Landmark California tax measure popular 30 years on

SAN FRANCISCO (Reuters) - Thirty years after it sparked a popular tax revolt that helped sweep former governor Ronald Reagan into the White House, Californians still support the landmark Proposition 13, but critics say it has roiled the state's budgets ever since, a report released on Friday said.

The measure, which came in response to fast-rising property taxes, held property taxes to 2 percent yearly increases until a property is resold.

The Field Poll and the Institute for Governmental Studies at the University of California, Berkeley said in the report they found that 57 percent of California voters would support Proposition 13 if it were on the ballot today and 23 percent would opposed it.

Support rises to 64 percent among homeowners and 79 percent of homeowners who bought their present home before voters passed the 1978 measure, credited with igniting hostility toward taxes nationwide and contributing to the election of the Republican Reagan as president.

"It passed overwhelmingly in California, a progressive state, so it was a real signal to politicians across the country," said Grover Norquist, president of Americans for Tax Reform and a prominent Republican Party activist.

Proposition 13 was also dramatic as it arose from frustration at the grassroots level, not sophisticated political strategy.

"It was one of those moments of change that wasn't orchestrated by the Karl Roves of the day. It was orchestrated by odd ducks ... guys who were leaning out the door and yelling 'I'm mad as hell and I'm not going to take it anymore!'" Norquist told Reuters by telephone. "It resonated."

PARTISAN BOTTOM LINE

Opposition to raising taxes and calls to limit them remain prominent themes in U.S. national politics, especially within the Republican Party, where they serve to unify members who may be split on other matters.

Republicans such as President George W. Bush, presidential hopeful Arizona Sen. John McCain and California Gov. Arnold Schwarzenegger represent a range of views on social issues, but all oppose higher taxes.

For the minority Republicans in California's legislature, Proposition 13 likewise informs their view that the growth of state government must be held in check.

"It has also prevented politicians from having free rein to raise taxes to pay for more government spending," said state Assembly Republican Leader Mike Villines.

Yet critics commonly cite Proposition 13 as a major source of California's budget woes as it has restrained the ability of the state and local governments to raise property taxes, making the state dependent on volatile personal income taxes and forcing many local governments to depend on state aid.

Opponents, including Democratic lawmakers who would like to boost spending on education, health and human services, also attribute the slide of California's public school system toward the bottom of state rankings on lost revenues in the wake of Proposition 13.

California voters in 1988 addressed school funding by passing a measure that set aside a considerable share of state money for education, effectively making budgets for other programs more difficult to write.

Proposition 13 led to "ballot-box budgeting," said Mark DiCamillo, director of the Field Poll. "It tied the hands of the legislature in a way they weren't tied before."

Proposition 13 also imposed a two-thirds vote of lawmakers for tax increases, which has afforded outnumbered Republicans considerable leverage in California's Democrat-led legislature.

The budget plan Assembly Democrats unveiled on Thursday marked a concession on taxes.

Like Schwarzenegger, they would cut spending and would not seek tax increases to close a state budget shortfall the governor has estimated at more than $17 billion, although that would include $2 billion set aside in reserve. But they urged raising $6.4 billion by scrapping tax loopholes and breaks.

The Field Poll's findings are based on a random sample survey of 1,052 registered California voters conducted by telephone in English and Spanish from May 17-28. The sampling error is plus or minus 3.2 percentage points.

(Reporting by Jim Christie; Editing by Gary Crosse)