How You Get Another Proposition 13

Using math to persuade--good luck with that. (Chron photo)

In December we noted how residents of high-tax states were early-paying their 2017 state income and property taxes because their Federal deduction would be limited in 2018. (The Milton, MA treasurer said, "Thank you, Mr. Trump, for solving my cash flow issues.")

Your humble blogger joined the check-writing spree by making payments to the State of California and San Mateo County one to four months before they were due. It's not hard to imagine that I was joined by millions of Californians who itemize their deductions and engage in a modicum of personal financial planning.

Five months later, the State of California has collected $8.8 billion in "unexpected" tax revenue. The surplus has been attributed to "boom times" and not to voluntarily accelerated payments prompted by the new tax law (heaven forfend that President Trump or the Republicans were responsible). We will soon have a better understanding of the reasons if tax collections rise or fall in a strong 2018 economy.

Governor Brown (to his credit, IMHO) wants to set aside most of the $8.8 billion for a rainy day fund:

“We’re nearing the longest recovery in modern history, and as Isaac Newton observed: What goes up must come down,” Brown said. “This is a time to save for our future, not to make pricey promises we can’t keep. I said it before and I’ll say it again: Let’s not blow it now.”

The surplus will be fiercely fought over in the Legislature during the next month of budget negotiations for the fiscal year that starts July 1. Brown is proposing to stash $7.6 billion, with $3.2 billion going toward the state’s budget reserve for unexpected expenses like wildfires and floods, and $4.4 billion into a rainy-day fund that would be used during a recession.

Various interest groups, of course, are holding their hands out for "badly needed" housing, education and health care. The tax windfall parallels the 1970's, when the real-estate boom caused tax revenues to soar (property taxes were based on the market value of homes). Despite the pauperization of seniors living on a fixed income, the government refused to adjust the calculation or refund the excess. The consequence was the crude, flawed, effective Proposition 13 which severely limited increases in property taxes.

Sacramento is riding high now, and the single-Party state seems impregnable, but the grasping behavior 40 years after it was enacted is how you get another Proposition 13.