Prop 13 is the third rail of California politics that is choking the state.
Until someone is willing to grab the nettle and fix the property tax situation to be fair and equitable to everyone then California cities are eventually going to run out of money to maintain infrastructure.
> Proposition 13 (officially named the People's Initiative to Limit Property Taxation) is an amendment of the Constitution of California enacted during 1978, by means of the initiative process, to cap property taxes and limit property reassessments to when the property changes ownership, and to require a 2/3 majority for tax increases in the state legislature.
The insidious part is that commercial real estate in California is paying the same rates as they were when the building was built, despite the fact that the value of the building has increased many times since and the building "changing" ownership many times since.
The second insidious part is that because of the enhancements to the tax code over the years it's possible to continue to pay 1978 property tax rates in perpetuity, and even pass those rates on to your descendants. You can even transfer those super low rates to a new property in some cases.
New buyers get screwed because they will be paying at today's rates. So you could be paying 10x more property tax as your neighbor for the same city services.
Public employee unions are the third rail of California politics that are choking the state. Central Valley farmers are the third rail of California politics that are choking the state. High-speed rail is the third rail of California politics that is choking the state. Free government services for illegal aliens are the third rail of California politics that are choking the state. We have plenty of rails, take your pick.
Fairness and equity are highly subjective. If you ask any Californian they will say that someone else should pay higher taxes. I support reform of the property tax system in general but let's not forget what triggered Proposition 13 in the first place: it was a taxpayer revolt against uncontrolled and unaccountable increases in local government spending. So any reform will still require an effective means of constraining government budgets. Otherwise we'll just end up back where we started.
Prop 13 may be a part of the problem, but not the biggest. The biggest problem is the same as all the other cities without prop 13 in the country that have budget issues: pensions.
A lot of government officials abuse the system and get exhorbidant pensions, especially when early retirement options start at 50.
Until someone is willing to grab the nettle and fix the property tax situation to be fair and equitable to everyone then California cities are eventually going to run out of money to maintain infrastructure.