How Many Votes Does It Take to Pass a New Tax in California? Thanks to the California Supreme Court, Confusion Reigns.
A land parcel tax to increase public funding for education in Oakland. A tax on gross receipts in San Francisco to fund childcare services and a parcel tax levy to boost teacher pay. An increase in Fresno’s sales tax aimed at funding parks improvements. What all these initiatives have in common is that they’ve been thrown into legal uncertainty by ambiguity on the part of the California Supreme Court.
The fundamental question, as this piece from CalMatters’ Ben Christopher notes, is how many votes are required to pass a new tax in California. That question once seemed clear, but is now anything but thanks to confounding rulings by the Court.
Over the last four decades, California voters have passed a series of amendments to the state constitution, all designed to make it harder for governments to tax them and raise new revenue. Proposition 13 from 1978 is the mother of all these tax blockers, but voters and the courts have been going back and forth over the details ever since.
In 1996, voters passed Prop. 218, which clarified that any tax designated for a specific purpose—say, to fund affordable housing—needs two-thirds of the vote to pass. Since then it was widely assumed that this rule applied to all specific taxes—no matter how they find their way onto the ballot.
But a year and a half ago, the state’s Supreme Court threw that into question.
The short version of its ruling in California Cannabis Coalition v City of Upland goes something like this:
• Prop. 218 requires that any tax imposed by “local government” must be voted on during a regularly scheduled election. • A cannabis industry trade group argued that that rule doesn’t apply to initiatives put on the ballot by petition of the local citizenry. • The court agreed, ruling that a ballot measure initiated by organized citizens (in this case, organized pot shops) is not an act of “local government.”
That got the attention of interest groups and public agencies across the state. If citizen initiatives aren’t acts of “local government” when it comes to the timing of an election, does that mean they aren’t subject to Prop. 218’s other rules—namely, that tax measures need two-thirds of the vote to pass? Did the ruling rip a “huge hole in Prop 13 and 218,” as some initially suggested?
The state Supreme Court didn’t say. And when lawyers involved in the Upland case asked for clarification, the justices turned them down.
And so here we are. While Oakland and San Francisco are being sued because the new taxes they’re collecting didn’t garner two-thirds of the vote, Fresno is being taken to court for the opposite reason — because, with just 52% of voter support, city leaders opted not to collect the new tax.
As Christopher writes, “sued if you do, sued if you don’t.”
The confusion “creates havoc for public agencies, it creates all this strange uncertainty for taxpayers and everyone else involved,” League of California Cities advisor Michael Coleman told CalMatters. “This kind of thing fuels cynicism about government.”
It also leaves key funds in limbo. In San Francisco, for instance, the money raised for teachers and social services is sitting in a separate account awaiting legal clarity. It could be another 12 to 18 months before the city finds out whether the money can actually be spent on education and childcare.
The litigants involved in the aforementioned legal cases differ in their interpretation of the Court’s decisions, of course. Taxpayer groups are certain that state law always requires a two-thirds vote for special taxes to pass. Local governments aren’t so sure. But they all seem to agree on one thing: clarification is needed and it is needed fast.
“Both legislative bodies and courts could do the people a big favor in being more precise when they pass legislation or issue court decisions,” Jon Coupal, President of the Howard Jarvis Taxpayers Association, told CalMatters. “They decided not to do that. So it’s like ‘thanks a lot, now you’ve just given us five years of litigation.’”