PROPOSITION 218 Essays - Property Taxes, Politics Of California

PROPOSITION 218 Essays - Property Taxes, Politics Of California PROPOSITION 218 Introduction California voters have spoken again. On November 6, they passed (56%) Proposition 218, marking the continued fiscal conservatism of the state's electorate and their frustration with what has been characterized as the arrogance and inefficiency of government. (SF Chronicle Staff, SF Chronicle: 11/6/96). As Bob Therrien of Ventura stated in his letter to the LA Times "Prop 13 and Prop 218 are the direct result of taxpayer abuse by our elected officials. Its time for government to do some serious soul-searching as to its duties, including the right of the people to have minimum intrusive government." (Therrien, LA Times, 10/13/96). There are two primary political impacts of Prop 218. The first is to take the power to levy taxes and assessments out of the hands of local government and put it into the hands of the general populace, and the second is to strengthen the control of the State government over local affairs. In essence, combined with Prop 13, local government officials have been told by its citizenry - here's a level of taxes, fees, charges and assessments you can collect from us without asking our permission for more. Mechanically, this is somewhat debilitating because getting voter approval is a slow and, often, expensive process. The schedule of elections does not allow for a rapid enough response to deal with the speed of today's demands. A case in point has already occurred in the City of Inglewood where the City has pulled back its offer to help finance a sports arena because Prop 218 knocked out taxes needed to support this effort and it would not be able to go before its voters until April 1997. This has given the City of Los Angeles "a leg up in getting a new sports facility at its downtown Convention Center" and may cause Inglewood to lose both the Lakers and the Kings, which would result in a significant negative financial impact. (Belgum & Merl, LA Times: 11/8/96).! In another example, the City of South Pasadena decided to cancel a special election for a utility tax which was scheduled in December and would have cost $25,000. (LA Times Staff, LA Times: 9/20/96). The LA Times, in a post-election article raised an interesting point when it said " the legislature and the governor must come to terms with the huge new burdens put on local governments... Sacramento, now flush with revenues, should help solve the problem by restoring property tax revenues to local government." (LA Times Staff, LA Times: 11/7/96). Although a potential short-term solution, it does give the State government an additional level of control of local government action (the other golden rule - he who has the gold rules) and, in effect, directly contradicts one of the intents of Prop 218's sponsors of putting more control in the hands of the local citizenry. It is my opinion that Prop 218 is another aspect of a developing trend toward a realignment of American society away from a representative democracy toward a desire for a general democracy (whether or not this will really work is another matter altogether). It is part of the citizenry's way of saying to both elected and appointed government officials that government has lost its trust. Background In 1978, the California electorate passed Prop 13 which set property taxes at a maximum rate of 1% of the property's assessed value and limited annual assessment increases to 2% until the property is sold, at which time the assessment adjusts to sales price, or there is construction or improvements to the property. Prop 13 also requires approval of two-thirds of the Legislature to raise state taxes and two-thirds of the local voters to raise special taxes. Since the passage of Prop 13, local government and the State Legislature have devised a number of ways to finance their operations. These have included increasing the use of assessments from capital specific to revenue general, expanding the use of Community Facilities Districts to charge "fees" citywide, and charging user type fees and taxes (i.e. - utility, hotel occupancy). Although challenged a number of times in court, California courts have, generally, upheld these practices. According to lawyers at O'Melveny & Myers (a major California law firm which represents many local governments), after a