Proposition 13 won by a larger margin, the Howard Jarvis-backed property tax cuts became law. Efforts to alter it have been a political third rail ever since.

Should both Gov. Jerry Brown’s Prop. 30 and billionaire activist Molly Munger’s Prop. 38 pass this time, most analysts believe the one getting the most votes would cancel out the other. But court battles would likely ensue.

Historic parallels and ironies abound here: Brown as governor during both fights has been intimately involved in each. He owns Prop. 30, which would raise taxes by about $6.5 billion yearly. He fought Prop. 13 and backed Prop. 8, aiming to lower property taxes on owner-occupied homes and buildings and create essentially what is now called a “split roll.” Had Prop. 8 passed, taxes for most residential property could be lower today, but levies on commercial and industrial lands and buildings would be higher.

After Prop. 13 won, Brown became a vocal convert, implementing it enthusiastically, especially helping state government take control of property tax revenues away from local agencies.

One irony today sees sometime tax cutter Brown wanting to raise taxes – even though the sums to be raised would simply make up for reductions in the vehicle license tax by ex-Gov. Arnold Schwarzenegger during his first days in office. This has amounted to about $6.5 billion per year since late 2003; without it there would likely be no state budget deficit and no plausible argument for either Prop. 30 or 38.

But there is that deficit, and Brown says past history may be largely irrelevant. “In the world I live in now,” he said in one recent talk, “there isn’t much past, there isn’t much memory. It’s all about the news.”

The news is that funding for education has been cut severely over the last few years. More than 30,000 teachers have been laid off, billions of dollars cut from university and community college budgets, plus enrollment cuts and tuition increases.

“Snake oil,” anti-tax fighter Jon Coupal labels arguments for both Props. 30 and 38. The head of the Howard Jarvis Taxpayers Assn. and others suggest the fact state parks officials hid about $50 million while parks were closing somehow means billions more lurk in Sacramento bank accounts no one has found.

The implication, of course, is that Brown, Schwarzenegger and everyone else who has cut education, highway, prison and other state funding threw those programs under the bus just to get a proposition passed. Not likely, no matter how loudly and persistently anyone makes the implication.

Critics add that Brown’s determination to sell voter-approved bonds for high speed rail means he could avoid the huge cuts he and the Legislature have set to take effect automatically if Prop. 30 fails. Also incorrect.

And there’s the charge that Prop. 30 doesn’t set aside any money for education. This ignores the 1988 Proposition 98, guaranteeing a large percentage of state spending for schools. Yes, the state under both Schwarzenegger and Brown has “borrowed” some of this money. But, no, that wouldn’t make funds from Prop. 30 any more of a “slush fund” than other state revenues.

“Sure, Prop. 30 would raise taxes,” Brown said. “But the income tax increases affect no one who makes under $250,000.” Its quarter-cent sales tax hike would affect everyone.

Brown adds that Prop. 38 “starts at a much lower level (only the lowest tax bracket is exempt from increases) and its money goes only to K-12 public schools. It would take five years before it brings in as much as Prop. 30 and it doesn’t start until next year – not soon enough.”

While Brown notes that schools have serious financial problems – “We’ve been cutting too many teachers,” he said – he adds that giving money to schools alone, a la 38, won’t solve the deficit. “The general fund is where the deficit is,” he said, noting it covers many other essentials like prisons, water management and Medi-Cal.

Opponents call the cuts due to trigger if Prop. 30 loses a form of “blackmail,” especially since most are to education. “That’s where the money is,” Brown said. “We couldn’t find any other places to cut.”

Ballot propositions are always important in California, but the 30 vs. 38 vs. no-on-both battle is one of the most vital yet. That’s why it may help that California’s votes in the presidential and U.S. senate elections on the same ballot seem to be foregone conclusions: lack of suspense about them ought to allow voters to concentrate on this critical fight.

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