THE LEONARD LETTER
A weekly electronic newsletter from Bill Leonard, Member State
Board of Equalization June 9, 2003

"The greatest leader is not necessarily the one who does the greatest
things. He is the greatest leader who gets the people to do the greatest things." Ronald Reagan

***Happy Anniversary, Prop. 13***

It is hard for me to imagine that June 6th marked the 25th anniversary of the passage of Proposition 13 --- and also my first primary win for elected office. I read a retrospective series in the Sacramento Bee and was disappointed to see that critics of Proposition 13 are taking advantage of tough economic times to haul out tired, old canards that the initiative is the cause of everything bad in California -- from the lack of housing to financially strapped schools to bad breath and the lack of cure for the common cold.

If you need evidence why the initiative was needed, Dave Doerr documents in his book, California's Tax Machine, the tax-and-spend climate that caused the revolt: In 15 years, from 1950-51 to 1965, property tax levies had quadrupled from $791 million to $3.367 billion. The average tax rate jumped from $5.81 per $100 of assessed value to $8.53. By 1977-78, the fiscal year in which Proposition 13 passed, the tax take was $10.276 billion, with an average tax rate of $10.68 per $100 of assessed value. These staggering increases showed that government's appetite for revenue had to be reigned in.

Proposition 13 had four key elements. It established that the property tax rate could not exceed 1 percent of specified value. It set up a formula for assessments - the assessed value could not exceed the 1975-76 assessed value but could be increased by the percentage change in the consumer price index, but not to exceed 2 percent. When property changed ownership, it could be reassessed at its current market value. The initiative also established that state taxes could only be increased by a two-thirds vote of the Legislature and local special taxes approved by two-thirds of the electorate.

The best thing about the initiative was the provision that controlled assessment increases on property. This directly addressed the driving concern of the tax revolt. After its passage, Ronald Reagan called Proposition 13 a prairie fire burning across the land. As president he went on to cut marginal income tax rates substantially enough that it helped launch the longest peacetime expansion of our economy, ever. More importantly, 25 years after the passage of Prop 13, the question that is being asked with regard to tax cuts now is not whether to do it, but rather, 'how much?' I even read last week that the Democratic governor of Washington State, Gary Locke, is going to propose a tax cut that he says, "will make legislators gulp."

To what extent Proposition 13 is responsible for such tectonic shifts in our culture is debatable. But I smiled when I read in the Bee piece this about a Sacramento retiree: "For her, Howard Jarvis and Paul Gann - the two late authors of the landmark 1978 property tax initiative - are among 'the only people that ever really mattered in life.'"

I was pleased to sign the petition and campaign for the initiative in 1978 and I am proud to have fought along side both Howard Jarvis and Paul Gann for the benefit of the people. They were two good men who are very much missed today.

The complete current issue of the Leonard Lettter

 Email to: Bill.Leonard@boe.ca.gov