Guest Op-Ed: California Must Reform Prop 13
May 17, 2017 | By Arman Kalyani
Proposition 13 was sold to Californians as a way to protect homeowners, by capping property taxes at 1975 levels. In reality, large corporations and the rich have benefited the most. Underfunded schools and crumbling infrastructure are just some of the reasons why California must reform the commercial side of Prop. 13 and make corporations pay their fair share. Here are five main reasons to advocate for reform:
Education: Since Prop. 13 passed, California’s school funding has dropped from the top ten in the nation to the bottom ten. The effects of this have been felt for years by educators and students, but were especially bad when the great recession hit. From school districts across the state having to lay off hundreds of teachers at a time, to slashing critical programs designed to help students succeed, we have had to take drastic measures to weather budget cuts brought about by the recession. Teachers who help prepare our kids to become well-rounded members of our society should not have to reach into their own pockets to buy materials for their classrooms. Because our primary revenue sources are so temporary and volatile, we remain vulnerable to similar cuts during the next economic downturn.
Public services: Local governments use property taxes to fund our first responders, roads, public transit, and parks. Under Prop.13, these services have been continually at risk. That’s why voters are constantly asked to pass local taxes and bond measures to fund things like BART, MUNI, and other public services that have been undermined by a lack of property tax revenue. Our public services face the same funding issues as our schools: their revenue sources are temporary and volatile, which results in disproportionately large cuts during economic downturns.
Inequality: The numbers lay bare how Proposition 13 has dramatically increased inequality. According to the California Tax Reform Association, the average California homeowner pays 40 cents per square foot in property taxes, while the Walt Disney Corporation pays just 5 cents per square foot in property taxes for Disneyland. You read that right: homeowners are paying eight times the property tax that Disneyland does. Mad yet? Well, maybe you will be when you find out that every year, Prop. 13 gives Chevron hundreds of millions of dollars in tax breaks too. This is not why voters passed Prop. 13, and these huge tax breaks for large corporations have incredibly negative effects on our state.
Anti-competitiveness: People often lament the barrier to entry for doing business in California. Prop. 13 makes this situation worse. Taxing buildings at different rates depending on when they were last purchased has put new businesses at a competitive disadvantage. They have to pay property taxes at fair market value while established competitors are locked into decades-old tax rates. Major corporations like Chevron and Disney, which have owned their properties for decades, are reaping a massive tax break that is in part being subsidized by new businesses that are helping to drive our evolving economy. It’s fundamentally anti-competitive, and costs our state $9 billion a year. Most California businesses (64%) already pay property taxes at fair market value; it is time for the rest to pay their fair share.
Trump: Finally, Proposition 13 makes it much harder to protect the values and services Californians care about most from Donald Trump. He plans to cut billions in federal funding from our state to coerce us into facilitating mass deportations and other regressive policies. Unless we find a way to generate revenue to fill this gap, we will experience massive cuts like we did during the great recession. Reforming Prop. 13 to restore $9 billion a year in local revenue is the best way for us to resist.
Prop. 13 has forced our state to slash funding for education and public services, and continues to shift the tax burden away from large corporations and onto the backs of individuals and new businesses. This is simply not sustainable. If we truly want to resist Trump’s attack on California’s budget and our values, we must generate our own revenue. Our children and future generations of Californians are depending on us. It is time to reform the commercial side of Prop. 13 and save our state!
Arman Kalyani is a campaign intern for Evolve California, a non-profit working to increase education funding and reform Proposition 13 through grassroots organizing. You can learn more at www.evolve-ca.org. We welcome op-ed submissions from our readers on any topic of local interest. To submit yours, email info@baycitybeacon.com.