It Begins: California Agrees on 'Compromise' to Change Proposition 13

It Begins: California Agrees on 'Compromise' to Change Proposition 13

On Tuesday, legislators, business groups and tax reformers reached a compromise to change part of California’s Proposition 13, the legendary restriction on property taxes passed by referendum in 1978. At the time, Prop 13 heralded the beginning of an economic turnaround for California, as well as the beginning of the nationwide “Reagan Revolution.” Democrats, however, have increasingly seen it as an obstacle to their spending goals.

The Sacramento Bee reports that the State Assembly Revenue and Taxation Committee voted to approve a change in the way Proposition 13 treats commercial property. The new provision would allow a commercial property’s value to be reassessed when 90% of that property changes ownership in a three-year period. The new amendment would not include incremental changes such as the buying and selling of stock, however.

Despite strong and enduring support–even in liberal California–for Prop 13, there is also broad bipartisan support for changes to the way commercial properties are assessed. A Field Poll in April showed that 69% of California voters would approve of reassessing business properties when they change hands. Some critics, however, worry that any minor changes to Prop 13 could herald far greater changes in the future–and tax hikes.

Economist Arthur Laffer recently wrote at Breitbart News that Jerry Brown–California’s governor in 1978, and again today–was Prop 13’s “secret best friend” at the time. “The state government Governor Brown headed created a near panic among homeowners by sending out notices of huge increases in property taxes prior to the election. Without him, Prop 13 never could have won the election by a 2-to-1 margin,” Laffer recalled.