Proposition 13, which sharply reduced property taxes and limited future increases due to rising property values, passed by citizen initiative in June 1978 by almost a two to one landslide. It has greatly accelerated California’s slide into fiscal anarchy.
Because of California’s mountains and coastal geography, the area available for development close to major cities – Los Angeles, San Francisco, Oakland, San Jose, and San Diego – has always been severely limited. High demand and extremely limited supply of housing has consistently caused real estate values to skyrocket in these areas during times of economic growth.
When real estate values increase, so do home values, and so did taxes prior to 1978. Escalating property values allowed California to avoid the consequences of its supermajority requirement in the 45 years prior to the passage of Prop 13. As the population grew and the major cities got more crowded and property values climbed, so did property tax revenues. California was able to fund the largest and finest public University system in the country and build some of the nation’s biggest, best, and most expensive freeways during the 1940s, 1950s, and 1960s, along with many other projects – all with the time bomb of the supermajority requirement quietly ticking away, but never exploding.
Even after the passage of Proposition 13 it took more than a dozen years before the supermajority time bomb finally detonated.