Myers Prop 13 Presentation

Knowledge in Action:

Dowell Myers Reflects on Prop. 13’s Future

By Scott Steele

Dowell Myers

“What were they thinking in 1978?” asked professor Dowell Myers of the USC School of Policy, Planning, and Development, during a recent presentation about the future implications for California as a result of Proposition 13 and the recent 40 percent decline in home values.

Speaking before an audience of more than 100 at the California Chamber of Commerce in Sacramento, Myers discussed how the history and future of Prop. 13 are headed in divergent directions.

The lecture, “Demographics of Proposition 13: Rewriting the Old Script for a New Future,” was part of the Critical Issues in Public Policy series at the USC State Capital Center.

“Dramatic spikes in house prices in the 1970s fueled overwhelming increases in property taxes, and the innovations of Prop. 13 provided much-needed solutions for many homeowners,” said Myers, an expert in demographic trends and their relation to all areas of policy and planning.

Prop. 13, approved by California voters in June 1978, capped property taxes statewide and also mandated a two-thirds majority vote to pass any new taxes.

Myers spoke about the need to examine how the state’s demographics have changed in the 31 years since the proposition was passed, as well as the outlook going forward.

Ever-rising house prices are the fundamental assumption underlying Prop. 13, Myers explained.

As new home buyers and property tax payers continued to enter the market amid escalating house values, the system worked as expected. The statewide financial crash of 2008, however, demonstrated that the system cannot remain solvent, he said.

Some of the measure’s flaws identified by Myers include the cap of a 2 percent assessment increase regardless of the rise in the annual inflation rate, as well as the assumption of continued surges in property values.

“Looking forward, it seems doubtful that prices and tax assessments will recover to their former level in the next decade or beyond,” he said. “Until they do, it seems more likely that recent home buyers, state and local governments, and public service users will be left in a depressed state.”

According to Myers, his research indicates that although future price trends are uncertain, there are reasonable scenarios to suggest prices could jump from the current level of 37 percent to 54 percent by 2020. Nonetheless, this growth would still be insufficient to recover the steep losses since 2007, he said.

Richard Callahan, SPPD associate dean and director of state capital and leadership programs, noted that “these programs advance our understanding of complex California policy challenges, framing the issues through research that allows traction in the policy dialogue.”

Myers, who directs the Population Dynamics Research Group at USC, said that the dependency on ever-rising house prices is no longer a good basis for fiscal policy and that alternative designs must be explored.

He stressed that public policy needs to be more future-oriented instead of simply maximizing benefits for current voters at future expense.

“We can’t make today’s decisions based on 31-year-old assumptions,” he said.

Myer’s research on the demographics of Prop. 13 was prepared while conducting a broader study of California’s changing political demography, with support from the John Randolph and Dora Haynes Foundation.

Photo by Philip Channing