Prop 13: The Battle Between Taxpayer and Taxes

For the second year in a row, the County Assessor is predicting San Diego will collect less in property taxes because of the housing crash. It’s a win for taxpayers who will pay less – but a loss for the county which relies on property taxes to fund schools and other services. This battle between taxpayer and taxes has been long fought in California. It began 32 years ago with a ballot initiative called Proposition 13.

“I hauled all these rocks from the mountain over there when I came home from work every night and every weekend,” 82-year-old Frank Taylor says as he points to the retaining wall that surrounds his yard and describes how he built it rock by rock.

In fact, nearly everything in this yard – the wooden tulips, bird house, and giant butterflies – was built by Frank, a retired Sears repairman. He and his wife Cathy bought this house in 1962 for $13,000.

“Of course I was only making $75 to $80 a week, so even then you wonder how you’re going to pay for it,” Taylor says.

In the past four decades, the Taylors’ house has increased by more than 30 times in value.

“I’ve heard that these houses around here go for $400,000. Can you imagine a house selling for $400,000,” Taylor says.

Despite the value of the Taylors’ home increasing so dramatically over the decades, their property tax bill has not. They pay $400 a year. And that’s because of Proposition 13, a ballot initiative passed in 1978.

David Butler is San Diego’s County Assessor.

“The only time we can reappraise property is when there is a change in ownership or when there is new construction,” Butler says.

Prop 13 locked in property assessments at 1 percent of the purchase price, and limited yearly increases to 2 percent. The result: California has among the lowest property tax rates in the country. In fact, more then half of all the homes in San Diego County are assessed below market value.

That may be good for the taxpayer – but it's bad for schools, firefighters and police departments. They rely on property taxes for funding.

Howard Jarvis led the campaign against rising property taxes in 1978. He sold Prop 13 as a way for taxpayers, especially seniors, to stay in their homes.

”We have a new revolution against the arrogant politicians and insensitive bureaucrats whose philosophy of tax, tax, tax, spend, spend, spend, elect and elect and elect is bankrupting we the American people,” Jarvis said.

But more than 30 years later, experts agree, Prop 13 is one of the reasons California is in a fiscal crisis.

Isaac Martin is a sociologist at UC San Diego and the author of two books on Prop 13.

“In the long run it really did have the effect of limiting local governments' ability to tax property, and that has resulted in limited resources for things like school districts, libraries, and local government services,” Martin says.

The shortfall is most acute in education funding.

Julian Betts is an economics professor at UCSD. He says Prop 13 is one of the reasons California schools are under-funded relative to the rest of the country.

“In absolute terms there was a mushrooming in the pupil-teacher ratio in California in the years immediately after Prop 13,” Betts says.

California has a 21-to-1 student teacher ratio, one of the highest in the country. Compare that to a state like New Jersey that can raise property taxes when it needs more money for schools. The student teacher ratio there is 12-to-1. But New Jersey homeowners pay more then double per capita in property taxes then in California.

Back at the Taylors’, Frank and Cathy’s kitchen door is freckled with notches – the heights and names of their kids and grandkids carefully recorded by each hand-carved mark.

For the Taylors, the dilemma between taxpayer and taxes comes down to this: “We wouldn’t have a roof over our heads if we had to pay the property taxes they have now,” Cathy Taylor says, “if it wasn’t for Prop 13.”