Last Tuesday was not the first time California’s political class was rattled by an unexpected election outcome.
Virtually every major California political figure, Democrats and Republicans alike, opposed Proposition 13, the landmark property tax limit, when it appeared on the June 1978 ballot, and they were shocked by its landslide approval.
Jerry Brown, the state’s young Democratic governor, was seeking a second term that year, and having denounced Proposition 13 as “a ripoff” before the election, scrambled to realign himself with the anti-tax mood of the electorate.
He quickly proclaimed himself to be a “born-again tax cutter” and sponsored a state income tax cut that Democratic legislators, who’d also been spooked by Proposition 13, just as quickly enacted.
“No new taxes,” Brown declared. “Voters have told us they want a tax cut. They don’t want a shell game.”
Brown didn’t stop there. Sensing that what came to be known as the “tax revolt” would reverberate nationally, Brown launched a second bid for the presidency in 1980 as an advocate of a constitutional amendment to balance the federal budget.
Brown couldn’t catch the wave that year, but Ronald Reagan, his Republican predecessor as governor, rode it into the White House. The rest, as they say, is history.
Fast forward to 2016.
The state that fired the first salvo in the tax rebellion has undergone a massive socioeconomic and political evolution since then and may be on the verge of surrendering as its voters embrace billions of dollars in new taxes.
Last week, California voters approved an extension of surtaxes on the state’s highest income residents, first adopted temporarily in 2012, that Brown – no longer a “born-again tax cutter” – proposed to deal with a state budget crisis.
Even though the budget is now balanced, and may not need the extra taxes to remain so, voters approved the extension (with Brown remaining officially neutral) that could generate $100 billion-plus over its 12-year life.
Voters also approved a $2 per pack hike in taxes on cigarettes – another tax that most of them won’t be paying – and in dozens of communities around the state endorsed local tax increases and bond issues that will automatically increase property taxes to repay.
Michael Coleman, who maintains a website devoted to California government finance, calculated after the election that 80 percent of the 430 tax and bond measures won voter approval, including most that required more than simple majority votes to be enacted.
The success of tax and bond measures this year emboldens unions and other liberal groups that have long opposed Proposition 13’s property tax limits and California’s other tax restrictions, such as supermajority vote requirements in the Legislature and local governments.
Initially, Proposition 13 opponents were planning to put a modification of the iconic measure on this year’s ballot, one that would remove its property tax limits for commercial property. However, they held off because the income tax extension, with many of the same backers, was headed for the ballot and they didn’t want to muddy the political waters.
There’s little doubt that in 2018, or more likely 2020, another effort will be mounted to change or even repeal Proposition 13. It will be a very expensive battle pitting unions against business – and the ultimate test of whether California’s tax revolt has run its course.