An Unlucky Proposition: A Policy Analysis of Prop 13

Executive Summary

California and its counties have faced continuous budget dysfunction and a major cause of this stems from proposition 13 limiting county’s property tax revenue, forcing the burden to be shifted to the state.  This paper ultimately recommends to remove/reform this policy.  While the new tax legislation from the republican congress may force California to abandon prop 13 by changing what deductions are available, this paper will recommend the pending ballot initiative of split rolling.  This would alter the way commercial properties are assessed for tax purposes.  A strategy that would not affect California’s residential property tax rates.  This is a middle of the road approach to this problem. 

Background

Prior to Proposition 13 California’s budget was growing exponentially.  As noted in the book Tax Revolt: Something for Nothing in California, spending by the California government had increased dramatically from 1973 to 1977.  California’s government expenditure was 8.2% higher than the national average with government jobs becoming 14.7% of all civilian workers by 1978 (Citrin).  In that time span, growth in California government jobs had outpaced the private sector for a number of reasons.   One notable reason was AB 80.  AB 80 was a bill passed in 1966 that standardized the assessment process in order to avoid selective assessment, which had been exploited by corrupt assessors in order to give their friends tax discounts.  The result of AB 80 was that properties began to be assessed at their actual market value resulting in tax increases for many California homeowners.  This then lead to increased revenue for the California public sector, which turned into budgetary growth. 

While this growth was occurring, the case of Serrano vs. Priest also concluded during this time.  Serrano vs. Priest was a class action lawsuit involving John Serrano, who was the parent of several children attending public schools, against Ivy Baker Priest, the California State Treasurer.  The suit contended that the school funding formula bred an inequity that caused a disparity between funding for schools in lower income areas in comparison to high-income areas.  At the time, property taxes were the revenue source for school funding and were kept within the jurisdiction they were collected from.  This ultimately meant that schools located in high property areas benefited from the high property values and therefore received more funding.  Serrano represented parents who saw this system as inherently discriminatory because it continued the cycle of economic inequality.  The courts ultimately ruled in Serrano’s favor forcing the state to equalize the funding between school districts and redistribute property tax income. 

(Howard Jarvis, image credit: Los Angeles Public Library)

With these elements in the background, the stage was set for proposition 13.  Enter Howard Jarvis, a former newspaperman from Utah who moved to California and began working for the Los Angeles Apartment Owners Association.  Jarvis began campaigning for proposition 13 in response to the changes caused by Serrano and AB 80.  Research by William Fischel suggests strongly that the Serrano decision was the direct cause for Prop 13’s rising popularity.  The basis of his supposition is that before Serrano, taxpayers had a direct connection between their taxes going to their local schools.  This is known as Tieabout theory, where two things being directly connected increases ones willingness to act.  Once Serrano was decided, taxpayers no longer saw the direct connection and therefore became less willing to pay taxes.  Fischel further supports this by pointing to the Watson initiative in 1972 that sought to limit property taxes.  This initiative failed by the same margin that Prop 13 passed.  What changed between the times of these two? Serrano.  In contrast to Fischel’s work, Isaac Martin produced a paper that questioned Fishel’s hypothesis. Martin claims that it was not Serrano but rather the foreclosure of elderly people in the face of readjusting property tax rates after AB 80 that rose beyond their fixed income levels.  Martin points to the ad campaign used by Proposition 13 proponents.  In their campaign, if the Serrano decision had been so key, they would have gone to higher value property owners and used the Serrano decision as a rallying cry.  Instead, Martin notes that the advertisements were built around the narrative of elderly losing their homes due to rising taxes.  The narrative then created a false dichotomy between over spending politicians and widows losing their home that was already paid off.  While both papers make strong arguments, they don’t have to be mutually exclusive.  That is to say that Fischel could be right on the how but not the why.  It is possible that Serrano created the framework for the perception of government overreach but the more effective narrative for campaign purposes was to appeal to voters’ empathy for vulnerable elder homeowners. 

A central claim for those in favor of Prop 13 is that it protected older homeowners from ever-growing property taxes due to rising market values. However, before prop 13, local government actually tended to decrease property tax rates as market values increased (Chu & Uhler)

Furthermore, there aren't any publicly reported cases of such foreclosures on homeowners, prior to Prop 13, although more research into that would be welcome.

This uproar around this combination of factors, which were the consequences of standardized assessment, created the perception that taxes were out of control.   Jarvis then lead what he called the Tax Revolt; a movement aimed at fighting taxes, specifically property taxes.  To accomplish this, his group introduced proposition 13, which would limit the ability of the board of equalization from easily editing the formula for property taxation.  It set the taxation to 1% of the property value at the time of purchase with no more than 2% increase per year.  Assessments would only be required at the time of sale, or acquisition value (hjta.org).  This meant that if someone purchased a house in 1980 for $100,000, they would pay $1000 in taxes.  As long as they maintained ownership of the property they would still be paying the same amount today.  Proposition 13 would be a huge boon for rental property in particular.  That is because they only pay a parcel tax. 

While property taxes were limited, rent could continue to rise with market value of the property.  This is a similar situation we see with commercial properties.

 

Passage of Prop 13 created several intended and unintended consequences.  These can be seen as beneficial or detrimental to the community.  On the positive side, the first impact was that it did lower taxes for homeowners and created an incentive to maintain long term home ownership as the home prices often increased faster than the 2% rise allowed by Prop 13.  This meant that if you owned a home for longer, you ultimately paid less and less in taxes as a percentage over time.  One example was noted by Warren Buffet who paid $14,410 on his $500,000 home in Omaha but only pays $2,264 on his $4 million dollar home in California (WSJ, 2003).   This was a major boon to homeowners.  A second positive impact was on new homes developments (take two).  This is because of two reasons.  The first was that it incentivized new housing developments because home ownership became longer term meaning there was less turnover and therefore more houses were needed to meet population demands (Fischel 1989 & Daily Beast).  Second, new home owners would bear more of the property tax burden, which they would be more likely to be able to do as newer generations tend to be more affluent that previous generations.  Lastly, for those who are skeptical of government’s efficacy with tax funds, this proposition would decrease overall tax revenue.  The result would be government would have less money to waste according to their viewpoint.  While there are some positive to proposition 13, there were also several negative externalities created by the policy whether unintentional or otherwise. 

The first negative impact is that Proposition 13 skewed the housing market in various ways.  As mentioned above, housing turnover greatly decreased as a result of the proposition.  While this may have helped current homeowners in 1978, it makes it more difficult for prospective new homeowners in the long term.  Homeowners keeping their houses longer artificially reduced the supply of houses that combined with increased demand drove housing prices up.  This make it more difficult for new owners to afford a house and additionally, meant that new homes were more expensive and therefore had to pay even more in property taxes (take 2).  This in effect created a divide between those who owned and those who wanted to own.  A second major consequence was that the decrease to tax revenue limited the ability of local municipalities to grow their budget and services.  This would not be problematic had government in California remained small.  However, California voters with prop 13 have tasked California’s government to do more with less by asking for more services with each passing year.  The gap between revenue and spending has consistently grown and has been a contributing factor to California’s budget shortfalls and deficit problems.  (McCubbins).  A third negative externality was that Proposition 13 mitigated the equity sought by the courts ruling in Serrano vs. Priest.  By limiting tax revenues this meant that there would be less funds to be distributed amongst school districts making it harder to evenly divide the funds, forcing counties to rely on the state.  Additionally, because homeowners were paying less in taxes, they could redirect those funds directly into the schools their children attended and therefore recreated the inequality that existed prior to Serrano.  The last major negative outcome was that Proposition 13 failed to deliver on the promise made by Howard Jarvis that renters would see lowered rents as landlords paid less in property taxes, despite Jarvis’s best effort (Christian Science Monitor).  Instead of seeing a trickle down effect, landlords pocketed the increased savings and kept rents inline with increased property values.  With the increased barrier to home ownership, more consumers were forced to rent which further increased rental prices (Daily Beast). 

 Fallout from Prop 13

After the passage of Proposition 13, there were many fiscal ramifications.  The first was that Prop 13 was supposed to limit tax revenue and therefore limit government spending.  While it was effective at the former, it failed at the later.  Research by McCubbins illustrates two major reasons for this.  First is that Proposition 13 had to be implemented by the same group it sought to limit, politicians.  This created an agency problem where they were not interested in punishing themselves for over spending.  The second reason was that while voters were happy to limit tax revenue, they did not want to see a reduction in services.  Rather, they wanted the opposite.  These two factors contributed to creating a massive and perennial budget dysfunction.  

 Figure one shows the impact of Prop 13 on property tax collection in California.  It is not unexpected that property taxes would dramatically fall due to the passage of a bill designed to limit them.  However, property taxes also make up a large portion of total tax revenue. 

As shown in Figure two, total tax revenue took a large cut due to the loss of property tax revenue.  So it is clear that while Prop 13 was effective in limiting total revenue, it still had no real impact on expenditures as evidenced by California’s continuously growing budget. 

In response to growing budgetary problems over time the state government began to look for alternatives to alleviate the burden caused by Prop 13.  Provisions within Prop 13 created the environment for the state government to establish Education Revenue Augmentation Funds (ERAFs).  ERAFs shifted the budgetary burden of paying for K-14 from state government to county, city and special districts.  The outcome of this policy had the effect of nullifying the Serrano decision, as the state was no longer responsible for paying for education and therefore no longer had to ensure an equal distribution of funding.  Yet again, due to the reduction in tax revenue from Prop 13, local governments are forced to do more with less.

Further more, the passage of Prop 218 was an extension of Prop 13’s aims to limit government’s ability to raise revenue.  Prop 218 made it mandatory for government to have voter approval on any revenue raising measure.   Effectively, if Prop 13 was the stabbing, 218 were the twisting of the dagger.  Similar to Prop 13, 218 exacerbates the problem of limiting revenue without limiting expenditures. 

The other major result of proposition 13 was a realignment of the residential dynamic in California by favoring long-term homeowners over newer ones, it created an incentive for perspective homeowners to become renters amid escalating rents. Even the OC Register noted that California has the second lowest homeownership in the country. The article also points out that the proposition's limits on taxation until a property is sold causes local governments to raise impact fees, which discourages homebuilding and creates a perpetuates a growing demand for rental property ultimately benefiting owners (Collins). It is perfectly reasonable to see why how Howard Jarvis, who worked for the Los Angeles Apartment Owners Association, would be compelled to write such a proposition into law, even if he did believe in it would benefit older homeowners. Coleman's research also shows that commercial and rental property owners reaped 40% of the financial benefit (Californiacityfinance.com). While it was effective at benefiting the wealthy and long-term property owners, it remains an unnecessary, ineffective, and ultimately outdated constitutional amendment that needs to be amended. 

Final Recommendation

         Public opinion of prop 13 remains relatively high despite Californian’s apparent willingness to tax themselves with targeted measures that raise revenue for key areas. Those who engage in litigation to defend prop 13 hail prop 13’s popularity. However, just because local government in California was able to adapt to the limitations of this, it seems counter intuitive to implement policy that caters to those who don’t believe in taxation in principal. Going a step further, repeal of prop 13 may be necessary due to the impact of the Tax Cuts and Jobs Act, which repeals the state and local deductions one in three Californians use, according to the LA Times.  By removing the SALT deductions for income taxes but allowing for sizable property tax, this sets the table for prop 13 to be phased out if even the most conservative Californians still support Prop 13 in principle, they will not want to give up the deduction.  However, a full repeal seems highly unlikely due to the entrenched Prop 13 support. 

         This leads to the next best solution and final recommendation of split rolling.  Split rolling is when the property value assessment rules are changed for commercial compared to residential properties.  This results in commercial properties absorbing a more proportional tax burden.  Since the passage of Prop 13, according to Chu and Uhler, the tax burden has shifted from commercial to residential property. Now, this is not out of step with other places in the U.S. entirely, but it is more pronounced in California.  While some companies may threaten to leave California in protest of higher taxes.  This threat though is often rhetorical, as businesses know that California is one of the largest economies in the world and they would be losing out on opportunity by leaving.  This leads to a low likelihood of businesses carrying out the threat.

         Ultimately, this paper’s final analysis has proven that Prop 13 is ineffective in its stated goals and has yielded negative externalities.  For the reasons of political viability and reducing externalities, split rolling should be adopted as policy.  Even though split rolling may not be fully effective in restoring government’s ability raise revenue given the available loopholes, it does represent a step towards eventual full repeal that is currently politically viable. 

Works Cited

- Collins, Jeff "Amending Prop 13 by raising property taxes could help solve housing

affordability crisis, expert says." The OC Register, The OC Register, 4 Apr. 2017, www.ocregister.com/2017/03/29/amending-prop-13-by-raising-property-taxes-could-help-solve-housing-affordability-crisis-expert-says/

- “Common Claims About Proposition 13.” Common Claims About Proposition 13, LAO

Report, 19 Sept. 2016, lao.ca.gov/Publications/Report/3497#Does_Proposition.A013_Increase_Homeownership.3F.

- Cox, Joel Kotkin Wendell. “Landless Americans Are the New Serf Class.” The Daily Beast,

The Daily Beast Company, 1 Apr. 2018, www.thedailybeast.com/landless-americans-are-the-new-serf-class-10.

- Dayen, David. “The GOP Tax Plan Could Be the Death of Prop. 13.” Los Angeles Times,

Los Angeles Times, 9 Nov. 2017, www.latimes.com/opinion/op-ed/la-oe-dayen-gop-tax-prop-13-20171109-story.html.

- “Did Prop 13 Cause LA’s Housing Crisis?” Take Two, KPCC, 29 Aug. 2017,

https://www.scpr.org/programs/take-two/2017/08/29/58859/was-the-housing-crisis-caused-by-prop-13/

- Fischel, William. " DID SERRANO CAUSE PROPOSITION 13?" National Tax Journal, Vol.

42, No 4 (1989), pp. 465-73.
- Martin, Isaac " Does School Finance Litigation Cause Taxpayer Revolt? Serrano and

Proposition 13" Law & Society Review, Vol. 40, No. 3 (Sep., 2006), pp. 525-557

JSTOR. Web. 28-3-2018.

- Lutz, Byron " American Economic Association Quasi-Experimental Evidence on the

Connection between Property Taxes and Residential Capital Investment." American Economic Journal: Economic Policy, Vol. 7, No. 1 (February 2015), pp.300-330. JSTOR. Web. 2 Apr. 2018.

- McCubbins, Collin and Mathew.  "Proposition 13 and the California Fiscal Shell Game"

The California Journal of Politics & Policy, Vol. 2, No. 2 (2010)

- "Prop. 13 Has Made Everyone’s Property Tax Reasonable." The Howard Jarvis Taxpayers

Association, The Howard Jarvis Taxpayers Association, Accessed 10 Apr. 2017, https://www.hjta.org/propositions/proposition-13/proposition-13-has-made-everyones-property-tax-reasonable/

- Scherer, Ron " PROPOSITION 13'S; Howard Jarvis; A LITTLE TO THE RIGHT OF ATTILA THE

HUN?" The Christian Science Monitor, The Christian Science Monitor, 24 Jan. 1980, https://www.csmonitor.com/1980/0124/012460.html

- Sears, David and Citrin, Jack “Tax Revolt: Something for Nothing in California” Tax

Revolt, Harvard University Press, Print, 1985.

- Sheffrin, Steven " State Budget Deficit Dynamics and the California Debacle" Journal of

Economic Perspectives, Vol. 18, No. 2 Spring (2004), pp. 205–226.

- Silva, Fred and Barbour, Elisa "The State-Local Fiscal Relationship in California: A

Changing Balance of Power." PUBLIC POLICY INSTITUTE OF CALIFORNIA, (1999)

- Vlaicu, Razvan and Whalley, Alexander "Do housing bubbles generate fiscal bubbles?

Evidence from California cities." Public Choice, Vol. 149, No. 1/2, (2011), pp. 89-108. JSTOR. Web. 2 Apr. 2018.

The Efficacy of Subsidizing of Public Transit

Public transportation infrastructure is a vital part of any local economy. While many may agree on the importance of freeways, streets, and roads, there is strong disagreement about the efficiency of public transit. This result in public transit funding faces continually bifurcated sources as it fights other transportation needs.  According to the National Transit Summaries and Trends 2015, “On average passenger fares fund 33 percent of public transit operations in the United States, with another 12 percent generated directly by the transit operator. Local and State sources fund 24 percent and 23 percent, respectively; Federal Government sources fund the remaining 8 percent.” (Department of Transportation, 2015) However, transportation funding at the local and state level has long been dependant on the revenue stream provided by the outdated taxes, which have lost buying power due to neglect. This, coupled with lower allocation levels in the mid 2000’s put transit funding on a steady path to a financial cliff. The solution was a Self Help sales tax measure, as embraced by the majority of California, which will serve as a test case, but also nation wide. While public transit does not always cover it’s operating expenses, consistent subsidizing of public transit is vital for two main reasons. First, there are economic losses associates with allowing public transit to fail and great returns on investment with public transit. Second, climate change will necessitate less reliance on vehicles and greater dependence on mass transit to solve the crisis. These benefits from public transit subsidies are consistent with the urban transit economic literature discussed towards the end of this paper

Why Self-Help

 While most public transportation funding had come from the revenues generated by the gas tax, according to selfhelpcounties.org, there has been a thirty seven percent decrease in the buying power of the gas tax since 1993 when California stopped adjusting it. This was around the time self help strategies had been adopted in California.  In this time period, technology made the gas tax strategy obsolete with fuel-efficient cars and an effort to reduce carbon emissions.  The Self Help method is not just a sales tax strategy, but a two-thirds majority voter approved half a cent sales tax to fund transportation infrastructure. This provides a guaranteed funding source to the local transit authority that it can then allocate accordingly to various projects. This strategy has been the bulk of actual and estimated transportation expenditures since 2000. Once a county agency or transit authority gets the revenue, then pays the collections and administrative costs, they can then determine how the revenue is allocated to what projects. This strategy provides top to bottom accountability to the voters and adapts to under-performing projected revenues. In Orange County, OCTA M2 project manager Tamara Warren explained, “It is a 1/2 cent sales tax that goes to transportation improvements based on an Ordinance that was created and approved when passed.  Currently the sales tax revenue forecast is estimated to raise $14.2 billion over the 30-year plan period (2011-2041).  The Ordinance specifies how the funding is allocated and there are a number of projects and programs within the plan that have varying ways of being allocated.  Generally speaking, the plan is broken into four main areas.  Freeways (42%) - set projects and scopes, Streets and Roads (32%) - funding allocated by formula with some funds going directly to the local jurisdictions by formula and some available to local jurisdictions on a competitive basis; Transit (25%) - several programs with most allocated to local jurisdictions through a competitive basis (agencies submit applications and they are rated based on set criteria); and an Environmental  (2%) program designed to protect our waterways by preventing transportation related contaminants and debris from entering the waterway…Prior to the allocation of net M2 revenues to the Freeways, Streets and Roads, and Transit categories, M2 funds are first directed to the following “accounts”, as outlined in the Renewed Measure M Ordinance No. 3. Funds are disbursed out. ” (Warren, 2016) This adaptability is how OCTA has averted budget crisis and other ongoing challenges.

Efficiency in Action

Orange County’s Measure M1 and M2 are examples of the Self Help strategy’s efficacy to fund public transit. The phrase conveyed by OCTA’s project manager and Self Help website is, “promises made promises kept”.  M1 (1991-2011) provided 4 billion in transportation improvements in 20 years. Including the widening of SR22, and numerous other projects between freeways, roads and streets that enhanced traffic mobility in Orange County. This could be why in 2006, Measure M2 was approved with 70% of the vote 5 years before implementation and extended for 30 years. Presently, M2 is operating under the M2020 Plan, which is an adaptable guide to M2 funded projects until 2020. This was bolstered by the early action plan approved by the OCTA board to accelerate implementation of M2 funds prior to their 2011 collection. This is not to say that the Self Help strategy has been perfect for OCTA. As figure 1 indicates, M2 came up about ten billion dollars short in August of 2016 from its 2005 development forecast. However, realistic estimates of external funding, updated costs estimates, programs scale to available revenues are leading OCTA to plan their spending for projects differently by letting revenues accrue and spending when cash flow is high, and saving when revenue is not, as shown in figure 2 (octa.net, 2010).  This kind of economic rationality would imply that transit authorities are just as efficient as any other firm.

Figure 1: Measure M2 projected sales tax revenue

Figure 2: OCTA’s Measure M2 cash flow

When evaluating the efficiency of subsidizing public transit it is important to recognize the uncomfortable truth that public transit is a monopoly. However, to call public transit an inefficient monopoly isn’t exactly correct. First, transit naturally forms into a monopoly, due to its spatial impacts and high start up costs. While conventional monopolies often result in dead weight loss because of their supplier singularity, public transit only appears inefficient when one only considers the price equilibrium to be where the marginal private benefit and the marginal social cost intersect, rather than the intersection of the marginal social cost and marginal social benefit curve created by positive externality. What is the positive externality that shifts the MSB curve outward?  Research suggests that there are economic gains to be made in public transit investment. According to a 2008 report by the American Public Transportation Association, “The study finds that the economically and socially optimal investment program outlined above would generate significant economic and social benefits relative to the costs of achieving them. The present-day value of the program’s total life-cycle benefits between 2008 and 2038 would total an estimated $2,359 billion. Total life cycle cost over the same period (capital and operating expenses) would be $539 billion for a net benefit of just under $1830 billion- and economic rate of return of 23 percent” (APTA, 2008)

Also, the negative impact of recent service cuts in response to declining ridership in Orange County’s public transit highlighted the equity aspect of subsidizing transit, because even though OC’s rider population is small, the service is vital to them. To adapt to underperforming venues, OCTA opted to eliminate certain routes, create new ones that cover the combined eliminated routes while keeping routes that have a more regular ridership, which depends on these routes for their transportation needs (Kwong, 2016). With a program as large as Measure M, it is necessary to do a P.E.S.T. and S.W.O.T. analysis for Self Help.

Political	Economic	Social	Technological
Tax climate: General public reluctance towards new taxes.  Openness to this particular tax strategy because cost appears small (half cent).	Figures on tax revenue from these kinds of taxes found in Figure 1.  Gains from capturing positive externality of public transit.	Allows for local control of transit funding for transportation infrastructure.	Each city will have to pass a respective tax meaning there is no technological barrier to implementation.

Strengths	Weaknesses	Opportunities	Threats
-Voter approval by 70% across the country. -Allows a modicum of local self sufficiency -Can also allow funding to tangential projects	-Money can be siphoned or misappropriated -Tax can lead to loss of efficiency and creation of a deadweight loss monopoly, however, not likely, as the nature of public transportation infrastructure is such in size and scale that any provider public or private would be a natural monopoly.	-Future tax measures to be supported -Transportation expanded	-Ride sharing -Austerity -Economic recession

Pros and Cons

Self Help is not impervious though, despite its ability to facilitate a consistent revenue source for subsiding public transit. One positive aspect of Measure M as well as similar measures is that they are demonstratively popular with the voters both in California and nation wide. Eighty percent of California’s populations between 19 counties have approved similar measures, with dozens of other counties nation wide opting for this strategy.  With any sales tax supported subsidy, there is a vulnerability to economic recession, such as 2008’s, that can affect the revenues needed to support public transit. Another positive part of Self Help is that public transit investments have benefits to freeways and roads by alleviating congestion and vehicle usage, adding an environmental gain. Finally, another drawback of the discretionary nature of Self Help is that arterial freeways and roads may receive disproportional allocation in relation to transit, which could distort the cyclical benefits of investing in public transit.

To Subsidize or Not to Subsidize

            One of the main objections to public transit subsidies is that they are monopolies incapable of efficiently determining the price equilibrium of supply and demand. A conventional commodity would find its price at the intersection of its cost and return. However, passenger fares only cover a small portion of public transit funding overall resulting in the majority of public transit to be subsidized. Public transit is not like other commodities though. As the renowned transportation economist Herbert Mohring pointed out in his landmark Optimization and Scale Economies in Urban Bus Transportation, “Transportation differs from the typical commodity of price theory texts in that travelers and shippers play a producing, not just a consuming role. In using common carrier services, they must supply scarce inputs, their own time or that of the goods they ship, that are essential to the production process.”(Mohring, 1972) This is what later becomes known as the “Mohring effect” justifying transit subsidies, suggesting that “the magnitude of mass transit scale economies and hence the lower bound for an optimal transit subsidy policy” as Mohring points out is higher than what is often supplied. Kenneth Small also concludes, “That today’s substantial operating subsidies for transit systems are warranted on efficiency grounds, at least for the three major metropolitan areas studied. The main caveat is that some of the subsidy may be lost to inefficiency or captured by labor unions, given the evidence cited earlier of increases in wages and other costs following transit subsidies.”

This is why OCTA opted to rearrange routes rather than broad service cuts. Small also points out Moring’s assertion that “ …users’ waiting or access costs declined as service frequency or route density is increased. A related point is that the higher passenger density allows vehicles to be operated with higher occupancy, thereby saving on the transit provider’s costs.” (Parry and Small, 2009)

However, not everyone is convinced, Peran van Reeven contends, “If travel behavior is such that consumers do not use the timetable, then the profit-maximizing frequency is identical to the welfare maximizing frequency, and can be operated profitably. This result applies to high-frequency public transport systems in particular. The practical implication is that private operation of these systems in is efficient, even without any subsidy.” (van Reeven, 2008) Small countered this, though, by writing “The empirical literature has not directly addressed the issues raised by van Reeven (monopolist’s profit-maximizing choice versus social optimality), but rather, has analyzed whether profiting additional subsidies to encourage operator to lower their existing fare and/or expand their existing frequencies is socially desirable.” (Savage and Small, 2009) Anecdotally speaking, private transit providers often only produced it as a supplementary good to profit maximize other capital investments, such as the Pacific Electric Railway or the Red Car service supported the real estate developments in southern California of the Huntington family between 1901 and 1964, only to be replaced by the current transit authorities Los Angeles, San Bernardino, Orange County, and Riverside County.  

Conclusion

            The aim of this paper has been to examine the mechanics and the efficiency of funding public transit. While public transit appears to be inefficient as a monopoly, a closer look reveals that the inefficiency of transit stems more from underinvestment in service overall.  Also, it is flawed to overlook the cyclical economic and social benefits of subsidizing public transit in favor of the loss of private profit maximizing strategies because of the unique nature of transit as a commodity. This line of thinking appears to be akin to the grass always being greener on the other side. The adaptability and transparency of Self Help strategies such as Measure M1 & M2 allow for rational allocation based on their jurisdiction’s individual needs, even in the face of lower than expected revenues. This is a funding strategy that individual cities could confidently pursue within Orange County, in places of expected population growth such as Irvine, to ease the congestion associated with a denser population. Finally, it is important to recognize the exceptional political popularity in conservative Orange County of Self Help, given it is after all, a tax.    

Works Cited

HDR|HLB Decision Economics. (2016, February 8). The Optimal Supply and Demand for Urban Transit in the United States. In American Public Transportation Association. Retrieved November 29, 2016, from http://www.apta.com/gap/policyresearch/Documents/TCRP%20Transit%20Investment%20Final.pdf

Kwong, J. (2016, February 11). Some bus routes saved after OCTA modifies plans. OC Register. Retrieved from http://www.ocregister.com/articles/service-703842-route-octa.html

Mohring, H. (1972, September). Optimization and Scale Economies in Urban Bus Transportation. The American Economic Review, 62(4), 591-604. Retrieved from JSTOR (http://www.jstor.org/stable/1806101).

Measure M2 M2020: the Next Ten Years. (2010, October). In octa.net. Retrieved November 9, 2016, from http://www.octa.net/pdf/TOC%20Next%2010101116.pdf

Office of Budget and Policy. (2016). 2015 National Transit Summary and Trends. In . (Ed.). N.p.: Federal Transit Administration U.S. Department of Transportation. Retrieved from https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/2015%20NTST.pdf

Parry, I. H., & Small, K. A. (2009, June). Should Urban Transit Subsidies Be Reduced? The American Economic Review, 99(3), 700-724. Retrieved from JSTOR (http://www.jstor.org/stable/25592479).

van Reeven, P. (2008, May). Subsidisation of Urban Public Transport and the Mohring Effect. Journal of Transport Economics and Policy, 42(2), 349-359. Retrieved from JSTOR (http://www.jstor.org/stable/20054051).

Savage, I., & Small, K. A. (2010, September). A Comment on 'Subsidisation of Urban Public Transport and the Mohring Effect'. Journal of Transport Economics and Policy, 44(3), 373-380. Retrieved from JSTOR ( http://www.jstor.org/stable/25801406).

Transportation Needs Rise While Funding Declines. (2010). In www.selfhelpcounties.org. Retrieved November 11, 2016, from http://www.selfhelpcounties.org/Declining_Transportation_Funds_FactSheet_021113.pdf

Measure M: Envisioning the Future (2014)

In www.selfhelpcounties.org. Retrieved November 29, 2016, from

http://www.selfhelpcounties.org/focus/counties/Orange.pdf

Warren, T. (n.d.). In J. D. Eurell (Ed.), Email Interview Questions About Measure M1 & M2.

Donnie Can’t Dish it Like this Cripple, so He Should Hire Me

Donald J. Trump is many things, a creepy father, serial adulterer, and be Republican Presidential candidate. However, none of these things bother me as much as his role as a habitual hater of the cripples (or disabled). It isn't the fact that he constantly insults a group of people that bare no responsibility that have been born with or being in that particular situation, it's that the Spray On Don can't dish the verbal violence that this crippled comedian can.

Allow me to state my qualifications and my purpose. Being that I'm multiple time participant in the World Famous Comedy Store's Roast Battle and as someone with cerebral palsy that's in a wheelchair, I'm going to show the lead singer of The Small Hand Band, Don T., I am the man to write disabled material for him. I'll do this by writing better jokes about the disabled people Donald Trump has mocked, then I'll roast the millionaire Duvet Toupee himself.

Lets start with Trump's attack from last November of Serge Kovaleski, after Trump lied about one of this reproter's 2001 articles . What grinds my gears about this is Donald Trump denies mocking the disabled reporter's arthrogryposis arm, dispite clearly contorting his left arm while making a joke. Nevermind the cliche ableist cowardis of acting like he didn't just dis a disabled person, I'm just going to replace his jokes with my soul torching insults.

"You should see this Serge Kovelski guy, his disability is as hard to pronounce as his name, I don't know how he survived as a columnist with no typing hands; it's probaly why he no longer works at The Washington Post, and now ia at the failing New York Times. His memory is as twisted as his forearm".

Moving on, Trump's insults of paralyzed commentator Charles Krauthammer were like the previous attacks in how they only vaguely attack the disabliity in a very glib way.Trump said Charles Krauthammer was a loser who just sits there and can't buy a pair of pants. I thought The Donald was supposed to be proudly politically incorrect! Those who watch my comedy videos on Youtube (link here https://www.youtube.com/channel/UChD53_ErZBIKeKegoDUA8dQ) know that I ridicule disability outright.

"Can you believe this jebroni Charles Kripplehammer? His ideas are as outdated as his attempts to hide his disability from the public. Chuck's as severed from reality as his spine is from his body. We call him Chucks cause that's what he lines his wheelchair with to protect his seat from his incontinence. Don't give him a gun, he can't stand his ground! But at least Chucks has more legs than his buddy Bill Kristol's ideas of how to bring democracy to Iraq".

I think I made the case for why Mr. Duvet Toupee should leave denagrating disabled people to the qualified professionals, so that it remains as funny as possible; Trump's humor is inaccessible as his numerous properties. I can see through Donald Trump, for instance I know that the only reason he seems patriotic is because he looks like an eagle who has had all the feathers plucked from its face. Joe Eurell knows Donald Trump better than Donald Trump knows Donald Trump. While Donald Trump sees himself as the King of Debt who is a succesful businessman, I know he's really the Baron of Bankruptcy, who's dead brother has better business sense than he does.

Finally, the most important reason the Baron of Bankruptcy should hire me, is that I'll work for free and we all know  the Don's record on not paying the people he contracts to do work for him

Entitlement: The Conservative Animus for the Disabled

July 26^th marks 26 years since the passing of the Americans With Disabilities Act, which was a landmark piece of civil rights legislation, which prohibits discrimination in employment, public accommodations, communications, and government activities. Even though a Republican signed the bill into law, the aim and enforcement of the ADA violate every tenant of the American Right’s worldview. From policy to rhetoric, the right has for decades sought to marginalize the plight of the disabled American.

It is not clear whether this animus is conscious or unconscious, but it is unmistakable. Indeed the fiercest opposition to accommodation came from several sects from the base of the American Right. The Chamber of Commerce led the charge against structural accessibility, claiming it would be a costly headache for small businesses. While the cost of renovating is real, it isn’t unreasonable to assume that a business owner would get a tax credit for making their facility more accessible. Also, disabilities are often times worse than headaches.  However, this exposes the ludicrous claim that the free market is benevolent in how it naturally adapts to the needs of consumers. Why didn’t the free market necessitate structural accommodation before 1990, the answer goes to the heart of the free market conservative ideology, disabled people didn’t contribute enough to the economy to warrant accommodation. This point segways into the difference in policy approach to the American Right and the American Left.

The gap of difference between the right and left about the disabled is predicated on conservative intellectual opposition to the dreaded “central planning”, and their perennial admiration for the private sector.

Social Security Disability Insurance is a major source of conflict against the disabled. From my own research and personal experience from being on the program, I was able to deconstruct the arguments against SSI and SSDI. From the beginning of the program, conservatives felt that supplemental income disincentivizes economic productivity among the disabled. To this day they claim that the program is fraught with fraud and abuse. However, my research indicates that from a sample of 1,523 cases from 11 cities found that the rate of fraud was one third of one percent, most of which was related to belated discontinuation of payments and beneficiary error in understanding eligibility. Early opposition to the SSDI and SSI programs were also predicated on the conservative’s preference for rehabilitative programs, rather than long-term subsidies. This is the crux of the right’s animus towards the disabled, the economic impact having a life long chronic disability from a medical condition like cerebral palsy, down syndrome or spinal bifida throws a monkey wrench into their Calvinist fantasies about personal responsibility.  Besides, since the conservatives opposed the existence of these programs, the fraud and abuse argument is a disingenuous canard.

Administrative changes about the definition of who is disabled might need to be made, for example, disability public policy should recognize the distinction between the chronically disabled and the aged disabled. The conflation of the two is the root of the problem of over accommodation from programs like SSI or parking permits. That said, conservative opposition to programs such as these is ideological and reflexive.  In many ways the argument of over accommodation or fraud is pretense for opposition to these sorts of government programs conceptually. Ultimately, the best way to accommodate the chronically disabled would be to have a monthly individual subsidy similar to SSI, yet separate from the larger Social Security program itself. This animus is even evident in their opposition to programs that only benefit the recipient indirectly, such as a section 8 housing subsidy.   

            One of the more comical moments of the 2012 and 2016 Republican primaries was the two Texans Rick Perry and Ted Cruz forgetting what departments of government they would see fit to eliminate. Senator Cruz said in 2016 that he wanted to eliminate the Department of Housing and Urban Development outright, and it was eluded to in the 2012 Republican debates. Now, them saying that HUD should be eliminated gives no consideration to those benefitting from Section 8 Housing.  Section 8 is a program where the government pays two thirds of the beneficiary’s rent, which benefits the property owner more directly than the beneficiary. However, many conservatives would comment on the lower quality of section 8 housing, comment on how housing subsides skews their beloved free market by keeping lower quality housing on the market, or they’ll even go so far as to say this skewing effect was the cause of the 2008 housing crash, rather than collateralized debt obligation being traded as an asset in the stock market as Yanis Varoufakis explained in his book The Global Minotaur.  Just like with SSI, the best way to accommodate the disabled with a housing subsidy would be to create an entirely separate section for the life-long chronically disabled, that asks the beneficiary to contribute a quarter of the rent, rather than a third. If we combine the administration of the previously mentioned supplemental income subsidy with this housing subsidy, the levers of public policy could be used to mitigate the economic impacts of the life-long disability.  Furthermore, there should be block grants designated for the funding of debt free college for the disabled through grad school. Aside from those programs the lifelong disabled should be allowed to maintain a personal savings account of up to $100,000 which would not be counted against their federal supplemental income, housing, or educational subsidies. 

All of these programs would then be administered at the federal level by a cabinet position known as the Secretary of Disabled Services. This would be easily assembled since many of these programs already exist, and just need to be streamlined into a more user-friendly approach. The funding for this approach would be drawn from 3-5% of the annual military budget. In so doing the military disabled, as well as the born disabled would be covered without having to depend solely on the V.A. Of course, this would require veteran care to be combined to the cost of the defense budget rather than something separate. In other words, disabled veterans could draw more benefits from the programs I’m prescribing, which would alleviate some strain on the Veteran’s Administration as a whole.

            The aim of these suggested programs is to provide a modicum of economic certainty that is otherwise denied to the disabled and their loved ones. This uncertainty of being born with a disability can manifest itself in different ways. A report authored by Senator Tom Harkin pointed out that 28% of disabled people of all ages from 18-64 live in poverty, which is double the national average from 2013. The disabled in America still face a certain amount of economic marginalization and isolation stemming from lack of understanding by the non-disabled majority. Many conservatives would say that it would be better to allow private organizations to care for the disabled through donations. However, it is easy to learn the flaws in this approach, given that most of the history of assistance programs in the United States was through the private sector. Kim E. Nielsen’s book A Disability History of the United States outlines the inadequacies of many private organizations to be able to understand what truly was a disability and to accommodate those they recognize as disabled. This is to say that those with mental disabilities were less likely to receive assistance than with those with severe physical disabilities because the administrators of these organizations were the determiner of who was deemed worthy of accommodation, rather than the disabled themselves. Also, the idea of subsidizing assistance programs by private donation only, is a system that more benefits those donating as they get a deduction, which reveals yet again the conservatives hostile disregard of the disabled as people, simply because of the perception that those on assistance subsidies don’t contribute to the economy.

             Finally, it is necessary to address the root of this animus, , the word entitlement. That is what existing assistance subsidies are called. Indeed, it is easy to imagine a conservative reader of my afore mentioned policy prescriptions calling them, as well as my tone, entitled. To this I would retort that to describe any disabled person as economically entitled is a callous affront to their character. The term entitlement implies that the disabled have endless options beyond government assistance; it implies a level of choice that is not afforded to those born with a disability. The only way assistance programs for the disabled could accurately be called entitlements was if the word entitlement referred to the constant complaining of the “Free Market” conservative about taxation subsidizing “non production” in these assistance programs. It seems as if these conservatives feel that taxation is a greater burden than the circumstance of having been born with or developing a chronic life long disability.

SOURCES:

http://www.opensecrets.org/news/2013/03/powerful-interests-oppose-strengthening-of-disabilities-law/

http://crippledpiper.blogspot.com/2015/11/if-it-isnt-broken-leave-it-alone-policy_15.html

http://www.nytimes.com/interactive/projects/cp/election-2016/fourth-republican-debate-highlights/cruz-follows-perry-with-an-oops-moment-of-his-own

The Global Minotaur, Chapter 1, section 2 by Yanis Varoufakis

http://www.help.senate.gov/imo/media/doc/HELP%20Committee%20Disability%20and%20Poverty%20Report.pdf

A Disability History of the United States by Kim E. Nielsen