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Tax-cut vote brough gloomy predictions of 300,000 lost jobs – its
closer to 9,000

BYLINE: Ian Brodie; SPCL

LENGTH: 1330 words

DATELINE: Los Angeles CA

Special to The Globe and Mail
LOS ANGELES – It is two months since Californians voted overwhelmingly
in favor ofProposition13 and gave themselves a huge
cut in property
taxes despite warnings of dire consequences for local government

The administrative dust from this populist tax revolt against
government spending is still settling, but so far the state has remained
in one piece and the after-effects have been unexpectedly mild. It has
been a rough time for the prophets of doom.

Before the vote, Governor Jerry Brown, who calledProposition13 a
rip-off, was using economic forecasts which said between 270,000 and
450,000 people would be thrown out of work if it passed. To date, 9,716
municipal workers have been laid off out of a work force of 1.1 million
and the figure keeps being revised downwards as some of those fired in
haste are quietly reinstated.

In the main three cities, Los Angeles, San Francisco and San
not a single full-time fireman, policeman or teacher has been dismissed
or given notice because ofProposition13. Los Angeles is actually
1,000 extra bus drivers to cope with a school desegregation program which
begins next term. In Oakland, 16 police recruits who were fired amid much
fanfare on the day of their passing-out parade, are all back on the

In spite of all the talk of slashing, San Francisco has emerged
99 per cent of its budget intact. The crisis plan to impose new business
taxes in the city has been shelved. Libraries and museums threatened with
closing remain open. In Los Angeles County, officials are putting
together a budget which will be $200-million more than last year.

Proposition13 amended
the California constitution and limited
property taxes by law to one per cent of the market value of commercial
and residential property, an average cut, it has now been worked out, of
57 per cent. So how has California managed to keep operations so close to
normal while suffering a loss of revenue of $7-billion? The answer lies
in the state’s extraordinary large budget surplus. Howard Jarvis, the
crusty, 76-year-old folk hero who was co-author ofProposition13, said
all along the budget surplus was bigger than anyone was letting on, and
he was right.

Governor Brown’s financial aides made an enormous error in
the surplus. At first they said it would be $3-billion by the end of the
next financial year, later changed this figure to $5-billion and now put
it at more than $6-billion. Mr. Jarvis says this astonishing error
confirms his view that bureaucrats and politicians have a reckless
disregard for taxpayers’ money. Others say the mistake was a deliberate
ploy in the effort to defeatProposition13.

Whatever the rhetoric, the surplus came to the rescue. Governor
and the Legislature in Sacramento were able to pour most of this torrent
of cash into the breach in an emergency budget.

They reduced the short-fall to $2-billion and then set about the
economy measures.

State employees lost a promised 7.5 per cent cost of living
So did more than a million mothers on welfare. A freeze was imposed on
hiring and as posts fall empty they are left vacant. Summer schools were
scrapped. So were plans for new roads.

Anti-abortionists got into the act and persuaded the Legislature,
Governor Brown’s objections, to eliminate free abortions for poor women.
As a result costs for pre-natal treatment, child care and adoption
services are expected to go up.

Governor Brown junked his pet scheme for California to have its
communications satellite and the man who paints murals on buildings to
make them disappear is looking somewhere other than Sacramento for his
next $100,000 contract.

Yet in the haste to trim and slash, some anomalies survived. The
department still receives more money than it can spend in a year. Fancy
new offices for issuing driving licences will still be built in the
districts of two influential legislators.

More baffling and annoying to Californians, however, was why there
should be such a vast budget surplus, even though it was their life-belt
in the wake ofProposition13. Other states have only small
surpluses and
New York is perennially bankrupt.

Part of the reason lies with earlier economies started by the
governor of California, Ronald Reagan, and continued by Governor Brown.
The surplus comes from state tax sources other than property tax, such as
the six per cent sales tax, income tax and corporate taxes. Each of these
is fuelled by inflation, which, together with the booming California
economy, are the main causes for the surplus building up rapidly. As an
example, much of the revenue has been generated by workers being pushed
into higher tax brackets by inflation.

Some economists and the state treasurer, Jesse Unruh, believe that
Sacramento may be able to replace most of the revenue lost under
Proposition13 from the surplus indefinitely.

Governor Brown hotly disagrees and sees problems ahead. He said:
People who think there’s a pot of gold in the state surplus are mistaken.
They should not assume we are out of the woods.

At 40, Mr. Brown finds his political future resting on how he handles
Proposition13. Having loudly and vehemently opposed the measure in favor
of a more tepid version, he reacted quickly while the votes were still
coming in and pledged to carry out the will of the people. He decided the
issue afforded him a high-risk opportunity to emerge as the apostle of
tax cuts. He could turnProposition13 to his advantage in his
re-election campaign this autumn against Evelle Younger, the state
Attorney-General who has been described by a fellow Republican as about
as exciting as a mashed-potato sandwich.

Success for Mr. Brown would, in turn, enhance his lustre for 1980
many political observers believe he could emerge as a strong challenger
to President Jimmy Carter for the Democratic Party’s nomination.

Mr. Brown is pushing ahead with a commission which will advise him
restructuring government as a result ofProposition13. He is
calling for landlords to pass on their property-tax savings to tenants,
mostly apartment dwellers in California’s coastal cities. A few of the
biggest landlords have willingly made reductions, but some smaller ones
have even increased rents and rent control may be necessary.

Meanwhile, Mr. Jarvis, the political gadfly who endured 15 years
rebuffs for his tax-cut campaigns, is suddenly in demand all over the

Groups in at least 30 other states are actively working to get
initiatives similar toProposition13 either on the ballot or
through new
laws. In Washington there is some support for a bill which would cut
federal taxes by a third over three years. Mr. Jarvis is enjoying his
celebrity status but is cautious with his endorsements. In a
characteristic comment he said: Don’t look for me to jump into bed with
just anybody. I’m too old for that.

Proposition13 tapped a wide seam of disenchantment among voters who
felt government spending had surged out of all proportion. A new study
has shown they were right. As the fastest-growing and most-populous
state, California has increased in 20 years from 14 million to 22 million
people, a jump of 56 per cent. During the same time, the number of state
employees has gone up 500 per cent and the cost of municipal government
by 689 per cent.

Politicians of every hue have been trying to emulate Governor
Brown in
claiming credit forProposition13 and to give the impression
that tax
cuts are their dearest wish. There is evidence they are failing.

A Los Angeles Times opinion poll asked the question: Do you think
politicians are making an honest effort to carry out the will of the
people onProposition13, or do you think they are
trying to change it
around to make things the way they want?
The response: Change it the way they want, 63 per cent; carry out the
people’s will, 25 per cent; not sure, 12 per cent.




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