Once again, California Prop. 13 is ‘on the table’

In the contest to see who will be California’s next governor, political pollsters haven’t given Republican John Cox much of a chance of prevailing over former San Francisco mayor and current Lt. Gov. Gavin Newsom. After all, California remains a fairly progressive state and the Newsom campaign has more money. Cox, to his credit, has closed the gap significantly in recent weeks and stays focused on his message highlighting that California’s government is dysfunctional, and what can be done about it.

Newsom and Cox have had only one debate — which was actually billed as a “discussion” rather than a true debate — and no further debates are scheduled, although Cox has agreed to them. Given his advantages in the race, Newsom appears to be steering clear of anything that could trip him up.

However, their one debate was illuminating in one, troubling respect. In a discussion of tax reform connected to housing, Newsom was asked directly whether Proposition 13 was “on the table.” He answered, “everything is on the table.” This is a comment to send cold shivers down the spines of Californians whose homes are their lifelong and most important investment.

California’s hostility to taxpayers is well established. We have the highest income tax rate in the nation as well as the highest state sales tax rate. Even with Proposition 13, which limits the property tax rate to one percent, California still ranks in the top third of all states in per capita property tax collections. Without Proposition 13, government’s insatiable appetite for more tax dollars would quickly force homeowners out on the street — a common occurrence in the mid-70’s before Prop. 13 was overwhelmingly approved by voters in 1978. It is no wonder then that a recent poll by PPIC showed that Prop. 13 remains strongly popular.

Politicians who threaten Proposition 13 do so at the risk of their careers, which makes Newsom’s oblique comment unusual. Political insiders are puzzling over possible interpretations of his words. The actual exchange with the moderator transpired as follows: “Is Prop. 13 on the table?” To which Newsom replied: “Everything is on the table, as it relates to this issue.” At the time, Newsom was referring to the allocation of property tax revenues so, put in the most positive light, a comment related to adjustments to how property tax revenues are divided among local jurisdictions – a matter left to the Legislature under the terms of Proposition 13 — may be a legitimate topic. But it is not clear whether he intended his statement to be so limited.

Some believe that his “on the table” comment is limited to changing Prop. 13 for business properties while retaining the limits for homeowners. By this, is Newsom supporting the concept of “split roll,” the controversial proposal to raise taxes on businesses by depriving the owners of commercial properties of the benefits of Prop. 13? He has previously stated he is open to the idea.

Another interpretation was advanced by Joel Fox, who publishes the Fox and Hounds blog. He wrote that Newsom might be leaving the door open to a full restructuring of California tax system including a new sales tax on services as proposed by Sen. Bob Hertzberg, D-Van Nuys.

Whatever he intended, Newsom’s willingness to put Proposition 13 “on the table” should concern all California taxpayers. So in deciding which of the two candidates to support for governor, perhaps voters need to ask the most pressing question — how important is Proposition 13 and should we take the risk of losing it?

Jon Coupal is president of the Howard Jarvis Taxpayers Association.