"Property Tax Reform in the Big Picture"
Paper Delivered at the Conference on Land, Wealth, and Poverty
The Jerome Levy Institute, November 3, 1995
What happens when a state radically slashes its property tax?
Michiganders are saying they must wait and see, but there is no
need for that: California can show you 17 years of experience.
read your future, just study our past.
Here is what has happened
since California passed Proposition 13 in 1978.
The obvious direct results have been to cut public services,
raise other taxes, and lose credit rating.
Our school support
fell from #5, nationally, to #40 in 1985 when last seen, still
County road maintenance is down to where my county
(Riverside) is repaving its roads at an annual rate of once every
Once in 20 years is recommended here, and up north you
generally need higher frequency.
You can't just build
infrastructure and then stop paying for it, it's a perpetual
Thanks to urban sprawl, a high fraction of our
population now depends on these county roads.
In 1978 we had a surplus in Sacramento.
Since then we have
raised business taxes, income taxes, sales taxes and gas taxes,
but go broke every June.
Now our State bond rating is last among
One of our richest counties (Orange) has gone
bankrupt; Los Angeles is on the brink of it, saving itself by
closing emergency rooms and hospitals that serve as a last resort
for the uninsured poor.
The private sector is doing badly, too.
taxes, business taxes, and sales taxes is no way to stimulate an
economy; they are all a drag on work and enterprise.
pc was down from #7 to #12 among the states by 1992, then fell
From 1992-94, California was one of three states where
median household income fell.
Our unemployment rate is 9%, 50%
higher than the national mean of 6%.
Our poverty rate is 18%,
compared to 14.5% nationally.
Not surprisingly, therefore, the
only government function that grows now is building and operating
One of our few rebounding industries is cinema, the art
of escaping from reality: we excel at that.
activity is that of auctioning off used machinery for export to
In 1993 there was net outmigration (including international
migration) from this state that has symbolized American growth
since time immemorial.
It is unheard of.
426,000 people were