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The Ugly History of 2/3

Many people ask the question, where did this 2/3 rule for budget and revenue come from? And why is it there?

Where did 2/3 come from?

California Politics 101 Factoid #1: California started out with a constitution that had majority rule!

Yes, it's true. And it stayed that way until 1933. In June of 1933, during the Depression, a complicated measure appeared on the ballot that changed the budget passage requirement from majority to 2/3.

California Politics 101 Factoid #2: You can change the Constitution of California with an initiative that passes with a majority vote. And you can change it to require something else to pass with a 2/3 vote! Whoa! Most places pass budgets with majority votes and change their constitution with 2/3 or 3/4 votes. Well, California is different.

California Politics 101 Factoid #3: The requirement of a majority to increase revenues stayed in place in 1933. It wasn't changed to 2/3 until 1978. What happened in 1978? Prop 13 - the "third rail of California politics."

...Factoid #4: The 2/3 requirement for revenue increases was the fifth sentence in the Attorney General's summary of Proposition 13. Prop 13 went after property taxes in a big way. Most people don't even remember that 2/3 was instituted for legislative action on revenues. In fact, the ballot pamphlet in June 1978 had NO mention of the change to two-thirds in either the pro or con arguments about Prop 13!

Why is it there?

The causes of historical events are complex, aren't they? Remember in school that textbooks could definitively say "the five causes of the Panic of 1873 were ....."?

So let's list the five causes of the 2/3 rule. You'll have to accept them because we're writing the textbook. So memorize them for the test.

1. The Depression caused problems for property owners who felt their properties were being taxed unfairly. The state wanted to tax other properties to get more revenue. In order to make this happen a complex initiative passed that made for fairer property taxation, increased the revenues to the state BUT also required a 2/3 vote to pass the budget whenever the revenues grew by more than 5% as a safeguard against squandering the money.

2. In the early sixties, since the state's revenues had grown by more than 5% every year for so long, they got rid of the little detail that the revenues had to increase by more than 5% to require a 2/3 vote. Little did they expect that the majority vote might come in handy sometime in the future when revenues were flat or decreasing.

3. In 1978, the state was raking in money from property taxes hand over fist. So, tax breaks started sprouting up all over for other kinds of taxes. You can guess which kinds of taxes got broken. HINT: It's not sales taxes. It's not personal income taxes for the middle class. It's not property taxes for senior citizens. No more hints.

4. The state government was flush with cash but property owners all over the state from the biggest guys to the littlest guys, from corporations to senior citizens, were having to pay higher and higher property taxes as land values inflated out of control. People are being driven out of their homes, especially grandma and grandpa. What to do?

5. Prop 13 comes to the rescue and sets property taxes to 1% of the property's value in 1976. And if the value continues to rise, the taxes can only increase 2% a year of the original 1%. Get a math teacher to explain to you that 2% of 1% is practically nothing. If you can find a math teacher that you actually like. Anyway, along with all the brouhaha about property taxes no wonder a few other items slipped by most people's attention. One of them was the 2/3 rule for the legislature to increase revenues by any method. There were other stiff requirements put in for local elections as well. And the legislature was forbidden to mess with property taxes in any way.

So that's it, boys and girls. The bell's about to ring so you're dismissed. Don't forget your assignment for tomorrow. You're supposed to bring artifacts from your parents or neighbors. Remember the artifacts have to be pictures or books or catalogs that show what California was like when it had the funding for one of the top public school systems in the country and free or practically free higher education.