CA Can No Longer Afford Prop 13 Revenue Raising Constraints
It's heresy. Throw the bum out. He's stepped on the third rail of politics in California. Am I an alarmist or realist? You make the call.
It's become impossible to wake up every morning and not hear about the lingering and worsening California budget crisis. This has been going on for at least three years, and there is no end in sight. Every day Californians wake up and wonder will it be cuts to public services, health services, child food and care programs, helping those in need, or education cuts. Perhaps we should all stay in bed and hope that, like Dorothy in the Wizard of Oz, we wake up in Kansas. The Kansas estimated budget shortfall for the upcoming fiscal year is $493 million. In California, the reported deficit is $25 billion, but we know it will be another $25 billion right after a budget passes for 2011-12 because of gimmicks used each year to close the loophole.
Proposition 13, the Holy Grail of property tax policy created by Howard Jarvis and passed by the California voters in 1978, has denied local communities the tax revenues needed to have the opportunity to improve schools. Here are some statistics on how Prop 13 has negatively affected education spending in K-12 through the 2009-10 school year. It comes from a recent study by the California Budget Project (see: http://www.cbp.org/pdfs/2010/1006_SFF_how_does_ca_compare.pdf).
- California’s schools ranked 44th among the 50 states in K-12 spending per student, spending $2,546 less per student than the rest of the US for the 2009-10 school year
- California ranked 46th in education spending as a percentage of personal income
- California ranked 50th in the nation with respect to the number of students per teacher
- California averaged 21.3 students for each teacher in 2009-10, more than 50% larger than the rest of the US, which averaged 13.8 students per teacher.
The 2009 Nation's Report Card, a national assessment of education achievement, (see: http://nces.ed.gov/nationsreportcard/pdf/main2009/2011455.pdf), shows a decline in both reading and writing from 1992 to 2009. The lack of an adequate education is not just a California problem, but it is most pronounced in the Golden State. The Prop 13 tax revenue cap is not the sole reason educational achievement lags in the state. Spending more money alone will not solve the problem. Somehow we need to (re)create the work ethic and discipline that is critical to education achievement. It starts at home supported by a culture of accomplishment and excellence -- a core value that no longer exists in the US.
Recently, there have been suggestions to tinker with Prop 13 limits on property tax revenues. Right now, real property is reassessed only when sold or transferred and between sales; the assessed value can be raised no more than 2 percent a year plus the value of improvements. Excluded from reassessment are transfers between spouses. A number of possible amendments to Prop 13 have been floating around for years. One possible amendment is to tax commercial property periodically on its resale value, not when there is a change of ownership. That's a good idea because creative accountants can obscure real ownership changes.
The bottom line is more revenue must be raised through a Prop 13 repeal or, at least, an amendment that provides substantially larger resources for local governments so they don't have to go hat in hand to Sacramento each year to fund public services thereby increasing the state's budget deficit. Even if the additional revenues do not contribute to higher achievement by California kids, we owe it to them to better fund K-12 education.
Another possible answer is to turn over operation of failing public schools to private entities such as the Edison Project and charter schools. Dozens of schools in California have been privatized. The results are unclear. Privatization is no panacea because studies show parental involvement more than anything else enables such entities to achieve higher education goals than in public schools. There is no excuse for the lack of parental involvement although a two-wage-earner parent home has replaced the one wage-earner model so prevalent up until the 1990s. Perhaps not so coincidentally, that is when education test scores started to decline.
Blog by Steven Mintz, aka Ethics Sage, April 11, 2011
Cartoon reproduced with permission.