It limits property tax, allowing only very minimal increases while the property is owned. This poses a few problems:
Schools get most of their funding from property taxes. This limits their available funding and encourages them to look for other sources of revenue. It is beneficial for the school districts to close neighborhood schools and rent them out to private schools. It is even more helpful if this encourages more people to attend the private school instead of the neighborhood school. Not only do they get rent from the private school, they have fewer children to educate in the public schools.
Schools and communities get more revenue if prices rise and there is high turn over in the housing market. However, the constituency is made up of people that have lived there a long time and pay low taxes. These people are also more reluctant to encourage change. They are happy to see a limited supply. After all, excess demand drives up the value of their 'nest egg', while not incurring any costs.
Because homeowners tend to stay in one place a long time, and demand a steady stream of services, cities have an incentive to discourage homes. Businesses are preferred because they demand fewer services. (Retail even provides sales tax revenue)
Cities with large amounts of new construction can provide excellent services because the property tax rate is high. Thus, there end up being large clusters of homes in one location – usually where clusters of business are lacking.
The people who have the most influence in municipal decision making are typically those that have lived there the longest. However, those that have lived there the longest typically pay the lowest property taxes. Thus, they are often using other people's money.
Any shortfall in taxes must come from somewhere. Thus often ends up being from sales tax (which encourages big box regional retail as opposed to local stores), or from other state sources (which encourages the state to interfere and make mandates. These mandates often drive down quality and drive up costs of education, thus driving more to private school, and shuttering local neighborhood schools.)
The 1% cap on assessed value limits variations in cities for tax purposes. However, special taxes have been added on top of the 1% to pay for other things. The 2% annual increase limit means that a homeowner's real tax rate will either go down or stay the same – if they stay in the same case. (An exemption allows those over age 55 to transfer their assessment to another house – but only in the same county. Thus there is some mobility, though it is limited by age and county.) Thus there is a strong incentive for homeowners to remain in the same house – even if the location, neighborhood, or house size is less than ideal. In theory this could provide for stability in neighborhoods. However, many residents are relative newcomers with little community affinity. Furthermore, the car-based culture encourages isolation and limited community contacts. The residents may also be attached to jobs outside of the community, further increasing congestion.
New residents have a more limited selection of real estate. This can be especially vexing as industries change in communities. City A may be filled with people who worked for a company which has now moved to City B. Meanwhile, people that are working in City A may have to live in City B because of the limited real estate options.
Proposition 13 grew out of a tax revolt. Property values were increasing rapidly, and with taxes based on value, the property taxes were also increasing rapidly. Cities and schools had services to provide and they were attempting to provide them. Property values grew in part due to supply and demand. People wanted to live in certain areas (often those with good schools and close to work). However, there was limited availability. And the main reason for limited availability was the excessive space devoted to the car. The car devotion also drove up need for taxes. (The cities needed some source to pay for all those wide roads.) What if, instead of fighting taxes, the revolters simply fought for a reduction in the car subsidy?
An ironic twist is that the tax revolt was lead by the 'small' government crowd. However, since it attacked the symptoms (increasing taxes) instead of the source (poor planning that causes increasing property values), it has resulted in more government. Now there is a huge school bureaucracy enabled by the huge increase in state control over school funding. With housing more expensive, subsidized housing becomes more prominent. People must go through the government to be eligible for subsidized housing. Developers are encouraged to provide some below-market-rate housing. (which means that the 'market rate' housing is more expensive.)
No comments:
Post a Comment