“Be kind, for everyone you meet is fighting a hard battle” - Often attributed to Plato but likely from Ian McLaren (pseudonym of Reverend John Watson)

## Monday, February 28, 2011

### Evil California homeowners and their failure to repeal Proposition 13

Those evil, selfish California homeowners passed the infamous Proposition 13 (I won't link it until later because this is a riddle), thus depriving the State of the financial wherewithal to adequately fund its operations and the pension funds of the various public employee unions. That's the wailing and moaning we hear from Sacramento and, in fact, from around the Country.

Is it true? I've culled some data and made some charts to investigate (all charts can be enlarged by clicking on them). First, let's see the California budget from 1970 to present:

Can anyone guess from this when Proposition 13 was passed? Ah, but California's population has increased as we see here:

So naturally, the budget would increase. So let's look at the budget per capita:

I still challenge anyone to guess when Proposition 13 was passed. Wait, I hear you! What about inflation? Yes, this has a major effect, let's see California's budget in constant 1970 dollars:

Was Proposition 13 passed in, say, 1993? 2008? Well, for a final chart, let's see the budget per capita in 1970 dollars:

OK, time to end the riddle. Proposition 13 was passed by the voters of California in June of 1978. That year, California's per capita budget was about $371 1970 dollars. It peaked in 2008 at a bit over$690 and, even in the teeth of the recession and California's budget crisis, the most recent year stood at $538 or 45% higher than before Proposition 13 took effect. In an earlier post I showed the outflow of funds from California to the Federal government, and certainly the cost of undocumented immigrants (or illegal aliens, depending on your political orientation) in the educational and criminal system has had a major effect. But that population is included (as much as possible) in the census data from which the per capita figures are derived. For these reasons, I have a very hard time developing sympathy for the crocodile tears shed by the political class over the devastation wrought by Proposition 13. Full disclosure: I am a homeowner. #### 3 comments: bkramer said... Brilliant. Ed Darrell said... Prop 13 didn't cut the state budget. It was targeted at county budgets. Consequently, there should be no expectation of a reduction in the state budget as a result of Prop 13. However, your charts demonstrate that the state was required to take on additional burdens in spending as a result of thoughtless, lawnmower "trimming" of county revenues throughout California. Schools, libraries, police departments, fire departments, sewage treatment, and road maintenance, to pick a few categories, suffered greatly. Prop 13 started a dramatic and tragic decline in the ability of local California governments to deliver the services and infrastructure that make a civilization great, or even workable. The increases in state budgets reflect, in part, the desperate attempt by state legislators to make up for the damage done by Prop 13. The charts you show are off-target. State tax revenues were not targeted by Prop 13. Your charts do not show county revenues, or spending. I'd accuse you of bait and switch, but I think you genuinely did not understand the difference between state and county spending in this exercise. This is a point I've made at my blog, in response to your comments there. King of the Road said... Clearly, Proposition 13 was not for the stated purpose of budget reduction. In 1978, inflation was a huge issue. Homeowners saw themselves as sacrificial lambs and were not willing to lose their houses to inflation and uncontrolled spending. At that time, I was a renter. I became a homeowner for the first time in CA in 1981. Despite that, I voted in favor of Prop. 13 for all its flaws (and there are flaws). This is not the point of the post. The point is that the State of CA has continued to increase its spending and then utilized "the horrific consequences of Prop. 13" as one of the primary excuses for the inability to balance the budget. My point is that Prop. 13 has never slowed them down and that this excuse is not valid. You're quite correct that the State has taken money from local government in order to attempt to keep up the pace of per capita inflation adjusted increases in spending levels. The thought of "why don't we see why$371 per capita 1970 dollars sufficed in 1978 and \$538 per capita 1970 dollars are insufficient now" has never entered the minds of those elected to serve us.

CA is still #12 in per capita tax burden so it's not as if we're at the bottom of the heap. And local taxes (sales, business, etc.) are extraordinarily high as well.

The fact is that the primary message ("you do not have a blank check") has never been received by our State government.