The impacts of Proposition 13 upon the California political system: Re-regulating the intergovernmental system

Abstract

Acclaimed or condemned, the Fiscal Limits Movement achieved national prominence with passage of Proposition 13 in June, 1978, broadening its significance far beyond the California local governments whose revenues were immediately impacted. The appeal of the concept of limiting governmental revenues or expenditures spread widely. Thirty-one of the states have now adopted one or another form of a fiscal limit (ACIR, 1980). Recent voter approval of Proposition 2 1/2 in Massachusetts demonstrates the continued allure of such policies, and the election of Ronald Reagan to the Presidency can be interpreted as part of the same movement. Numerous analyses of Proposition 13 and the larger Fiscal Limit Movement have appeared. The causes of the phenomenon have been examined (e.g., Levy, 1979; Oakland, 1979; Pascal, et al., 1979). Responses by state and local governments have been studied (e.g., Doerr, 1979; GAO, 1979; Kirlin, 1980). Analyses of effects of Proposition 13 have included studies of human services (Stumpf and Terrell, 1979), the criminal justice system (Walker, et al., 1980), and land-use decisions by local governments (Chapman, 1981; Chapman and Kirlin, 1979; State of California, 1980). The equity effects of fiscal limits have been examined by Menchik and Pascal (1980). A useful summary of the political and legal responses to Proposition 13 is provided by Lipson (1980), and Danzinger and Ring (1980) review recent research on fiscal limits. In time, analysts realized that fiscal limits such as Proposition 13 were part of a larger movement toward fiscal constraint upon state and local governments. Shannon (1981), for example, contrasted the expanding share of GNP going to state and local governments in the 1960-1975 period with the decline that occurred thereafter. In addition to the spate of fiscal limits imposed in the last half of the 1970s, states also reduced personal income and general sales taxes or indexed the individual income tax during this period. A total of thirty-eight states reduced revenues by one of these methods or by a tax or spending lid during the 1977-1980 period alone (Shannon, 1981). Federal aid to state and local governments also declined in this period.