Tuesday, March 20, 2012

What does Prop 13 have to do with rising college tuition?

Twelve UCLA students sat in the middle of Wilshire and Westwood, the busiest intersection in LA and possibly west of the Mississippi, to raise hell about raising tuition in November 2011. Some were also seeking to raise awareness about the consequences of Proposition 13. Note: the student with the black jacket is my friend and former roommate Renee.
Source: LA Times.
It started this morning when this girl I know from elementary school expressed her anger (nicely put) on Facebook about the Cal State system's decision to temporarily cease admitting students for the spring semester due to fiscal constraints.

Yes, that is pretty upsetting. I get that.

But my ears perked up when the girl went off on cutting "bureaucrat salaries". Not one to rein in my opinions, I pointed out some damning facts:
  1. Most of us bureaucrats (myself included) are not rolling in money, especially those amongst us who are early in our government careers. Most of us work really hard, with little to no prospects for merit raises or COLA adjustments. I work in a public university system because I believe in its academic, research and service mission. This is not sexy talk to say the least. But I'm still young enough (or stupid enough) to be optimistic. 
  2. State support for UC and CSU has diminished substantially over the past 10 years. This year, for the first time, students are making a larger contribution to UCLA operating budget than the state is. While places like UCLA have held the line in the cost of educating each student, the state's subsidy has declined in real dollars, and while philanthropic dollars have filled the void here and there (as UCLA does not provide need-based aid the way private schools do), we've resorted to raising tuition to backfill the difference.
  3. Forty years after its passage, we are now viscerally impacted by the the profoundly devastating effects of Proposition 13 and the way that it restructured public finance and tax revenue generation.
The gist of Prop 13 is summarized here (thank you, Wikipedia).
Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.
The proposition decreased property taxes by assessing property values at their 1975 value and restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year. It also prohibited reassessment of a new base year value except for (a) change in ownership or (b) completion of new construction.
What have been the documented effects of Prop 13? Here is a short list:

1. Diminished local support for primary and secondary schools. This is hard for a lot of people my age to believe, since my friends and I were schoolchildren in the post-Prop 13 era, but California once had one of the best public school systems in the nation (if not the world.) Today? Annual giving fundraising is the norm at public schools with middle and upper-income families. My alma mater Wonderland Elementary, an LAUSD school in the well-to-do Hollywood Hills, now raises $400,000 a year -- that's nearly $900 per student. 
Screenshot from Wonderland's website. They literally state their goal of raising $400,000. This is to "make up" for the fact that they only receive $40,000 in Title I funds annually. The expenses they want to cover, in my opinion, seem basic. But in LAUSD and in public schools throughout the nation, the idea of having an arts curriculum is seen as superfluous. 
2. Diminished support for municipal services, such as police and fire protection; libraries; social services; and (of course, my and Juan's personal favorite) roads and sidewalk maintenance. If you don't believe me, visit your local sidewalk. It might look like this:

3. The fiscalization of land use. This can be a very difficult thing to explain. So in layman's terms, Californians, you might be wondering why your city is trying so damn hard to attract or retain sales tax generators. We're talking about car dealerships and big box retail shopping centers (Costco one is huge). This is because with the declination in property tax revenue, cities have turned to generating sales tax revenue. The urban planner William Fulton talked about the emergence of the Sales Tax Canyon, a 10-mile long strip of the 101 in Ventura Canyon where many car dealerships, movie multiplexes and outlet malls popped up in the 80s and 90s on what had been farmland, as an example of the fiscalization of land use. (And here's a 1998 review of Bill's book from the LA Times.)

abandoned multiplex
An example of an abandoned multiplex.
From Flickr User Vistavision/used under creative commons license. Source: http://www.flickr.com/photos/vistavision/3264613249/
 I'm also convinced that we have artificially placed constraints on the supply of housing (especially dwellings sufficiently large for a family with children) due to the way that Prop 13 has disincentivized long time homeowners to sell and trade down to something smaller. There are people who decry the possibility of old people on fixed incomes getting priced out their homes had Prop 13 never passed out due to rising property values. But again, this is a false argument.

1) Circle back to the likelihood that property values are inflated due to constraints voters placed on limiting turnover in a community's housing supply.

2) It has been fiscally unsustainable for our society to subsidize land rent (which is what property taxes are, essentially). (And it is particularly infuriating to subsidize them for homeowners who own their houses in the clear - presumably they have equity.) As I have stated elsewhere, the responsibility for homeowners to pay for local services - like schools, and roads, and police protection - do not sunset when their mortgages are complete.

But I think the more important point to press upon in these conversations is that we can clearly document what I call the visceral impact of Proposition 13 on Californians over the past 35 years. Our landscape is forever changed because of the way that our cities changed their land uses in order to generate the revenue necessary to provide crucial services. Our state's ability to provide equitable access to a quality education regardless of a student's household income has eroded. And I suspect that the graduates of California state universities will be especially hard hit when stuff really hits the fan regarding onerous student debt obligations.

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