The state Supreme Court this week issued a much-anticipated ruling that will make it much easier for local tax increases to be enacted.
Or maybe not.
The 5-2 decision, upholding an appellate court ruling, was that the taxing constraints on local governments in the state constitution don’t apply to voter-generated ballot measures that raise taxes.
It was immediately interpreted by anti-tax and pro-tax forces as allowing initiatives for “special taxes” – those for specific purposes – to be approved by voters via simple majorities, rather than the two-thirds margins required for special taxes proposed by governments themselves.
“It’s pretty devastating,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “It will incentivize collusion between local governments and special interest groups to create special tax increases.”
Coupal says an effort will be mounted to overturn the decision via a constitutional amendment.
“It’s hard to overstate how important this ruling is,” Scott Wiener, a Democratic state senator from San Francisco, said in a statement. “Communities will now have a much easier time funding schools, transportation and other critical needs.”
A provision of the state constitution, enacted in 1996 via Proposition 218, says that local governments may raise taxes – usually sales or parcel taxes – for general purposes with simple majority approval of voters, but special taxes, require two-thirds approval.
Monday’s ruling, stemming from a dispute over licensing and taxing marijuana sales in Upland, a small city in San Bernardino County, declares that the provision doesn’t apply to initiatives, drawing a bright legal line between governments and their voters.
“Multiple provisions of the state constitution explicitly constrain the power of local governments to raise taxes,” Justice Mariano-Florentino Cuéllar wrote for the court’s majority. “But we will not lightly apply such restrictions on local governments to voter initiatives,” citing a previous declaration that the initiatives process is “one of the most precious rights of our democratic process.”
The court’s two dissenters disagreed, saying that voters are, in fact, part of their governments and, therefore, the constitution’s provisions apply to them as well.
The two-thirds vote requirement for special taxes has mostly affected single-purpose governments such as school districts and mass transit agencies, while cities have tended to seek general purpose tax increases due to their lower voting requirements.
In theory, therefore, with this week’s ruling, pro-tax forces, such as public employee unions, could sponsor ballot measures to raise special taxes without triggering the two-thirds vote requirement.
Some doubtless will try that route, but since the decision didn’t explicitly refer to the vote requirement, additional litigation would surely result.
Aside from the complex legal facets, the decision should be seen as one of equity. There’s no particular reason why the voting requirements for general and special taxes should be different at the local level, or why local tax measures should face hurdles that are not imposed on state tax measures.
While the Legislature must muster two-thirds votes of its own members to raise any kind of taxes, statewide initiatives for higher taxes – even very narrow ones for specific purposes such as cigarette taxes – have never required more than simple majority voter approval.
What’s good for the state goose should also apply to the local gander.
CALmatters is a public interest journalism venture committed to explaining how California’s Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/articles/author/dan-walters. Dan Walters: firstname.lastname@example.org