The plight of California’s cash-strapped cities and counties would have delighted the man many say is most responsible for the increasingly serious fiscal crises confronting local and regional governments.
Following a 1977 speech to the Malibu Rotary Club, an inebriated Howard Jarvis—the 74-year-old co-author and prime mover of Proposition 13—told this writer that he had created the landmark California initiative “to demolish local government and eliminate all the bureaucracy.”
Soaring real estate prices matched by rapidly escalating taxes spurred California voters to pass Prop. 13 the following year. As a direct result of the initiative’s mandates, property tax bills fell by an average of 57 percent in the next year.
A one-time Utah newspaper publisher, Jarvis made no secret of his anti-statist beliefs, which he passed on to numerous recruits. One of his earliest and most passionate converts was a libertarian and major Santa Monica property owner named Arnold Schwarzenegger.
During his run for the governorship almost three decades later, Schwarzenegger rebuked his own campaign economic adviser, billionaire investor Warren Buffet, after Buffett called for reforms to the Prop. 13 provisions in order to provide an increase in California property taxes. “Mr. Buffett doesn’t speak for Mr. Schwarzenegger,” declared campaign spokesperson Rob Stutzman, who then told the press that Schwarzenegger admired Jarvis “and has referred to him as the original terminator.”
The results of Jarvis’ relentless campaigning, while fully compatible with his smash-the-state fantasies, have proved a double-edged sword. California has become a state which penalizes young couples buying their first homes, while rewarding older taxpayers who have seen inflation send their home values home soaring far above their property taxes.
Thus a first-time owner of a modest, 1,200-square-foot two-bedroom home in the Berkeley flats may pay four or five times the taxes paid by the longtime owner of a million-dollar-plus, 7,000-square-footer in the hills above the city.
Prop. 13 also provides the same breaks for corporate owners, leading to the peculiar result of a long-established large manufacturing plant paying less taxes than a recently purchased small apartment building—exactly as Jarvis had intended.
One side effect of Jarvis’ campaign has been to create a state that is dominated by regressive taxes and fees that fall heaviest on the poor, according to the California Budget Project. By 2002, the lowest one-fifth of working age California taxpayers shelled out 11.3 percent of their incomes in state and local taxes, while the richest one percent of Californians paid only 7.2 percent.
Though Jarvis died 18 years ago, his legacy lives on, gaining in significance and impact with each passing year.