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one of the many reasons local governments don't approve housing is that tax revenues from housing rapidly decay to 0 while services for the additional residents cost significantly more than 0

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do you have any references for this? how does the tax revenue 'decay' to 0. Prop 13 doesn't reduce the tax over time but fixes it at a certain amount upon purchase (if the property is new) or transfer if it's sold.

All new houses and transferred properties are taxed at the value they were purchased.

No, I have no citations for the claim that inflation is sometimes above 2% or for the claim that the inflation rate for government services (which includes the cost of buying local housing for government employees) is sometimes above 2%. If either of these were true, the tax collected on a given property would increase in nominal terms but decay toward 0 in real terms.

Unrelatedly, Brisbane found that they could raise 9 times as much revenue and provide 0 times as much additional services to residents by approving hotels instead of housing. https://brianlui.dog/2018/08/01/housing-shortages/#_edn4

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