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Example research essay topic: Proposition 13 And The California School System - 1,335 words

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... ut never deliver, Proposition 13 delivered as promised: about $ 7 billion in immediate property tax reductions. Proposition 13 was aimed directly at the financing of local government. It is among local governments that this change can be most visibly seen. The tax cut brought about by Proposition 13, along with an unsteady state economy and tight budgets, has resulted in a fiscal tightening of social and educational programs.

Beyond the visible results of this tax cut- increased class size, reductions in money for social services- a change in the states political structure can be seen. This had a profound affect on the lives of Californians. Upon the implementation of Proposition 13, power immediately shifted away from city halls and county buildings to the state capital. This was the direct result of Proposition 13 s direct affect on the local governments ability to increase its main source of revenue, the property tax. The across-the-board cut, originating from a property tax rate lowered to one percent from an average of 2. 67 percent, brought assessments back to 1975 levels. The tax cut was truly a cut for every property taxpayer; in those areas with high property tax rates, tax bills were cut by two-thirds.

Business, agricultural and rental property had paid in about 64 percent of the property tax and received about $ 3. 8 billion of the tax cut; homeowners received 36 percent, about $ 2 billion from the tax cut. These lower rates meant an increase in state and federal income tax payments for local governments. Despite this reverse revenue-sharing for local governments, the savings were still real; homeowners did have significantly lower tax bills (See Figure 3). One must question the efficiency of this tax cut though.

If the homeowners were the ones with the problem- not the farmers or landlords- then Proposition 13 was not that affective. Only one-quarter of the benefits ($ 1. 7 billion) reached the homeowners. One must also question its political efficiency as well. Property tax revenue losses directly impacted local government, not the state capital. Because of the huge state surplus, the effects of the tax cut did not hit local government immediately. As the state surplus kept increasing, eventually hitting $ 5 billion, the immediate public sector effects varied.

In the fiscal years immediately following the tax cut, legislators reported very little change in revenue received by local governments. The source of this revenue was now coming from the state though, and not from local property tax. The state divided $ 4. 4 billion of the surplus to cities, counties and school districts. The state was now the primary source of money to all government programs and services, it no longer shared this responsibility with the local government.

The state now determined how to distribute the surplus and what property tax rates to apply to whom. This was a complete shift in power for the state and local governments. Almost all revenues were now in the greedy hands of the state waiting to be distributed. The state legislature began to use its newfound power by declaring all public employees contracts null and void as a result of uncertain funds. This provision was later found to be illegal. The state also required the maintenance of police and fire services in order to reassure the publics concerns about safety.

The cost of health and public assistance was also now under the care of the state, something that the liberals who wanted uniform standards had sought after for many years. These new provisions were later abandoned by the state because they were either unable or unwilling to pay for them. A series of state Supreme Court decisions gave power back to some of the cities. This returned some of the lost taxing power, but not all of it. Most counties did not have their taxing authority restored by the courts rulings and the Legislature continues to make fiscal decisions for all of California's counties. The Legislature continues to control the civil and criminal courts, jails, public hospitals and social welfare services.

Counties remain deprived of power. Big businesses and big labor firms are trying to keep power in the Capitol. In the Capitol they only have to deal with two legislative houses and a governor instead of hundreds of people within the local government system. Business- represented by the California Chamber of Commerce, the California Taxpayers Association, the Business Roundtable of 86 executives from manufacturing, banking, agricultural firms- fear that returning to a system would legislate a state tax increase and give local governments additional taxing power. Proposition 13, to the voters, was simply a tax limit, but by limiting the local tax power, the voters actually had given the Legislature the power to levy more conditions and terms on local governments in return for state aid that was needed for lost revenue. Proposition 13 also provides that every time property is sold or is first constructed it is assessed at its full selling price.

After that price is established, the value assessed may increase by no more than two percent per year until the next transfer of ownership. If one has purchased property before Proposition 13 was implemented, its value will be assessed at the 1975 value, plus two percent per year. The transfer of Business property ownership has proven difficult to follow. 90 percent of the stock of a publicly traded corporation may change hands, but under the definition of Proposition 13, ownership change has not occurred. The rule under Proposition 13 is that one owner must make 50 percent of a property purchase, in order to fall under the conditions of an ownership change.

There are exceptions to this rule. Re-assessment does not take place if there is a transfer of property to a surviving spouse and the transfer of property ownership from parent to child. Elderly homeowners, who move to a property with the same or lesser value, may use his or her prior property value on the new property. Those forced to leave because of disaster may keep their prior property value as well. New voter requirements also came as part of the package as well. Proposition 13 provides that any new state taxes that generate an increase in revenue, must pass through a two-thirds vote in the Legislature.

This rule also applies to local governments as well. Exceptions include that local taxes designed for specific purposes may pass by a majority vote of the people, or a majority vote of the governing body. Prior to 1978, the Legislature could increase taxes by a majority vote, subject to the Governors signature, and local government could increase taxes without a vote of the people. Proposition 13 also forced government officials in California to cut spending to match property tax reductions. Political pressures and governmental restrictions that stem from the initiative itself, limited what cities and counties could do. This helped form a system that favors public safety at the expense of public works, health, welfare and social programs.

The Legislature, fearing that police and fire services would get cut, conditioned their aid money on promises that the services would be left intact. Even after that limitation was suppressed, political pressure from voters and unions forced most cities and counties to make spending on public safety a priority. As a result, instead of spending the 29 cents of each tax dollar on police protection that they did in fiscal 1978, they were now spending 37 cents of every dollar in 1981. Although part of that increase could be attributed to the result of changes in the way government agencies reported spending, law enforcement spending, adjusted for inflation and population, increased by 8. 5 percent. The Legislature also forced counties to take over expensive services, particularly in health and welfare programs, which are the majority of non-educational spending. The state forced counties to care for medically indigent adults, but yet agreed to only pay 70 percent of the costs associated with it.

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