Silicon Valley Leaders: Prop. 13 Not Working Anymore

By: Aaron Glantz

The housing crisis that began in 2008 could have a crippling effect on California's ability to provide government services for a generation, according to a new report released Tuesday by the Silicon Valley Communtiy Foundation and Joint Venture Silicon Valley.

The problem: Proposition 13, passed by voters in 1978, essentially freezes property taxes on homes or businesses unless they change hands — meaning that today's low property values could mean reduced government revenues for years to come even after the recession ends and property values begin to rise.

"In 2008, the world changed,"said Emmett Carson, Ph.D., president and chief executive of the Silicon Valley Comunity Foundation. "Now we have to say either we are going to dramatically cut back services that we have become accustomed to to the level that will be sustainable, or we are going to have to rethink our whole system" of taxation.

Making matters worse, the groups said, is a provision in state law that allows property owners to petition to have their property reassessed if they think it has lost value. In the 2011-2012 tax year, the report shows, Santa Clara County reduced the assessed value of more than 124,000 properties by a total of $25.9 billion.

"There should be a conversation" about changing the tax structure, said Russell Hancock, president and chief exectutive of Joint Venture Silicon Valley.

"It's about time. Its not working for us anymore," he said.