For the last 10 years, two untouchable sacred cows stood out in
California public affairs: the three-strikes-and-you’re-out
criminal sentencing law and the property tax limits of Proposition
13. Reality was that anyone messing with either would soon be
politically dead.
For the last 10 years, two untouchable sacred cows stood out in California public affairs: the three-strikes-and-you’re-out criminal sentencing law and the property tax limits of Proposition 13. Reality was that anyone messing with either would soon be politically dead.
But this month’s election returns changed things a bit. Even though it went down, the attempt to revise three-strikes via Proposition 66 lost by less than 2 percent, and then only after a last-minute $1.5 million blitz of radio and television commercials.
Which leaves three-strikes very much in play. If it’s in play, at least to some degree, maybe some unfair aspects of Proposition 13 could be, too. Which could come in handy as the Legislature and Gov. Arnold Schwarzenegger cast about for ways to balance the state budget in the next few months.
Here’s where three-strikes now stands: you’d have a real chance at passage with a new attempt that aims to change only the option for prosecutors to lift a minor misdemeanor to a third strike and a 25-year-to-life sentence. Many Californians plainly find the existing law too harsh.
What killed Proposition 66 was the fact it sought a fundamental change in three-strikes, aiming to remove residential burglaries from the realm of violent crimes that can be second or third strikes – unless the burglar believed in advance someone would be on the premises. This provision could have put prosecutors in the business of mind-reading, while reviving many old burglary cases.
“I have heard from a number of opponents of 66 – privately – that they would not be opposed to some changes in three-strikes,” said Jon Coupal, head of the Howard Jarvis Taxpayers Assn. and signer of a ballot argument against 66. And 66 author Sam Clauder announced on Election Night that he’ll try again. “Rest assured, in the words of Gov. Schwarzenegger, ‘We’ll be back!'” he said.
Next comes the question of whether Coupal, whose organization bears the name of Proposition 13’s co-author, would accept some changes in the workings of his own pet law.
The answer is maybe, if the change were limited to the way ownership change is defined for properties belonging to limited partnerships.
As it stands, if no one person or corporation takes more than a 50 percent interest in an apartment building or other property that’s sold, the property generally is not reassessed. The same applies to properties involved in some corporate mergers.
Says the accountants’ handbook “Taxing California Property,” “If a corporation sells a piece of property, that is a transfer of ownership (and subject to reassessment at 1 percent of the purchase price). If a corporation is sold, that is not a transfer of ownership if the corporation still owns the property.”
Key fact here: The regulations setting these rules were not part of the original Proposition 13. Rather, they were adopted by the Legislature almost a year after the measure passed in June 1978, aimed at clearing up areas not covered in the original ballot initiative. So legislators could change them without tinkering even slightly with what the voters passed.
Meanwhile, anytime a home is sold, it is automatically reassessed, with the tax climbing steeply in most cases. It’s fundamentally unfair to treat partnerships better than individual homeowners.
Estimates vary from $3 billion to $12 billion for what the state could raise yearly if limited partnerships and corporations were treated like home buyers. Schwarzenegger sometimes brags about his deals with Indian casinos that might raise as much as $1 billion in new tax revenues, peanuts next to what this change could bring. Yet, he says nothing about fixing the Proposition 13 regulations.
Schwarzenegger usually considers whether any move creates jobs or costs jobs. It’s hard to see how raising the tax a bit on an apartment building bought by a limited partnership would cost anyone’s job. But there’s no doubt it could raise big dollars for the state.
Even Coupal, the prime defender of the purity of Proposition 13, says he’s open to the idea, if it’s done right. “I would be willing to look at any proposal in the narrow area of limited partnerships and see if it goes to the core of 13 or not,” he said. “I would need to see the specifics.”
This idea is not new. Democratic state Sen. Martha Escutia of eastern Los Angeles County in 2003 carried a bill treating corporations and limited partnerships just like all other property owners.
Schwarzenegger often blusters that he’s “blowing up boxes” in Sacramento, another way of saying he’d like to go after some sacred cows. If he wants to eliminate the structural deficit many say is now built into state budgets, blowing up the box labeled “Proposition 13 regulations” may his least painful option.
