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California Direct Democracy- Proposition 13 (Property Tax)

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According to Reilly (2010), direct democracy is defined as elections that allow the public to directly influence policy choices and constitutional amendments. In its ideal form, direct democracy enables citizens to voice their opinions and avails the opportunity for them to contribute to policymaking. In California, direct democracy was born in hope that it would bring citizens closer to the governance process. Contrary to this, it led to audience democracy. On the other hand, propositions are essential ideas that citizens have regarding new laws as well as constitutional amendments. For instance, Proposition 13 was meant to reduce property taxes. This research paper analyzes the impact of direct democracy on California, and how wealthy interest groups have capitalized on it against people’s will. The paper closely examines Proposition 13, a product of direct democracy that has plunged California into fiscal crisis.

In 1911, progressive reformers managed to marshal Californians to change state constitution to enable voters to participate in law making. Callahan (2012) argues that this was conceived in good faith in order to tame wealthy interest groups who hijacked American politics. These interest groups jammed state legislatures with their cronies who implemented their directives at the expense of citizens. Tax reforms, homosexual rights, and environmental issues among others are some of the emerging issues that drew Californians’ attempts to shape policy through direct democracy. Since its birth, direct democracy has grown to become a prevalent force in making of state policies. Consequently, the move has shifted power from the elected representatives to the “parallel legislature” of governing through ballot initiatives (Baldassare & Katz, 2008). However, in a dramatic turn of events, the unintended consequences of direct democracy have taken central stage in California. Most of ballot measures are dominated by the very interest groups they were introduced to overcome. Rich powers routinely pour their fortunes to manipulate citizens to change state laws through ballot measures in favor of wealthy individuals.

California has over a long time faced serious financial problems that are slowly crippling most of state’s services. Besides recess, which has caused tax revenues for all states to plunge, direct democracy, flawed constitution, timid governors, and partisan gridlock in California have largely contributed to the financial crisis in the state. The major factor that has contributed to California’s budget chaos is proposition 13, an anti-tax measure that was passed on June 6th, 1978. Although a struggling economy is a challenge to all American states, California is an extreme case. The state cannot pass budget in record time even in good years. It has fallen from one of the best among the 50 states to the absolute worst just in one generation (The Economist, 2011). The accumulated impact of direct democracy has made America’s most populous state, California, virtually ungovernable. The fabled tax initiative that was adopted by the citizens has defunded all local governments in the state making them largely depend on revenues dispersal from the state government and bail-outs. This ballot measure locked out large portions of California’s budget. This has caused all powers to be shifted from local government and being concentrated in Sacramento.

Proposition 13, officially known as People’s Initiative to Limit Property Taxation, was introduced by the late Howard Jarvis through ballot initiative process. The anti-tax crusader was known for his affinity towards designing deep structural change that stack for a long time in the political system. Once embedded in the system, such changes remain nearly impossible to alter unless there is a massive change in the perception of the voters. California State Constitution outlines the requirement for voter initiative. If advocates of a petition have a sufficient number of valid signatures, the constitution allows constitutional amendment or proposed law to be included on the election ballot. The electorate will then face a distinct choice at the ballot box: to vote for or against (Reilly & Yonk, 2012).

Voters’ revolt in 1978 arose in response to scandals that involved assessors of property tax. Assessors gave tax breaks only to business friends and frequently raised taxes on properties. Jarvis took advantage of the anger of voters over skyrocketing property tax to introduce Proposition 13. As a tax measure, it was meant to reduce property tax rates on farms, homes, and businesses by about 57 percent. It was passed by 65 percent of the electorate in California. In the Proposition, Jarvis included a mandatory two-thirds majority vote in the State Assembly as a requirement for the introduction of any new taxes in California. Since the passage of Proposition 13, state’s liberals and moderates have struggled to live with it. On the other hand, Californians expect them to continue providing state services. Such services include assistance to needy families, freeways, prisons, higher education, as well as essential funding to school districts and local government, several of whom varnished following the passage of anti-tax measure (Leary, 2009).

The birth of the Proposition can be dated back to 1970s, a period during which the value of real estate as well as home assessments escalated rapidly. Consequently, property tax bills rapidly increased as local jurisdictions set out to exploit property owners. Before the introduction of Proposition 13, property tax rate in California was slightly below 3 percent of the market value. In addition, charges could be added by local jurisdictions to well above the market value as no limits had been put in place regarding property taxation. Proposition 13 tax reform rolled back property tax value to the 1976 assessed value level and transferred local jurisdictions to state law makers. Additionally, it limited tax increase to not more than 2 percent per year on any property as long as it was not sold. The Proposition required that the value of any sold property be reassessed at 1 percent of the sale price, but in the future years, the 2 percent yearly charge remained applicable. The Proposition provided property owners with great certainties as well as reassurances. The move allayed fears that gradual increase of tax on properties would eventually tax citizens out of their homes. Following the passage of the Proposition, property owners were able to approximate the amount they will pay in future years as tax on their properties as long as they maintained the ownership (Reilly & Yonk, 2012).

Baldassare & Katz (2008) observe that petitioners further put a restriction to tax addition by introducing a two-third majority vote for local governments’ elections. This enabled people to recall leaders who proposed rise in special taxes. Currently, the debate over the significance of Proposition 13 is one of the most acrimonious political issues in California. The proposition has loosely been referred to as the “third rail” of the populous state politics (touch it and you die). Thus, Proposition 13 greatly restricts unpredictable tax assessments and paralyzes legislature’s ability to compensate for a budget shortfall by limiting its ability to raise taxes in other arenas. Consequently, the elected representatives find themselves powerless in what ought to be one of their roles as people’s representatives. That is, the ability to manage the flow of revenues as well as expenditures in order to cover basic requirements of both local and state government services. In the eventuality that economic downturn triggers a sudden fall in tax, elected representatives are stripped of their tools to act in response to such crisis. In turn, legislatures are left to depend on voters to approve their fiscal recovery plans. Unfortunately, most of the voters have little background understanding of public finance and are always subject to agents of manipulation. Thus, the local government lost all its capacity and authority to govern, and consequently its sovereignty has diminished. In fact, local governments have seized to be what they were, rather they have become “local agencies” that are solely dependent on state policymaking and are mandated by Californians to provide essential services with state’s financial assistance.

Although ballot measures are genuine reflection of people's will, they have become vehicles of policymaking heeled by special interest groups. Bond & Smith (2012) argue that sponsors of most ballot measures have drifted the initiatives from being a legislative process which ought to involve hearings, debates, and compromise. Proponents write extreme measures, which are largely their own agenda engineered to boost their profits, raise their political profile, or simply to gratify their ego. The manner in which the propositions are presented has often led to failure by voters to understand the consequences of initiatives. Most of the propositions are often staffed with lengthy legal jargons that leave most of the voters at sea regarding the consequences of the choice they make. Most of the electorate ends up voting under the influence of the intensive media ads that are usually sponsored by the very interest groups. For instance, while passing Proposition 13, the electorate focused their attention on lower taxes as the reward rather than the impact of their decision on the overarching governmental interest. Reilly (2010) argues that voters wanted to get the value of their money for the taxes, yet they did not understand the consequences of their decision on the ballot. Voters’ poor knowledge on this matter is clearly expressed by the financial crisis that California is currently experiencing. Despite this crisis, opinion polls show that voters still support the Proposition just as they overwhelmingly supported the same in 1978.

Reilly & Yonk (2012) note that Jarvis, who introduced Proposition 13, is not any better than most of special interest groups that have taken advantage of direct democracy. He owned apartments. He is, therefore, a landlord whose motivation for Proposition 13 could have been his own business rather than reforms on property tax. The 1978 move was not Jarvis’ first attempt to change tax laws. It is noted that together with Paul Gann, his seasonal politically ally, he had tried to alter property tax laws several times in vain. The duo was well known for their hatred towards all kinds of taxes. He executed his plan by making voters believe that they were actual victims of the wrongs that had been brought about by poor government policies. Currently, advocates of Proposition 13 argue that the law should stay in place as it allows retirees to continue staying in their own homes. Nonetheless, Proposition 13, which is squarely responsible for Californians' most woes remain intact and strongly guarded.

It is evidenced that there is a need for reforming the out-of-control system of democracy in California. However, the venture has proved to be quite complex and hard to push through. Several people and groups have divergent views on how this can be done effectively. Notably, in order to cure ills committed by democracy, more democracy needs to be put in place. Thus, only ballot measures can efficiently call California back to order. There have been attempts to modify anti-tax measures, but the two-thirds requirement has become an insurmountable obstacle to the passage of any new laws regarding taxes in California. This is due to the fact that the power remains still in the hands of a generation of tax-averse electorate. Additionally, powerful forces in the state that are opposed to any change to the initiative processes have become a real force to reckon with in quest for reforms. Fred Silva who works for the California Public Policy Institute describes the powerful forces in the state as the “initiative industrial complex” (Ulrich, 2012). An attempt in the year 2000 failed to garner the mandatory two-thirds required to amend the anti-tax measure (Reilly, 2010). Finally, to achieve the reforms, it is necessary to reduce the role of money that most billionaires pump in these initiatives. This can be done by enacting stronger campaign finance laws. 

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