This month’s election was good news for those who believe Californians’ taxes, while already among the nation’s highest, should be increased.
Voters elected Gavin Newsom, who has an expansive and expensive agenda, as governor, and also solidified Democrats’ supermajorities in the Legislature, giving them, at least on paper, unfettered power to raise taxes for that agenda.
Voters’ willingness to raise taxes was most starkly demonstrated, however, at the local level, where the vast majority of nearly 400 city, county and school district tax measures (including bonds that require new property taxes to repay) were endorsed by voters, according to a tally by Californiacityfinance.com.
About three-quarters of those tax increases were approved, including 90 percent of the 168 placed on the ballot in California cities. They are facing sharp increases in mandatory payments for city employee pensions – although that factor was rarely mentioned in the pre-election campaigning.
Instead, most local government tax campaigns stressed improvements in popular police, fire and park services. However, most of the proposals were deemed as general taxes, which allows them to be approved by simple majority votes and also allows them to be used for any purposes, not merely those cited by proponents.
The state constitution says that taxes meant for specific purposes require two-thirds voter approval, but last year, the state Supreme Court cast a cloud on that provision, implying in a Southern California marijuana case that if special purpose tax measures are placed on the ballot by initiative petition, rather than by local governments themselves, the two-thirds vote threshold might not apply.
Pro- and anti-tax organizations want a definitive judicial ruling on the issue and two measures passed by San Francisco voters this year, one in June and the other this month, might provide it.
Measure C, placed on the June ballot by an initiative petition sponsored by members of the city’s Board of Supervisors and approved by 51 percent of its voters, imposes a 3.5 percent tax on local commercial rents, such as office buildings, and a 1 percent tax on warehouse rents.
Entitled “Universal Childcare for San Francisco Families,” the measure dedicates tax proceeds to child care and early childhood education.
This month, another Measure C, also placed on San Francisco’s ballot by initiative, imposes a 1.5 percent gross receipts tax on large businesses located in the city – clearly aimed at high-tech corporations – and dedicates revenues to helping the homeless. It won about 60 percent approval but the proceeds won’t be spent until after a court case involving the first Measure C is resolved.
Commercial property owners and the Howard Jarvis Taxpayers Association sued, contending that June’s Measure C is clearly a special tax, since its proceeds are designated for one purpose, and thereby needed a two-thirds vote.
If the plaintiffs win, both Measure Cs will be voided. If they lose, the door will be open to even more local tax initiatives dedicated to single purposes but requiring only simple majority votes,
Meanwhile, another conflict over local taxes is simmering.
Los Angeles County voters overwhelmingly approved a “parcel tax” on “impermeable land” through which water cannot pass, such as driveways and parking lots. Proceeds would be used on water improvement projects.
However, the California Taxpayers Association filed a complaint with the state Fair Political Practices Commission, alleging that the county board of supervisors violated state election law by spending taxpayer money on a campaign for the water tax.
Were that complaint to be upheld, local government drives for higher taxes could be sharply curtailed.