TEXT ON SCREEN: June 6, 1978

ARCHIVAL (NBC, 6-16-78): WOMAN: People have to pay all these taxes, they dont get nothing for it.

ARCHIVAL (NBC, 6-16-78): MAN: I feel like screaming.

ARCHIVAL (CBS 5-30-78): WOMAN: Its kinda like a Boston Tea Party, that were saying weve had it.

NARRATION: In the 1970s rising property taxes started a revoltin California.

ARCHIVAL (CBS, EVENING NEWS, 6-15-78): WALTER CRONKITE: Proposition 13, thats what it was called and it could take its place alongside no taxation without representation.

NARRATION: Californias young governor and other officials tried to stop it.

ARCHIVAL (CBS, 3-2-78): WILSON RILES (SUPERINTENDENT): I must say that the proposed initiative will do nothing short of destroy education in California as we know it.

NARRATION: But there was no stopping the man who led it.

ARCHIVAL (KPBS, 1978):HOWARD JARVIS: We the people not the politicians are still the boss.

NARRATION: More than 35 years later, tax cutting measure Prop 13 is still on the books, but what has it really meant for California?


NARRATION: In the 1970s the nations economy had hit the skids. An energy crisis meant long lines at gas stations and inflation was eating away at workers paychecks. Then Californians received their property tax bills.

ARCHIVAL, (CBS 03-02-78):NEWS REPORT: Dolores McCormic last year had to pay $646, this year its a $1072.DOLORES MCCORMIC: The state has become an octopus, its just gobbling up all our little homes, thats all.

JOEL FOX (FORMER PRESIDENT, HOWARD JARVIS TAXPAYERS ASSOCIATION):Howard Jarvis said the reason he got involved in the tax revolt is he once was helping a woman who was really afraid that her property taxes were going to force her out of her home.

NARRATION:Joel Fox started working with Jarvis in the 1970s.

JOEL FOX: And he went down to the county building with her according to Howard, she had a heart attack right there in the building.And it really prompted his theme that he was going to follow. And he says, Death and taxes may be inevitable, but being taxed to death is not inevitable.

NARRATION: Californias constitution allows anyone with enough popular support to put a proposed law on the ballot.Jarvis, a retired businessman, had tried tax-cutting measures beforeand gotten nowhere. But with voter anger at a boil, Jarvis proposed a bold idea.

ARCHIVAL (CBS, 5-30-78):NEWS REPORT: It would cut property taxes sixty percent on the average, limit them to one percent of market value. To the cities and counties of California it would mean a revenue loss of at least $7 billion.

NARRATION: For many those cuts were too harsh. Californias governor, Jerry Brown, said the tax cuts would benefit corporations more than homeowners, because businesses would receive more of the tax savings.

ARCHIVAL (CBS, 5-30-78):NEWS REPORT: Brown has campaigned hard against 13, calling it crazy, a bonanza for large landholders and corporations who stand to get the biggest tax savings.

NARRATION: Opponents also pointedout that as a lobbyist for the Los Angeles Apartment Owners Association, Jarvis represented one of the potential big winners. But he countered criticism with a populist message.

ARCHIVAL (CBS, 6-15-78):HOWARD JARVIS: After all the basis of a free country is that government must be limited. Now we got unlimited government. That brings unlimited taxation. That either brings you into bankruptcy or dictatorship.

TOM HAYDEN (SOCIAL ACTIVIST AND CALIFORNIA STATE SENATOR, 1992-2000):So you could tell this guy is not a Hollywood guy, this guy is not a bright shiny guy.

NARRATION: Tom Hayden was part of a coalition that fought against Prop 13.But he understood Jarviss appeal.

TOM HAYDEN: He was really not the elite. He spoke for people who felt pinched, economically pinched.

ARCHIVAL (THE MOVIE NETWORK, 1976):HOWARD BEALE: Im as mad as hell and Im not going to take this any more!

NARRATION: Jarvis found inspiration for his Prop 13 campaign in the 1976 Academy Award-winning film Network.

MARK PAUL (CO-AUTHOR, CALIFORNIA CRACKUP: HOW REFORM BROKE THE GOLDEN STATE AND HOW WE CAN FIX IT):The main character Howard Beale, you know, becomes a television star by getting on television and shouting, Im mad as hell. Im not going to take it anymore.That was Howard Jarviss motis, he picked up that line and that persona.

ARCHIVAL (THE MOVIE NETWORK, 1976):HOWARD BEALE: I dont know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first, youve got to get mad. Youve gotta say, Im a human being, goddammit!My life has value!

NARRATION: Howard Beales signature line from the movie,Im mad as hell, struck such a popular chord that Jarvis used it on the cover of his autobiography and it became a rallying cry for the Prop 13 movement.

ARCHIVAL (CBS, 5-30-78):NEWS REPORT: They are talking revolution in California. A revolution against taxes and government.WOMAN: I feel that we just have to stop this excessive spending. I just feel its getting out of hand.

NARRATION: Jarviss popularity soared after he started regularly appearing on a Los Angeles TV station in a series of debates where he took on Prop 13 critics.

ARCHIVAL (KABC, 5-78): ED EDELMAN: He is using this taxpayer revolt, homeowner revolt to really help not the homeowner really. HOWARD JARVIS: Thats phony. ED EDELMAN: Can I finish? HOWARD JARVIS: No ED EDELMAN: Its to help the big industrial property owners HOWARD JARVIS: That is the biggest phony lie!

NARRATION: Opponents to Prop 13 argued that it would erode the local services that property taxes helped pay for.

ARCHIVAL (NBC, 10-10-78): JERRY BROWN: It takes too much out of the public sector, $7 billion, which would jeopardize our bonds, our fire department, our police, our schools, our other programs.

NARRATION: But supporters of Prop 13, like former governor Ronald Reagan,reassured voters that it wouldnt spell disaster because the money saved would be spent, generating other tax revenue.

ARCHIVAL (CBS, 6-15-78): RONALD REAGAN: The loss of revenue over any period of time, it will not happen unless the people bury that seven billion dollars in a tin can in the backyard.

NARRATION: Prop 13 struck a nerve with voters.

MARK PAUL: They rolled the dice. The elites told them that this would be a catastrophe, and people just didnt care.

ARCHIVAL (CBS, 5-30-78):CORRESPONDENT: They want to see politicians punished and spending cut.

NARRATION:On June 6, 1978, Proposition 13 won in a landslide.

ARCHIVAL (KPBS, 6-23-78):HOWARD JARVIS: We the taxpayers have spoken.We have made clear our goals.Now we are watching you. It is your responsibility to make Prop 13 work.

NARRATION: The state got the message.

ARCHIVAL (NBC, 6-16-78):JERRY BROWN: We have only three weeks to act. Three weeks to decide multi-billion dollars of fiscal questions.

ARCHIVAL (CBS, 6-15-78):Most school districts have already announced there will be no summer school this year. Not since the depression years of the 30s has summer school been cancelled in California.

NARRATION: Jarvis shrugged off the pending cuts.

MARK PAUL: Eliminating summer school he said, thats just babysitting. Art and music and the rest of it he just said those were frills.

ARCHIVAL (NBC, 6-16-78):HOWARD JARVIS: The most important thing in this country is not the school system, nor the police department nor the fire department the right to preserve the right to have property in this country, the right to have a home in this country, thats important.

NARRATION: As California struggled to meet its bills, the architect of Prop 13 became a national sensation spreading the gospel of tax-cutting.

MARK PAUL: Not many people of Howard Jarvis background end up with their face on the cover of national magazines like Time and etc. It made him a celebrity.

ARCHIVAL (PROP 2 ADVERTISEMENT, 2010):Pigs could stretch their limbs out,if you check the box for yes.

NARRATION: Prop 13alsohad another effect. Whether it was this proposition sponsored by animal protection groups to make farm animals less confined it passed, or another initiative backed by millions from Texas-based oil companies which aimed to roll back Californias pro green climate change law it failed.

Voters have since used ballot initiatives like these to amend Californias laws more than 75 times.

KIM ALEXANDER (PRESIDENT, CALIFORNIA VOTER FOUNDATION): What Howard Jarvis and the taxpayers revolt showed us in the late 1970s was that you can tap into that popular sentiment, that public revolt, and use it to change the law.

MARK PAUL: In California anyone with a couple million dollars and an idea can get a measure on the ballot with a chance of getting it passed.

NARRATION: While there have been scores of citizens initiatives in California, nothing has had more lasting influence than Prop 13.

The tax-cutting measure has kept rates low, saving property owners billions and allowing many to hold onto their homes.

But critics say it has also contributed to economic problems.

ARCHIVAL (NBC, NIGHTLY NEWS, 1-10-08):BRIAN WILLIAMS: Today Governor Arnold Schwarzenegger came out with a budget plan that cuts almost everything in sight to make up a staggering deficit there.

TOM HAYDEN: People that think elections dont matter have to weigh carefully what happened with Prop 13. Were still living with the consequences.

ANTONIO VILLARAIGOSA (MAYOR, LOS ANGELES, 2005-13): Ive seen what its done to our schools. We used to be in the top five in per pupil spending.Today, were closer to the bottom.

TOM HAYDEN: We have hundreds of thousands and millions of parents whose children suffered an inadequate education as a result of those schools being cut.

NARRATION: Jennifer Bestor, a mom and school volunteer who lives in Silicon Valley, used 2014 property tax data to explore the impact of Prop 13.

JENNIFER BESTOR (VOLUNTEER RESEARCH DIRECTOR, EDUCATE OUR STATE): This is a property that always interests me because weve got a Walgreens, weve got an Unamas, weve got a Starbucks.

NARRATION: Under Prop 13, property ownerswho hold property for a long time still pay taxes tied to the original purchase price, regardless of the current market value.

Bestor says that means owners with similar properties contribute disparate amounts, with some paying much less tax.

JENNIFER BESTOR: Weve got about 15,000 square feet of space. And its only paying $9,337 a year in property tax.Im not an assessor but I would expect to pay about $75,000 or more a year in property taxes. Essentially, theyre getting a $65,000 free ride. Which I tend to think of this in terms of school kids.Wow, thats six and a half kids who could be educated for the amount of money that theyre escaping.

NARRATION: Property taxes are supposed to reset to market value when a property is sold. But loopholes have allowed some commercial properties to keep these low tax rates regardless.

In 2011, when Jerry Brown became Californias governor again, 36 years after his first term, he proposed a new tax on high earners asa temporary fix to help fund schools.

ARCHIVAL, (PROP 30 COMMERCIAL, 10-14-12 ):JERRY BROWN: For Californias future, vote yes on 30. KIDS: Yay!!!

KIM ALEXANDER: And he asked people, Ive got this idea.Rally around me. And he had a vehicle that allowed people to rally around him, and he put it on the ballot and they got to vote. And they did rally around him.

NARRATION: But Prop 30s wealth tax was only a band-aid,sunsetting in 2018, unless extended by voters. Critics say an overhaul of Prop 13 that would limit its benefits to homeowners remains part of the solution to Californias budget woes.

ANTONIO VILLAIRAIGOSA: What we have right now is broken and we have to fix it, and we need leaders who have the courage to stand up and say, Hey, look.Why cant we have a rational discussion?This isnt working.

NARRATION: Howard Jarvis died in 1986. But Fox says that any attempt to roll back Prop 13 would still make his old boss, and most California homeowners, mad as hell.

JOEL FOX: Wed fly back into Los Angeles. And when you fly into Los Angeles, to LAX, and you come down and there are thousands of homes. And Howard would be looking out the window more than once, and he said, I saved a lot of people their homes.