Until something is done about the effects of Proposition 13 on the ability of the state of California to deal with this crisis, it is just band-aids and make-up. That is the straight jacket the state finds itself it and it is constricting the breath out of the population. Until that straight jacket is removed, normal activity will be impossible.
from wikipedia
On the State tax structure
Proposition 13 has introduced major problems of equity and efficiency into the state's tax structure.[14] An analytical approach to examining a tax policy is to apply the traditional principles of taxation, including equity, allocative efficiency, revenue yield/elasticity and administrative and political feasibility. Equity reflects the basic values of how society determines different groups should be treated; these values include horizontal and vertical equity, ability to pay and benefits received. Allocative efficiency refers to the ways in which a tax policy influences changes in private consumption behavior. Revenue yield and elasticity refer to whether revenue from a particular policy has the capacity to increase in the future to meet citizens' expectation for services. Lastly, administrative and political feasibility refer to whether a government can implement and enforce a tax policy with reasonable effort and without excessive political resistance.
Proposition 13 freezes the value of properties at the time of purchase with a possible 2% annual assessment increase. Therefore, properties of equal value have a great amount of variation in their assessment, even if they are next to each other.[4] Assuming the price of a house determines a person’s wealth (and therefore ability to pay) and benefit received, this feature leads owners who purchased similar properties at different times to pay different assessments, without regard to ability to pay[clarification needed] or benefits received.[4] Overall, these qualities create what some[who?] see as serious inequities and a potentially regressive tax structure.[15] The imbalance between state spending and state tax revenues had contributed to near constant budget crisis that has pushed the state to near bankruptcy and deadlocked the political system.[citation needed]
[edit]On cities and localities
Proposition 13 disproportionately affects coastal areas, such as Los Angeles and the Bay Area, where housing prices are higher, relative to inland communities with lower housing prices. According to the National Bureau of Economic Research, more research would show whether benefits of Proposition 13 outweigh the redistribution of tax base and overall cost in lost tax revenue.[12]
Cities and localities have become more dependent on state funds, which has increased state power over local towns and cities.[4] The state provides "block grants" to cities to provide services, and bought out nearly all local county health and welfare centers.[16]
Local governments have become more dependent on sales taxes for funds, which some maintain has resulted in poor land planning, and has made cities encourage more retail stores and "big box" outlets. The jobs and ongoing sales tax those stores provide may discourage growth in other sectors and job types that may provide better opportunities for residents.[4][16] In addition, cities have increased fees to make up for the shortfall, with particularly high fees levied on developers creating new houses or industrial outlets.[16] These costs transfer to the building's buyer, who may be unaware of the thousands in fees included in the building's cost.[16]
California public schools, which in the 1960s had been ranked nationally as among the best, have fallen to 48th in many surveys of student achievement.[17] Some [18] have disputed Proposition 13's direct role in the move to state financing of public schools, because schools financed mostly by property taxes were declared unconstitutional in Serrano vs. Priest, and Proposition 13 was then passed partially as a result of that case.[16] California's spending per pupil was the same as the national average until about 1985, when it began dropping, which led to another referendum, Proposition 98, that requires a certain percentage of the state's budget to be directed towards education.[4]
Public libraries have seen a decrease in funding from cities.[16] Fire departments were gutted because of a drastic loss of funds.[citation needed] Police departments received generally the same amount of funding, from 15% in 1978 to 16% in 1995.[16] Cities also cut water, gas and electricity expenses.[16]
California localities have taken measures to offset Proposition 13 revenue losses. Some newer cities or established cities experiencing rapid population growth such as Irvine and Roseville have carefully incorporated sales tax revenue generators into their city's general zoning plan, while others have used eminent domain and redevelopment laws to condemn blighted residential and industrial properties and convert them into sales tax generators such as shopping malls, multi-dealer "auto malls" such as the Cerritos Auto Square, and strip malls anchored by big-box stores such as Costco and Wal-Mart. Cities that have been notably successful with this strategy include Cerritos, Culver City, Emeryville, and Union City. However, the spread of big box retail is considered another major factor behind California's severe housing shortage, as cities have routinely rezoned vacant parcels and "blighted" neighborhoods for retail in an attempt to increase their share of the sales tax pie. With developable land made scarce by open space preservation laws and by the resistance of single-family homeowners to up-zoning, the resulting market pressures have led to urban sprawl that has brought formerly rural areas like the Antelope and northern San Joaquin Valleys into the urban areas of Los Angeles and San Francisco, respectively.
[edit]2008-2009 Budget Crisis
The two-thirds majority requirement to pass a budget and the cap on property taxes limits the legislature in raising taxes. In the 2008–2009 California budget crisis some legislators claim these restrictions have prevented Governor Schwarzenegger and a majority of California legislators from raising taxes on property owners. The budget crisis required drastic cuts in state services. Matt Welch and the Reason Foundation at Reason[19] and Chris Reed at the San Diego Union Tribune,[20] have argued that unbridled spending, rather than the tax cap, is the cause of California's budget crisis. (It was Jarvis' intention to curb government spending with Proposition 13.)[5]
In response to the budget crisis, citizen groups have been organizing to repeal Proposition 13.
One can compare Prop 13 to a person who does not eat enough proper foods and is constantly losing weight, is almost skeletal, and cannot perform normal physical functions of living and work. A radical whacko doctor keeps telling them all will be fine as long as they do not over exert themselves. Avoid situations in which you can get hurt because you are so thin. Rest and relax and try not to burn so many calories. Every other reasonable doctor would tell them to increase their caloric intake and put on some pounds so their health is not in danger and they can function like a normal person.