The Fiscal Initiative of Proposition 13 essays

The Fiscal Initiative of Proposition 13 essays The popular initiative process has played a role in the evolution of a stronger state presence in local affairs. At the beginning of the twentieth century, the California Constitution was modified with a series of measures approved by the voters that reflected the "progressive" mood of the times, including the initiative, referendum, and recall system. These provisions have significantly influenced the state's fiscal health. State fiscal policymakers find themselves setting policy in response to major policy changes approved by the voters and brought to them by a parallel policy-making process often sponsored by narrow interests that have failed to accomplish the same objective in the legislative process. Perhaps the most famous fiscal initiative was Proposition 13, "The People's Initiative to Limit Property Taxation," proposed by anti-tax activists Howard Jarvis and Paul Gann. This 1978 initiative capped the local property tax rate at 1 percent of full cash value, originally set at 1975 market value, and provided that the assessed value of a property could only be increased to reflect the sale or new construction of the property. Overall annual increases in assessed value for individual properties are capped at 2 percent or inflation, whichever is less. To prevent the legislature from increasing state taxes to cover the loss in local property taxes, Proposition 13 raised the vote threshold to increase a state tax from a majority vote to two-thirds of the legislature. This threshold remains in place today. Proposition 13 severely limited local services financed by the property tax, particularly for schools, and transferred much of school funding to the state. In 1988, California vo ters approved another initiative, Proposition 98, which guarantees a minimum level of state revenues and property taxes to be provided to K-14 education. Some analysts contend that Proposition 98 is a ceiling rather than a floor for education spending. A...