Slouching Toward California

I was in a small city near Sacramento, California, not long ago, walking a downtown block with the mayor, the city planner, and a couple of other staff, when the mayor started pointing out buildings he wanted gone. Not gone as in demolished. Gone as in the businesses inside them. 

He gestured at a storefront that had been cited for a minor code violation, the kind of thing that in most places gets a warning and a handshake, and said something about how it was time for that tenant to move on. Then he did it again at the next building. I assumed I was hearing about businesses that were failing, or causing problems, or sitting vacant. I wasn't. These were fine businesses. People shopped there. The mayor didn't like them anyway.

It took me a while to figure out why, and I had to verify the city’s planner directly before it totally clicked. The buildings weren't the problem. The property taxes were. Under California's assessment rules, a building's taxable value is frozen close to what it was worth when it last sold, rising only a small amount each year regardless of what's actually happening to the market around it. A building can double or triple in real value and the city sees almost none of it.

But sales tax has no such ceiling. If the insurance broker became a restaurant with a full bar, or a business that moved real volume across a register, the city’s share of that flow wouldn't be capped at all. The mayor wasn't describing a downtown he'd given up on. He was describing a downtown that had stopped being useful to his budget.

A city government making decisions about what belongs on Main Street not based on what serves the people who live there, but based on which use throws off the most revenue the city is actually allowed to keep... That's what I was watching on that sidewalk, even if it took me a while to see it. It felt like a government turning predatory toward its own residents. Not out of malice, but out of arithmetic.

California didn't set out to build this. It arrived there by way of Proposition 13, passed by voters in 1978, and it arrived there for a reason that made complete sense at the time. Home values in California were rising fast, and property taxes were rising with them. People who had owned modest homes for 20 or 30 years were watching their tax bills climb past what their income could bear. Retirees were being taxed toward the edge of their own homes. Prop 13 capped how much a property's assessed value could grow each year and reset it to full market value only when the property changed hands. It passed by a landslide, and it did exactly what the people who needed it wanted it to do.

What it also did, over the following four decades, is now simply a matter of record rather than prediction. Two identical houses on the same street can carry wildly different tax bills depending only on when their current owners bought them. Cities, stripped of the ability to let their primary independent revenue source grow with actual value, turned hard toward whatever taxes weren't capped — aggressive redevelopment schemes, until that power was stripped from them, and now predominantly sales tax — and started making land-use decisions accordingly. 

A thriving small business that only generates property tax becomes, from the city's point of view, worth less than an empty lot that might someday hold something with a cash register. This isn't a caricature of California governance. It's the documented, unsurprising result of the incentive the state built in 1978 and never rebuilt.

Florida likes to describe itself as everything California isn't: leaner, better run, more respectful of taxpayers. But it's already walking a version of California's path. It started in 1992, when voters created the Save Our Homes cap, limiting annual growth in a homestead's assessed value to 3%, with the full market value returning only when the property sells. Now, this November, voters will decide whether to take the next step down that same California-paved road.

A new amendment, fittingly named "Save Our Homes from Excessive Property Taxes," is structurally the same shape as Prop 13, down to the slow-building gap between what a longtime owner and a new neighbor pay for an identical house. This year's proposal doesn't repeal that cap or rethink it. It builds directly on top, raising the homestead exemption to $150,000 in 2027 and $250,000 in 2028, while directing the legislature to eventually eliminate the tax on homestead property altogether.

The ballot summary says the amendment ensures “funding for core services,” but can it? The Legislature's own staff has already run the numbers. If the amendment passes, local government funding is cut by $4.95 billion in the first year alone, $8.78 billion the year after that, and $11.86 billion by 2031, and that's before the amendment's required next step, a legislative framework to eliminate the homestead tax entirely.

If property taxes are eliminated on homestead properties, then who pays for local government?

The assumed answer, if you’re a Florida resident, is “someone else” — the same answer Californians chose in 1978 — but that’s not really an answer. The bill acknowledges the core services of local government: public safety, education, infrastructure, natural resources, debt service, retirement benefits, and administration. If someone else is going to pay for these, who is that? 

None of this makes the frustration behind the amendment invalid. Local governments do make bad decisions. All the time. They take on infrastructure they can't sustain, defer maintenance until it becomes a crisis, and treat a growing budget as proof of good management. Florida's local government budgets really have grown faster than inflation and population since 2019. That's a fair complaint about the past. It's not a plan for what happens next. 

This is billed as reform, a way to force fiscal discipline by shrinking the tax base and letting cities cut whatever isn't essential. But California already ran this experiment, and the results aren't theoretical anymore. Squeeze a city's primary independent revenue source, and it doesn't just get leaner. It gets more inventive, and not in the way we’d like to see. 

A desperate local government, loaded up with promises and stripped of options to meet them, cuts services where it can and defers maintenance where it can't. It looks for new fees to attach to things that used to be free. It courts whatever growth still pays, on whatever terms that growth demands. And it takes on debt. Lots of debt.

It also stops paying much attention to the residents already there. A capped assessment means their tax bill barely moves whether the city serves them well or serves them badly. At best, they've become a captive audience: locked in, easy to ignore, bereft of any healthy feedback loop to reward good service or punish bad service in a way city hall actually responds to. At worst, they become an obstacle to success. They're the storefronts the mayor near Sacramento wants gone, not because they're failing, but because they've stopped being useful to him.

There's a version of this argument that treats this decision as a simple binary: either Florida cuts property taxes and trusts cities to handle it, or Tallahassee steps in to make sure they do. But that's not actually two options. It's the same option twice. Sacramento didn't originally set out to run California's cities either. It did that gradually, backfilling budgets and layering on state mandates as Prop 13 hollowed out what cities could do on their own. 

Florida is doing the same thing on a faster timeline, and doing it with intention: a companion law raises the threshold for a city to set its own tax rate to a supermajority vote, or a public referendum. Another requires every city and county to find 10% in cuts before adopting a budget, whether or not 10% of anything is actually there to find. A third already lets a single official challenge a city's own decision to reduce its police budget, with the final call going not to anyone in that city, but to an administrative law judge in Tallahassee. 

None of that is restraint. It's a transfer of judgment, one piece of legislation at a time, from the people closest to a place to the people furthest from it.

There's a third way, and it doesn't start with deciding for cities what they can charge or what they must cut, from either direction. It starts with helping them build a financial model that doesn't need constant rescue in the first place. That means real feedback loops, so a local government feels the consequences of its own decisions quickly enough to correct them, rather than discovering the damage decades later in a pension shortfall or a bridge nobody budgeted to replace. It means a development pattern that pays for itself over time instead of one that trades a small amount of new tax base today for enormous maintenance obligations tomorrow. It means treating local knowledge as an asset instead of a liability to be constrained by statute. 

None of that fits on a ballot next to a specific dollar figure, and none of it makes for as satisfying a press release as a $250,000 exemption. But it's the only version of reform in this fight aimed at making local government work, rather than just making it smaller or making it someone else's problem. 

That's the conversation Florida hasn't had yet, and the one voters in November won't be asked to have either. The ballot gives them exactly one choice: whether to cut property taxes further. The state's micromanagement that arrived alongside that cut — the supermajority thresholds, the mandatory cuts, its say over a city's own police budget — was never on a ballot at all. It's already law.  

A Strong Towns approach starts somewhere else entirely, with whether a city can govern itself well, and what it needs in place to be able to do that. It's a question neither Tallahassee nor Sacramento can answer by tightening a formula or mandating a local provision. It's one the state can help foster, but a city has to build the capacity to answer it on its own.  

Get that right, and a mayor stops needing his own downtown's best businesses to disappear. He starts needing them to prosper.

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A shout-out to Eleanor Harnage who brought this entire thing — including the legislative receipts — to my attention on the Strong Towns Commons. We’re discussing this article and Florida’s amendment process there for those of you who are Strong Towns members and want to know more.