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A Prop 13 lawsuit, borne out of the Prop 8 case

Community/Meta Prop 8

By Adam Bink

Those of you from or in California are likely to be familiar with it, but Prop 13 was a ballot initiative passed by the voters in 1978 severely limiting the collection of property taxes as well as state government’s ability to raise revenue through tax increases. You can read long essays about the result, but the bottom line is that it has hamstrung all kinds of public services, especially schools, and led to all kinds of “fees” to avoid tax increases because of the political difficulty in moving them through.

What’s interesting is that yesterday, a lawsuit was filed challenging Prop 13 on the grounds that it was improperly enacted… and its backers say their inspiration came from the Prop 8 case (though one of its backers appears to oppose Judge Walker’s decision). LA Times:

What if the most basic facts of California politics and government were suddenly upended? How different would the political life of this state be if the constitutional requirement that tax increases can only be approved by a two-thirds “supermajority” of the Legislature went away, and instead a simple majority could do the job?

That provocative possibility has seemed beyond imagination ever since 1978, when Californians approved Proposition 13, the landmark initiative whose chief aim was to lower and control property taxes but that also imposed the two-thirds requirement, making it much more difficult for the government to raise all taxes. Now, after three decades of accepting the conventional wisdom that Proposition 13 changed life forever, a potentially blockbuster lawsuit challenges that assumption: The suit argues that the measure was improperly approved and should be stricken from the books.

The case is no gimmick. It’s brought by Charles Young, the longtime and highly regarded former chancellor of UCLA, and the lawyers are led by William A. Norris, a retired U.S. 9th Circuit Court of Appeals judge and a leader of Los Angeles’ civic and legal community. Norris came up with the idea, which struck him after reading the California Supreme Court’s ruling that upheld Proposition 8, the voter-approved ban on same-sex marriage.

The issue in that case was whether the proposition was an “amendment” or a “revision” to the California Constitution. The former only requires a majority vote of the people, while the latter needs a supermajority vote of both houses of the Legislature as well as a majority of the public. That’s because amendments are defined as “an addition or change within the lines of the original instruments,” but revisions go further. A revision is considered a “change in the basic plan of California government,” which alters the power of any branch or the relationship between them.

In analyzing Proposition 8, the state Supreme Court, led by Chief Justice Ronald George, laid out those definitions and concluded that the measure was properly thought of as an amendment, for though it did great and noxious damage to the rights of gay Californians, it did not reach the structure of government itself. Reading the court’s opinion in that case, Norris said he had two reactions.

“I thought the outcome was correct … even though I didn’t like the outcome,” he said in an interview last week. “And I was intrigued by Ron George’s review of the various California Supreme Court cases over the decades on the distinction between an amendment and a revision.”

That started Norris thinking: Was Proposition 13, which was passed as an amendment, really a revision? He acknowledges that his colleagues at the law firm Akin Gump, where he now practices, were skeptical at first, but they set to work researching the question.

Passed at a time when property taxes were sharply on the rise and California was running a surplus, Proposition 13 limited property taxes to 1% of a property’s value and restricted the annual increases on assessed values. Those provisions seem like a traditional amendment — they change or add specific rules within a larger constitutional set of provisions. But Proposition 13 also required that “any change in state statute which results in a taxpayer paying a higher tax” must be approved by two-thirds of both houses of the Legislature.

That language has had a profound impact on the power of the executive and the Legislature. The power that it constrains — the authority to raise public funds — is among the most fundamental of government. And the requirement gives more weight to some legislators — and, by extension, their constituents. As the lawsuit notes, “legislators opposing a tax increase are given the functional equivalent of more votes than those legislators who favor such proposals.”

The result is that Proposition 13 has altered power in the Capitol and appreciably weakened the ability of the Legislature to pass new taxes, which sounds an awful lot like a “change in the basic plan” of state government. It also has had important political consequences. Because Republicans hold just over one-third of the seats of both houses, they have enough votes to block any tax increase if they band together; those willing to break ranks on tax increases have leverage to get their legislation or projects approved. If the necessary margin were changed to a simple majority, Republican power would evaporate overnight.

Given the sweep of its implications, the lawsuit filed by Norris and his associates would impose a stern burden on the Supreme Court if it finds the logic compelling. Not only would the court be faced with invalidating an enormously popular blockade against tax increases, but also with wiping out a system that has governed California for more than 30 years.

11 Comments

  • 1. Alan_Eckert  |  December 27, 2011 at 11:10 am

    I had to make sure I read it correctly because I forgot about the "amendment vs. revision" kerfuffle. I would have to crunch numbers to see how the removal of Prop 13 would affect me, but I imagine it would increase my taxes dramatically.

  • 2. jpmassar  |  December 27, 2011 at 11:14 am

    If it ever were declared unconstitutional via this route, legislation that protected homeowners against massive, immediate increases in property tax would almost certainly be proposed and passed.

  • 3. Kate  |  December 27, 2011 at 1:04 pm

    Not good. Prop 13 needs to be modified by excluding commerical/business/church properties (a huge loophole that should have been closed immediately), not eliminated. There are many, many of us in the state who would suffer tremendously were we to suddenly lose the protection we've had over years.

  • 4. Bob  |  December 27, 2011 at 1:25 pm

    Prop 13 is an obnoxious piece of anti-government legislation. It needs to go. There's a great deal of irrationality in the system it created, not only in terms of how it inhibits the function of government but even in the way properties are assessed. After all, I always I thought it was axiomatic that properties of equal value should pay about the same in taxes; under Prop 8 the assessed value of a property has little to do with what that property might sell for on the market and a great deal to do with how long it's been since the property was last transferred. There's something intrinsically unfair when two identical houses, sitting adjacent to each other have completely different assessed values simply because on hasn't been sold in 30 years while the other one changed hands in 2006 (or whenever). All other things being equal, both should go for about the same amount if they were put up for sale.

  • 5. Alan_Eckert  |  December 27, 2011 at 1:38 pm

    The major underlying factor is that there would be a large number of people who would not be able to afford where they currently live if their property taxes went up considerably based on the current value.

  • 6. Chris in Lathrop  |  December 27, 2011 at 3:09 pm

    Protection for homeowners is a must in this case, else we risk further damage to the state economy through more foreclosures.

  • 7. RWG  |  December 27, 2011 at 3:18 pm

    Prop 13 was a prime example of the philosophical underpinnings of the Reagan revolution, which held that "government was the problem". It was a fundamental attack on the New Deal and the concept of a united citizenry, working through its government, solving the great problems of the day. The overturn of Prop 13, while it may be problematic for some homeowners (massive tax increases are not automatic, don't panic), it would be one of the final nails in the coffin of the cultural conservatism which has done so much damage to American life for the past 35 years.

  • 8. 415kathleenk  |  December 27, 2011 at 3:25 pm

    I think Prop 13 was one of the most irrational pieces of legislation ever enacted and i would love to see it go away and some sort of reasonable taxation return to California so we can support the bloody goverment and all the services that go along with it as well as returning to some rational way of the CA legislature enacting a yearly budget. That said, no i do not want my property taxes to increase dramatically nor do i want more people kicked out of their homes That would not help anything. The key word here is rational. I really hope this lawsuit goes forward. Its about time,

  • 9. jpmassar  |  December 27, 2011 at 3:25 pm

    One possibility would be that the CA Supreme Court ruled that the 2/3rds vote rule to raise taxes was unconstitutional, but that the limitations on property tax increases per year were legal.

  • 10. Martin Pal  |  December 27, 2011 at 3:39 pm

    From the article: "its backers say their inspiration came from the Prop 8 case (though one of its backers appears to oppose Judge Walker’s decision)."

    Unless I mis-read, I think it's the CASC decision abuot the amendment vs. revision he was disappointed in, not Judge Walker's.

  • 11. Adam Bink  |  December 28, 2011 at 6:10 am

    Oh, I think you're right.

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