Information was gathered through interviews with people who took part in the legislative action implementing the constitutional amendment and through an analysis of reports, legal documents, and newspaper accounts regarding major events occurring after the June 6, 1978, vote. In a 3-week period, State policymakers made major decisions to allocate the remaining local property taxes, to provide about $4.1 billion in temporary grants to local government, to set up an emergency loan program, to define ways to implement Proposition 13, and to reduce the State budget. The provision of State funds to local government was contingent on several factors, including the provision of the same level of local police and fire protection as in 1977-78. Although interest groups lobbied extensively during the legislative action, their overall influence was marginal compared to that of legislative staff. Factors such as the large margin by which Proposition 13 was passed and the existence of a large accumulated State surplus were the most influences on the legislative deliberations. Local governments must now depend on the State legislature to determine their shares of remaining property taxes and State aid. The revenue base supporting local government has shifted from the property tax to the State sales, income, and bank and corporation taxes. The traditional growth of State and local public employment and expenditures appears to have slowed. State actions providing long term bailout funds and reforming local property tax administration have restored some stability to local fiscal planning, although this stability is threatened by the Jarvis initiative that will appear on the June 1980 ballot. Tables, footnotes, and appendixes presenting background and supplementary information are provided. (Author summary modified)