Prop 13 No Longer Looks Quite So Villainous
ALEX CHADWICK, host:
Like Nevada, California has also seen property values plummet over the past year, about 30 percent in just 12 months. But unlike Nevada, California officials are not too worried about a looming collapse in property-tax revenues, and that's because of Proposition 13, passed by angry voters 30 years ago. It limited the growth of property taxes, but it's also meant stability in hard times. NPR's Karen Grigsby Bates reports. It also has meant stability for some property owners.
KAREN GRIGSBY BATES: Jo Ramsey (ph) is showing me through her spacious Hillside home in Los Angeles' View Park neighborhood.
Ms. JO RAMSEY (Resident, Las Angeles, California): This is a Cape Cod, four bedrooms, three baths, family room, formal dining room, kitchen, TV room.
BATES: The living room with its grand piano and gleaning hardwood floors looks out on another amenity she forgot to mention.
Ms. RAMSEY: Oh, the backyard is gorgeous.
BATES: And you've got a swimming pool there.
Ms. RAMSEY: Oh, we've got a black-bottom swimming pool.
BATES: Ramsey, a semi-retired real-estate agent, and her husband Wade, a retired school administrator, bought their home in 1976. That was two years before the tax revolts spurred by the late Howard Jarvis, a Republican activist, put a cap on the state's real-estate taxes. Sitting in her wood-paneled den, Jo Ramsey tells me Prop 13 has been a lifesaver for the state's homeowners.
Ms. RAMSEY: Well, look at the rest of the country, and what those prices are, what those taxes, those taxes are killing people.
BATES: Jo recalls hearing from a friend who relocated to Houston a few years ago in search of more reasonable real estate.
Ms. RAMSEY: She called me, I've moved to Texas. I've got a 39,000-square-foot house and I only paid 200,000 for it. Guess how much the taxes are, 9,500 a year, and she wants to sell it again.
BATES: The Ramsey's paid 69,000 dollars for their two-story home in 1976. They upgraded with the pool and added solar paneling in the mid-'80s. Not long ago, someone offered them 1.2 million for it. Unlike her Texas friend, Jo and her husband pay well under 2,000 dollars in annual property taxes. Critics claim that very comfortable tax rate comes at the cost of support for local municipal staples, like public schools, the police, and fire departments.
But historian and urbanologist, Joel Kotkin, says we have to remember the context in which Prop 13 was birthed. In the late '70s, soaring home prices and rapidly rising property taxes were starting to force many Californians out of their homes, especially those who were elderly or unfixed incomes. Kotkin says Jarvis' Proposition 13 struck a chord in angry anxious homeowners.
Mr. JOEL KOTKIN (Author, "The City: A Global History"): California had prided itself on a fair tax system, that it was not fair for some working-class person who had bought a house for 8,000 dollars in 1946 was suddenly paying three times to that in property taxes.
BATES: So, those people were able to keep their homes, but that had an unintended effect. There's been so little turnover in many areas, that many first time would-be home buyers had been frozen out of the market. Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation, says Prop 13 is an imperfect fiscal compromise, but is proving to be a big help in the current real-estate downturn, because while home prices plummet in some areas, property taxes don't.
Mr. JACK KAISER (Chief Economist, Los Angeles County Economic Development Corporation): Prop 13 is a strange thing. A lot of people feel it caused a lot of problems with local government finance, but in times like these are - is providing a little bit of stabilization.
BATES: Joel Kotkin admits the economic trade-offs are complicated. But, he says, it pays to remember that single-family homeownership remains a magnetic part of the California dream, pulling people from less hospitable parts of the country.
Mr. KOTKIN: What's the point of living in California without having the ability to look at the sun and to be outside, to sit outside and have a barbeque? I mean, if you take that away, why be here?
BATES: Homeowners like Jo Ramsey say Prop 13 has enabled them to pursue that dream, and she is happy with it as it is.
Ms. RAMSEY: Very. And anybody else that's got any sense is going to be happy with Prop 13.
BATES: Wherever he is, Howard Jarvis is probably nodding in satisfaction. Karen Grigsby Bates, NPR News.
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