Proposition 13
Proposition 13 was passed in 1978. It cut California property taxes by 30 percent and capped the rate of increase in the future. It still arouses strong passions for and against, but the pro and con viewpoints seem to me to miss the most significant effect of Prop 13. That effect was identified by the Santa Cruz City Manager, Richard Wilson, who wrote, "In 1978 Proposition 13 reconstituted the financial structure of California's public sector. The result was system change, from one in which the State, counties, cities, special districts, and school boards all made independent financial decisions to one in which the State is the only financial decision maker of any consequence".

This is the reason why all of California's municipalities are in trouble along with the state. Since the passage of Prop 13, the state has increasingly taken revenues historically dedicated to local government for itself. During the boom, an adequate amount was returned to municipalities. Now, with the bust and concomitant deficits, that money won't be returned and local governments will be forced to make significant and painful budget cuts. So we should expect local services and infrastructure to decline noticeably in the next few years.

Yet another example of the law of unintended consequences. It's why good policy - the wonkish, obsessed with both minutiae and outcomes, boring-as-hell kind - is so important and so critical. The devil really is in the details. California's rising property taxes and spending did desperately need to be reined in the late '70's. But Prop. 13 wrecked California's school system and transferred fiscal control from local to state government. It's worth analyzing what went wrong and what better approaches could have been taken, because those lessons could be applied today. Maybe we could find a better way to hold down property taxes, revoke Prop 13, and even transfer control over local collected funds back to the localities where they were collected. It's never too late for good policy.

Oh, and the idea of deficits being concomitant with the bust isn't quite true. Our huge state deficit can't be blamed on just the economic downturn. Good policy and realistic planning would have ameliorated the effects of the bust. Unfortunately, our Governer and the Legislature elected to go on spending as if the boom would continue forever. I'd like to oppose the recall initiative because it's just a ploy by the Republicans to get Arnold into office two years early, but Gray Davis fully deserves it. Too bad there's no way to recall the legislature as well.