Proposition 13 and Its Impact on Local Government Programmes in California

Abstract

In July 1978 the California Legislature passed a far-reaching and controversial law, popularly known as Proposition 13, which greatly reduces the State revenue from property taxes. This article examines the reasons for the growing discontent with property taxation which has received nationwide support in recent years. Major changes in property taxation under Proposition 13 are reviewed and the implications of a declining property tax base are assessed for cities, counties and special districts in California. Proposition 13 has clearly resulted in a serious reduction of some services and the elimination of others depending on the priority which local governments give to the various services. There is also a trend for local governments to ensure that charges for services now reflect the true cost of providing them. Although individual home-owners and businessmen have benefited considerably from reduced property taxes, the full impact of the revenue loss on programmes of local government spending has still to be felt because of the support funds supplied by the State Treasury. These funds have effectively shifted the tax burden from a local to a State level and temporarily delayed the time when local governments must come to terms with the real and very substantial revenue loss mandated by Proposition 13.