Many would actually argue that prop 13 destroyed California. To understand this, we need a quick refresher California taxes. To simplify things, there are three

Many would actually argue that prop 13 destroyed California. To understand this, we need a quick refresher California taxes. To simplify things, there are three main types of tax in California: 1) State Income Tax. This goes to the actual state government. 2) Sales Tax. This is split between state government (7.25%, soon to be 8.25%) and county (up to 9.75%). 3) Property Tax. This is a county tax and goes to local government. Before Prop 13, property taxes were assessed based on the current value of the land. So when a housing boom hit, people's property prices shot up, and their taxes followed suit. This was a somewhat flawed system, as land prices were skyrocketing, and people couldn't afford to hold their houses. As a result, prop 13, a piece of citizen legislation, was enacted in 1978 and basically stated that the property tax of a piece of land would be fixed at 1975 levels with a maximum of a 2% increase each year, regardless of change in property value. Though reform was essential, prop 13 was NOT what California needed, and was a classic example of the "Tragedy of the Commons." By capping property tax, Californians did get more money in their pockets. But only 13% of savings actually went to the citizens. 87% of that tax money went to coroporations with large tracts of land (agriculture, warehouses, ...). Because these funds went directly to counties, the counties were pretty much rendered broke instantly. Most local services (police, education, firefighters) come at the county level, so their budgets were destroyed as a result. To remedy this, counties began to lobby the state for more funds. Remember, the state still had income tax and sales tax. Unfortunately, income tax is a much harder amount of money to predict when compared to property tax. So now there's a central state government that needs to fund its counties with money it doesn't really know it has. On top of this, a state government is not as responsive to local needs as a county, so the ability for a government to recognize and respond to the needs of its constituents was crippled. Competition for state funds became fierce, and counties hired lobbyists to gain traction. Bigger, richer counties could afford better lawyers. Smaller counties were left in the dust. Currently, prop 13 still weighs upon California industry. Older warehouses and smokestack industries are still paying 1975 property tax (with 2% increases every year), whereas industries that want to move in can't, simply because they would be paying so much in property tax compared to their longstanding competitors. It has created a monopoly on organizations that needs space. The perfect model for a county to actually make money today comes from an unlikely source: Emeryville. They limited their population so there are less constituents to pay for. They are located next to a freeway that is payed for on the Federal dime. They kicked out smokestack industries for big-box retailers, and take in all the sales tax they can. Finally, their workforces commutes from the impoverished Oakland next door, so that can pay peanuts without affecting their own populace. It's clean, attractive, safe, and exploitative on so many levels. [Sorry, I can't give you the specific references, as they come from lecture notes of Kerwin Klein's "History of California" course at Berkeley. An amazing course, I might add]