In recent years, California court rulings have made it easier to raise local taxes.
Now business interests are trying to change that. Meanwhile, Democratic lawmakers are moving to stop them through legislation introduced by Assemblymember Chris Ward, D-San Diego.
The California Business Roundtable and allied organizations have qualified an initiative for the November 2024 ballot that would, among other things, raise the voting threshold to increase local and state taxes.
Many local tax increases for a specific purpose proposed by local governments currently require two-thirds voter approval. General tax increases proposed by government are ed with a simple majority.
The big change has come from repeated court decisions that have determined that citizens’ initiative tax measures placed on the ballot through signature-gathering now only need a simple majority, rather than the two-thirds.
The business-backed ballot measure would require a two-thirds majority for all local taxes.
Ward’s legislation would place a measure on the ballot, likely in the March primary, mandating that any initiative that changes the voter-approval threshold must be ed by that same threshold.
In other words, his Assembly Constitutional Amendment 13 means the business measure would need a two-thirds majority to win — and in deep blue California that seems unlikely.
Sometimes it’s hard to keep straight what needs simple- or super-majority approval from voters. (The ACA 13 ballot measure would with a simple majority.)
As for state taxes, currently they can be raised with a two-thirds vote of the Legislature. The business initiative would add a statewide vote requirement on top of that, though only a simple majority of voters would be needed.
For the Legislature to put a measure on the ballot, is needed from a two-thirds majority in both the Assembly and state Senate. Democrats have those numbers, but that’s still a high bar.
That shouldn’t be a problem for ACA 13. Assembly Speaker Robert Rivas, D-Hollister, has signed on as a co-author of the legislation. The proposal also has broad backing from labor unions, the League of California Cities, the California State Association of Counties, and groups that pursue infrastructure funding, among others.
Critics of the Ward measure say it seeks to change the rules mid-game, along with throwing up a roadblock to limiting taxes. Opponents of the business proposal say the initiative takes away existing voter rights.
The proposal to raise the voting threshold has received the lion’s share of attention, but the business initiative does a lot more than that.
The initiative also expands the definition of taxes to include various fees and charges levied by government, such as use of city property or services like trash collection.
Los Angeles Times business columnist Michael Hiltzik pointed out that real estate interests are big financial backers of the initiative. Then he highlighted one specific prohibition in the measure.
“No levy, charge, or exaction regulating or related to vehicle miles traveled may be imposed as a condition of property development or occupancy.”
Vehicle miles traveled, known as VMT, is a policy increasingly put into use in various states that charges motorists based on how many miles they drive.
VMT fees, also called road-use charges, serve two basic purposes. They help fund infrastructure improvements as a replacement for, or supplement to, gas tax revenues, which have been declining steadily because of increased fuel efficiency and the growth of alternative-energy automobiles, especially electric vehicles.
VMT fees also are used as an environmental planning tool to focus development in more concentrated areas to reduce travel by automobiles.
Though controversial, VMT fees are being considered by the state of California and local government agencies, including the San Diego Association of Governments.
There are at least a couple of other noteworthy provisions in the business initiative. The proposal would prohibit advisory votes on how new tax money should be spent from being on the same ballot as measures to raise those taxes.
Such advisory votes, though not binding, can be used to hold officials able if they don’t spend the money as promised. Further, the advisory vote can boost for a general — and simple-majority — tax if it says the money is targeted for popular uses, such as public safety or transportation.
Critics say voters would be less inclined to a general tax without an ading measure describing where the money would go.
Ward’s ACA 13 would allow advisory measures to be on the same ballot as a proposed tax increase.
Meanwhile, the vote-threshold initiative would be retroactive to Jan. 1, 2022. That means local taxes approved by less than a two-thirds vote since then, and presumably increased fees, would be voided if the business-backed measure es. The same goes for state taxes and fees not approved by a statewide vote.
The initiative would have negative financial impacts on state and local governments, but to what degree is unclear because of variables.
“Due to the uncertainty of these factors, we cannot estimate the amount of reduced state revenue, but it could be substantial,” said an analysis of the initiative by the Legislative Analyst’s Office.
The analysis said local governments “generally face greater restrictions to raising revenue” than the state.
“The extent to which (local) revenues would be lower is unknown, but fees could be more impacted,” the analysis said.
The League of California Cities said in a report that billions in local government fees and charges would be “placed at heightened legal peril.” The report also said hundreds of million of dollars in annual revenues from tax and bond measures approved by voters after Jan. 1, 2022, could be “subject to additional voter approval if not in compliance with the initiative.”
The fight over what constitutes approval of tax measures is not new at the state and local level. The battle long predates the string of court rulings determining citizens’ initiatives to raise taxes require only a simple majority, which began in 2017.
In the city of San Diego, an initiative aimed at raising the voter approval for general government tax increases to a two-thirds majority in the early 2000s was thwarted by a counter-initiative that keeps them at a simple majority.
Initiative threats on taxes have “spurred deal-making” in the state Capitol before, according to Politico.
“Business groups qualified a similar measure in 2018 and then used it as leverage to win a ban on local soda taxes, withdrawing the initiative after Democrats reluctantly agreed to the beverage industry’s demands,” Politico wrote.
It’s hard to see that kind of endgame here, but in Sacramento you never know.
For now, two competing measures are headed for the ballot next year, when proponents of both will be arguing that theirs is the best for democracy.
