July 3, 2009


(Gann and Jarvis - the boys you can thank your IOU for today)

With California circling the economic drain, it's interesting to consider where this chaos all started. A little populist movement called "Prop 13" that captured the anger of California in 1978 and plunged us into the stone age as the result. It all centered around property taxes, placing a cap of 1% of the property's value as taxable. The anger centered around tax revenues being redistributed to other communities, rather than the community where the tax was being levied, not to mention tax rates increasing for everyone, not just new home buyers. The fear card was played that older home owners would be forced to sell their homes because tax rates would increase to the point of bankruptcy for most, and certainly this became the rallying cry.

The effect was almost instant, with a $5 billion dollar surplus evaporating in a short time with services and education funds slashed to practically nonexistent. Since it has been written into it's constitution, California has slid into depression almost continuously since then.

And Prop 13 has become the infamous "third rail" by which no one dares question - challenges to the laws validity have been struck down by the State Supreme Court and politicians caught even breathing Prop 13 revision have been hounded out of office, or threatened with it. The lobby surrounding the Prop 13 movement has a vice grip on the state legislature. So any thought of revision or modification is ignored.

But on June 9, 1978 the news was pretty much like it is now. Only now we have 31 years of failure to look at.

And we're left scratching our heads.

Can you help us out?

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