I RECENTLY RAN INTO A CONSERVATIVE on the east coast. He was a nice enough guy, but the second he found out I was from California he began a rant about the economic crisis on "the left coast".
"The result was a seller's market, rising property values, and increased speculation."
According to him, the problem we face here is the result of over taxation and liberal policies. He saw us as an object lesson to the nation—a warning of the dangers of the "tax and spend" left wing.
But I've lived here since the early sixties, and I beg to differ.
Back then, California was envied by every state in the union. We had the best infrastructure, the best roads, the best college system in the world.
As a result we attracted businesses and our economy boomed.
It really was a golden state, and it had been built, during the fifties and sixties, by liberal administrations.
So what went wrong? How did we get from there to here?
Conservatives.
Ronald Reagan dismantled our system of institutions for the mentally ill, turning them out on the street and creating a population of homeless people who were not capable of fending for themselves.
Howard Jarvis used a public outrage over the assessment practices for property taxes to push through proposition 13—a giveaway to businesses disguised as tax relief for homeowners.
Proposition 13 had several effects:
- It lowered taxes on property, and drastically limited increased assessments as long as the property was not sold.
This was a nice thing for homeowners. Fewer people lost their homes or became tax poor because of rising home values.
But the much larger effect was that the same rules applied to business property. Businesses can hold on to property a lot longer than homeowners, so over the years they're in a position to reap greater tax benefits.
So the idea of buying, and holding, property became a lot more attractive to businesses, while at the same time the fact that moving meant raising your property tax made people think twice about selling. The result was a seller's market, rising property values, and increased speculation. Property taxes no longer acted as an offset to the many savings and incentives to trading in real estate.
The current housing crisis is in part due to Proposition 13. - It cut state revenues—particularly revenues for our education system, which has been struggling ever since. We have constantly had to struggle to keep the very programs that made our state so prosperous alive.
- It created a requirement for a two-thirds majority to levy or raise taxes. This, in turn, made it possible for conservatives to stonewall attempts to balance the budget through reasonable taxation.
But Reagan and Proposition 13 weren't the end of the conservative onslaught.
The saga continued...
