Did Prop 13 Produce a ‘Communist' System?

This weekend, I came across a New York Times story about all the problems and corruption in the governance of local villages in China. This is portrayed as a surprise because local village commitees -- the equivalent of our city councils -- are democratically elected in China, by the people themselves.

Then I got to this paragraph, which hit me, as a Californian, like a truck:

"Village committees must provide many of the services offered by governments, such as sanitation and social welfare, but they cannot tax their residents or collect many fees. Any efforts to raise additional money, for things like economic development, usually need approval from the Communist Party-controlled township or county seats above them."

If that sounds familiar, it should. That's pretty much how local government works in post-Prop 13 California.

Prop 13 centralized power for raising revenues with enough force to please the most authoritarian Chinese Community Party functionary. After Prop 13 (and measures that built on it), local elected officials no longer could set tax rates themselves. Higher levels of governments (in California's case, the state government) had the authority to raise the taxes.

In China and California, this has created all kinds of problems in local governance. Local elected officials who don't have to set tax rates have little incentive to be disciplined. The result: corruption in places like the Southern California city of Bell or the town of Wukan -- the Bell of China -- where citizens have launched a revolt of sorts against the authorities.

This is counter-intuitive, because Californians and Chinese both like to think that local government is more responsive and democratic. The Times story noted:

"China’s village committees should be the most responsive bodies in the nation because they are elected by the villagers themselves. Moreover, the government has built safeguards into the village administration process to ensure that money is properly spent."

But it turns out that centralization undermines accountability. And no amount of process can alter the negative effects of taking away revenue-raising authority from local officials.

I can already hear the howls of protests from defenders of Prop 13. California under 13 isn't like China--that's a totally unfair comparison. And they're right. It's probably unfair to China.

If anything, California may be more centralized in local government matters than China. The Chinese give some control over revenues to the community party in bigger towns and in the counties; California centralizes revenue-raising power far away, at the state or provincial level.

The lesson? The next time someone speaks in praise of Prop 13, ask them: are you some kind of Chinese communist?

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