Business is booming, government continues to flourish and the lives of most Californians have been little changed by Proposition 13, the property tax-cutting measure approved overwhelmingly by California voters a year ago this week.
These conclusions have emerged from a variety of analyses on the impact of the measure, which its supporters at the time of passage hailed as a new American revolution and some of its critics saw as the death knell for government services deemed essential since the New Deal.
In practice, neither the hopes of the one side nor the fears of the other has been realized.
Because of a huge and increasing state surplus caused by economic prosperity, inflation and a relatively high state income tax, state revenues have been able to take up most of the local government slack.
"Overall, Proposition 13 has had only minor effects on the size of the public sector in California," said a report prepared for the Economic Review of the Federal Reserve Bank of San Francisco.
Kirk West, executive director of the California Taxpayers Association, and an original opponent of Proposition 13, observed that the surplus provided enough of a cushion for local government to grow between 5 and 6 percent last year, compared with a pre-Proposition 13 growth of 11 to 12 percent annually.
"I don't think anybody really knows what the impact of the Proposition 13 is, because the surplus has cushioned the bad effects, if there were going to be any," said state Treasurer Jess Unruh. "So all that you can look at is the extra money pumped into the economy [from lower property taxes], and that was healthy."
Unruh , a Democrat who is one of California's most knowledgeable politicians, correctly predicted before passage of Proposition 13 that the state surplus would far exceed official estimates. The size of the surplus became an effectove argument for the measure's supporters, who argued that needed services could be provided even if taxes were cut.
Proposition 13, formally known as the Jarvis-Gann Property Tax Limitation Initiative, restricted property taxes to 1 percent of 1975 market value and assessment increases to 2 percent a year. Before passage, property taxes had ranged between 3 and 3.5 percent of market value.
The measure deprived local governments of $7 billion of the $12.4 billion that had been anticipated in revenue for the 1978-79 fiscal year.
Of this lost revenue, governments made up nearly half a billion dollars in various assessment increases.
The state then passed a relief measure, funneling local governments $4.2 bullion from the state surplus. An additional $1 billion came from deferring capital construction and hiring freezes and an additional $200 million from added fees.
According to the report, prepared for the Federal Reserve Bank of San Francisco, the overall revenue shortfall (from anticipated revenue, not from the previous year) was $1.2 billion, or 4 percent. The report said that the state can offset the impact of Proposition 13 indefinitely if Californi's personal income grows at a 12 percent annual rate. It is currently growing at this rate, and averaged an 11 percent increase over the last five years.
Liberal UCLA economists who before the election had predicte massive layoffs in the public sector now say that the state can bail out local governments at an increased rate over the next four-year period and still maintain a surplus.
Conservative USC economist Arthur Laffer, who supported Proposition 13 but preferred a massive income tax cut, said the measure had worked well, except in a few instances where politicians have interpreted the budget-cutting mandate too strictly and made unnecessary cuts.
"The message of Proposition 13 was very clear," Laffer said. "People weren't voting for a reduction in services. They wanted to cut tax rates and keep services, and that's basically what they did."
Even state assembly Speaker Leo McCarthy, a San Francisco Democrat who was the most outspoken foe of the initiative before its passage, says it has had "a superb effect" in reducing property taxes. McCarthy contends that it is simply too early to assess Proposition 13's impact on government services or the economy.
McCarthy is trying to put together a political consensus in the legislature for a measure that would in effect institutionalize Proposition 13 by permanently giving local governments a share of state revenues, increasing state aid to education and transferring county welfare costs to the state.
Gov. Edmund G. (Jerry) Brown Jr.'s transformation from an opponent of Proposition 13 to its chief advocate has been widely copied in state and local government.
One who changed his tune id liberal Los Angeles Councilman Marvin Braude, who recanted publicly in the Los Angeles Times.
"We who thought that Proposition 13 could not, would not [perhaps even must not] work were simply wrong," Braude wrote. "We public administrators, officials, those whose interests are closely tied to public spending - in short, we in the government class - made a fundamental if all too human error in confusing our own convenience and welfare with the people's interest."
One of the reasons that Proposition 13 may have worked as well as it did if that the levels of government services and taxation in California were higher than the national average, says the report to the Federal Reserve Bank.
It was prepared by the Academy for Contemporary Problems, a research organization for states, counties and cities.
While Proposition 13 generally is regarded as a conservative measure, it has had some unintended liberal consequences. The most consipicuous is the trend in California cities, especially Los Angeles, to rent control in an effort to ensure that landlords pass on their tax savings to renters.
Before Proposition 13, rent control had been rejected consistently by the Los Angeles City Council.
According to the Academy for Contemporary Problems report, the substitution of state tax sources for local sources gives cities a larger percentage of revenue collection than it does suburbs. Central cities also may gain, the report says, "from a little-noticed feature of the state relief measure that allocates state assistance roughly in proportion to previous property tax collections."
On the other hand, there are those who say that central cities, where crime is the highest, have been hurt from a decline in law enforcement services, even though the state relief bill stipulated that these services not be reduced.
Ken Spiker, chief legislative analyst for the city of Los Angeles, estimates that 200,000 calls a year are lost in the city because the police emergency number frequently is answered by a recording instead of a person. Thirty percent of all capital improvement programs, including fire stations and bridges, were deferred, and 556 police cars were not purchased.
Statewide, the biggest loser has probably been the various library systems, which are supported mostly by property taxes and which lack the politically influential lobbies possessed by police, firefighters and school teachers.
"They haven't bought any new books - what kind of library can you have without books?" says Los Angeles County Supervisor Ed Edelman. ". . . They're managing the employe problem through attrition. And a lot of the libraries are now closed on different days. They've been the hardest hit."
Overall, though, severe service reductions have failed to occur, and almost entirely because of the state surplus which Unruh estimates will still be $3 billion at the end of this fiscal year.