California lawmakers yank high-stakes local tax proposal after 11th-hour deal
Democratic lawmakers, business groups and a conservative anti-tax activist struck an 11th hour deal Thursday that raises the bar on voter-initiated local tax increases. It replaces a proposed constitutional amendment from November ballots with a new proposal passed by the Legislature.
The deal averts a ballot referendum that backers from the Howard Jarvis Taxpayers Association said would’ve reined in expansive local real estate taxes. Critics argue it would’ve threatened critical existing revenue streams that local governments use to pay for public services.
The ballot initiative, the Local Taxpayer Protection Act to Save Proposition 13, would have effectively invalidated Los Angeles’ controversial “mansion tax” passed by voters in 2023. That measure set taxes up to 5.5% on real estate sales and has so far raised $1.2 billion, but developers argue it discouraged much-needed housing construction.
The ballot measure would have required special taxes approved by local governments to receive two-thirds support from voters to go into effect — and invalidated previous tax increases that hadn’t met that threshold.
The deal hammered out with lawmakers creates a new constitutional amendment to go before voters that would preserve the two-third majority requirement but removes language making it retroactive. It also prohibits ballot measures that create new property taxes outside of limits currently in the California Constitution.
That move largely spares local governments budgetary hits that nonpartisan legislative analysts pegged between $2 billion to $3 billion annually.
Assemblymember Buffy Wicks, D-Oakland, said the agreement “protects vital resources for our local communities and it removes the greatest threat to our cities and their fiscal health, which is the Taxpayer Protection Act.”
Both the California Assembly and Senate passed a bill Thursday, with bipartisan support, that would make the new language from the deal eligible to go before voters in November. The Legislature also voted to eliminate a competing referendum, originally passed in 2023, targeted at ballot measures that seek to change the threshold for passing certain initiatives. That ballot proposal, ACA 13, would’ve effectively held those initiatives to their own standards. If an initiative proposed a new two-thirds majority requirement, for example, it too would need a two-thirds majority to pass.
Carolyn Coleman, CEO of the League of California Cities, said in a statement that the organization did not yet have a position on the compromise.
But Coleman said that cities are already struggling to maintain a high quality of service in a context of high inflation, cuts in federal funding, and stagnant sales revenue.
“Efforts that limit the ability to raise local revenues only deepen uncertainty for local governments and the communities they serve,” Coleman said.
The heads of the California Business Roundtable, California Taxpayers Association and California Business Properties Association — all supporters of the initial Local Taxpayer Protection Act—issued a statement praising the compromise agreement.
“Strengthening these taxpayer protections is an important step toward improving affordability and restoring public confidence in government,” the group said.
POLITICO reported Wednesday that developers who’d backed the Howard Jarvis Taxpayers Association ballot measure would spend around $10 million to fight it if the organization’s president, Jon Coupal, didn’t agree to an earlier legislative compromise supported by other members of the coalition. Coupal initially stood his ground, but later issued a letter spelling out terms for the eventual agreement.
This story was originally published June 25, 2026 at 6:02 PM with the headline "California lawmakers yank high-stakes local tax proposal after 11th-hour deal."
