[burfog]

Prop 13 is a crude solution to the problem of cities being unwilling to properly manage their budgets. Something had to be done, and nothing better was offered. Cities would take on unsustainable expenses, then be unable to shed them when required.

An example of a specific cost is pension-like benefits. They turn bad when the paying population shrinks, when the receiving population lives longer than expected, or when costs (such as healthcare) for the receiving population change.

An example of a general cost is the tendency for the expenses to grow to match income. This can happen when a real estate bubble provides a property tax windfall. People get hired, people get raises... and then there is a need to cut all that back when the bubble bursts. This one is particularly bad because the bubble doesn't actually mean that people have more money for paying the tax. The tax rate needs to go down, keeping the city budget mostly unchanged, but that never happens. (the city may need to pay more, but this is minor because not all goes to property: materials are included, and there is a delay before the average worker's housing cost rises much)