Has California’s tax revolt run its course?
Last Tuesday was not the first time California’s political class was rattled by an unexpected election outcome.
Virtually every major California political figure, both Democrats and Republicans, opposed Proposition 13, the landmark property tax limit, when it appeared on the June 1978 ballot. They were stunned by its landslide approval.
Jerry Brown, the state’s young Democratic governor, was seeking a second term, and having denounced Proposition 13 as “a ripoff” before the election, scrambled to realign himself with the anti-tax mood of the electorate. He proclaimed himself a “born-again tax cutter” and sponsored a state income tax cut that Democratic legislators, who’d also been spooked by Proposition 13, just as quickly enacted.
“No new taxes,” he declared. “Voters have told us they want a tax cut. They don’t want a shell game.”
Brown didn’t stop. Sensing the “tax revolt” would reverberate nationally, Brown launched a second bid for the presidency in 1980 as an advocate of a constitutional amendment to balance the federal budget.
Brown couldn’t catch the wave that year, but Ronald Reagan, his Republican predecessor as governor, rode it into the White House. The rest, as they say, is history.
Fast forward to 2016.
The state that fired the first salvo in the tax rebellion has gone through a massive socioeconomic and political evolution and might be on the verge of surrendering as its voters embrace billions of dollars in new taxes.
Last week, California voters approved an extension of surtaxes on the state’s highest-income residents, first adopted temporarily in 2012, that Brown – no longer a “born-again tax cutter” – first proposed to deal with a state budget crisis. Though the budget is now balanced, and might not need the extra taxes, voters approved the extension (with Brown remaining neutral) that could generate $100 billion-plus in its 12-year life.
Voters also approved a $2 per pack hike in taxes on cigarettes – another tax most of them won’t pay – and in dozens of communities around the state endorsed local sales tax increases and bond issues that will increase property taxes.
Michael Coleman, who runs a website devoted to California government finance, calculated that 80 percent of the 430 tax and bond measures won voter approval, including most that required more than simple majority votes.
The success of tax and bond measures this year emboldens unions and other liberal groups that have long opposed Proposition 13’s property tax limits and California’s other tax restrictions, such as supermajority vote requirements in the Legislature and local governments.
Initially, Proposition 13 opponents were planning to put a modification of the iconic measure on this year’s ballot, one that would remove its property tax limits for commercial property. But they held off because the income tax extension, with many of the same backers, was headed for the ballot and they didn’t want to muddy the waters.
There’s little doubt that in 2018, or more likely 2020, there will be another effort to change or even repeal Proposition 13. It will be a very expensive battle pitting unions against business – and the ultimate test of whether California’s tax revolt is dead.
Dan Walters writes for The Sacramento Bee on issues of statewide significance; reach him at 916-321-1195 or dwalters@sacbee.com
This story was originally published November 13, 2016 at 2:12 PM with the headline "Has California’s tax revolt run its course?."