Lasting Impacts of Prop 13

The issue of property taxes in California and how they should be allocated has been an ongoing fight and was on full display in Claremont. On Friday, representatives for the state and redevelopment agencies met in Claremont to discuss the allocation of property taxes to redevelopment agencies. The California Legislature passed two bills for the 2011-12 fiscal year, one which “eliminates redevelopment agencies altogether, but allows cities to continue some form of redevelopment agency or go without,” and another which “forms an alternate redevelopment agency for cities that decide to continue with redevelopment. However, they will be required to pay 40 percent of its revenue to the state.”
The constitutionality of both bills is being challenged in the California Supreme Court starting November 10, but the most relevant part of this story to the class is this example of an unintended consequence of Proposition 13 and other California tax laws. Prior to these two bills, the reallocation of property taxes to redevelopment agencies “cost the state $2 billion annually to backfill the loss of property tax to schools.” Prop 13 greatly reduced property taxes that residents had to pay, which at the same time reduced the amount of money available to local schools. Due to other previous California laws, the state has had to pay for education from general fund, which would normally be paid for by property taxes. Marianne O'Malley with the Legislative Analyst's Office said that, “Every dollar redevelopment redirected from schools is a dollar that the state has to dip into the general fund to provide to local school districts,”
Overall the long lasting impacts of Prop 13 and other tax related laws are currently causing problems for California and have been magnified by the economic difficulties facing the state. Less property taxes plus property tax revenue being diverted to redevelopment agencies equals less local money for education, causing the state to cover more of the costs. For the full article on the Claremont discussion here is the link http://www.sgvtribune.com/news/ci_19218133