NCPA - National Center for Policy Analysis

Sharp Spending Responsible for California's Fiscal Woes

June 3, 2003

As Proposition 13's 25th anniversary approaches, it has come under fire for California's ongoing fiscal crisis, says Michael J. New of the Cato Institute. Proposition 13, also known as Jarvis-Gan, was a 1978 citizen's initiative that rolled-back property tax rates and limited future increases.

In its 25 years, Proposition 13 has served as an all-purpose whipping boy for individuals unsatisfied with some aspect of California's budget or fiscal policy. However, insufficient property tax revenue is not to blame for California's current fiscal shortfall, says New.

Instead, the primary culprit is California's rapid rate of expenditure growth.

  • Between 1980 and 2000, state and local spending in California doubled in real terms.
  • Since 1995, the state budget has grown by 58 percent.

As a result, if California residents are serious about preventing fiscal crises in the future, they should focus their efforts on curbing state spending by enacting constitutional spending limits, says New. Recent history from California and elsewhere indicates that this might be the best strategy for limiting the size of government during the next 25 years.

Source: Michael New, "California's Fiscal Nightmare Can't Be Blamed on Prop. 13," Investor's Business Daily, June 3, 2003.


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