Republicans Push to Close 'Loophole' in Local Tax Law

Republicans in the California State Assembly proposed a constitutional amendment on Wednesday that would reinforce higher voter thresholds for some local tax measures placed on the ballot by citizens.

The constitutional amendment is a response to a state Supreme Court decision this week that opened the possibility of passing some local tax measures by a simple majority vote.

"The court’s decision opens up a loophole for special interests to pass taxes and subverts these taxpayers' protections," said Assembly Republican Leader Chad Mayes, R-Yucca Valley. 

The court's ruling questioned the reach of Proposition 218, passed by voters in 1996. The ballot measure placed certain restrictions on local initiatives that seek to raise taxes for specific purposes, such as funding a new train line or park.

Those requirements include the need for the approval of two-thirds of local voters.

A majority on the court found that measures brought directly by citizens shouldn't be held to the same standard as those placed on the ballot by elected officials.

"We agree with the Court of Appeal that [Proposition 218] does not limit voters' 'power to raise taxes by statutory initiative,' " the majority opinion stated.

Some Democratic lawmakers have celebrated the ruling, arguing that Proposition 218's requirements have made it difficult for local governments to raise vital revenue.

"This two-thirds vote requirement for dedicated, earmarked taxes has really harmed the ability of local communities to pave their streets, to keep their libraries open," said San Francisco state Sen. Scott Wiener. "It’s had broad negative impacts and we need to make it easier for our local communities to fund basic services.”

Because Monday's decision in California Cannabis Coalition v. City of Upland dealt with Proposition 218's requirement that taxes appear on a general election ballot, and not with the issue of the supermajority threshold, another court ruling may be needed to provide greater clarity.

Republicans hope to get ahead of further rulings by enshrining the higher voter thresholds into law.

"That two-thirds threshold is difficult to reach, but it works," said Assemblywoman Catharine Baker, R-San Ramon. "Not only because it protects taxpayers from trigger-finger reactions to try and raise taxes at every chance, but it builds consensus." 

Mayes said he hopes the constitutional amendment will pass both houses this year (a Herculean task given the supermajority vote needed for constitutional amendments) before appearing on the June 2018 ballot.