California courts muddied tax rules set by voters. Proposition 43 cleans up their mistake

California voters will get to decide in November if it should be harder to pass tax measures at the local level. Below, an anti-tax advocate says Proposition 43 solidifies a constitutional amendment passed decades ago that the courts muddied. The opposing view: A city councilmember from Sonoma believes Prop. 43 enables minority rule, making it harder to fund vital government functions.

The November ballot measure Proposition 43 would make it harder to raise taxes in California by restoring the two-thirds vote requirement for local special taxes. 

A “special tax” is one that earmarks the revenue for specific purposes. Ever since voters approved Proposition 13 in 1978, the California Constitution has clearly stated that cities, counties and special districts may impose special taxes “by a two-thirds vote of the qualified electors of such district.”

If courts had enforced that plain language, Californians today would not be paying billions of dollars in local taxes. This includes sales tax increases such as L.A. County’s 2024 Measure A for homelessness programs, as well as Measure ULA in the city of Los Angeles, a real estate transfer tax on the value of a property worth more than $5 million, which also pays for homelessness programs and affordable housing. 

Neither of these received the constitutionally required 66.67% of the vote.

In San Francisco, courts upheld a June 2018 special tax on commercial real estate leases to fund early education and child care, and a November 2018 special tax on the gross receipts of businesses to pay for homelessness programs. 

Just like Los Angeles, these measures fell short of a two-thirds vote.

In 1978, the people of California added the two-thirds vote requirement for special taxes to their constitution. When did the constitution become merely advisory?

It began in 2017 with ambiguous language in a California Supreme Court decision, California Cannabis Coalition v. City of Upland. The court suggested — without really deciding — that if a tax increase was placed on the ballot by a citizens’ initiative instead of by a city council or other government body, the constitution didn’t necessarily apply, and a two-thirds vote wasn’t necessarily required.

Lower courts used that language to uphold special taxes that received less than a two-thirds vote if they were placed on the ballot by voters signing initiative petitions. 

But who are these citizens who want to stand outside grocery stores and farmer’s markets with clipboards to raise their own taxes? They’re often the people who will get the money from the tax. 

The Upland decision has essentially enabled special interest groups to write their own tax increase, direct all the money to themselves, pay to collect the signatures to get it on the ballot, and then evade the two-thirds vote requirement.

Some of the court rulings on these Upland taxes have even allowed local government officials to work hand-in-glove with special interests to get tax increases on the ballot as “citizens’ initiatives.”

Now the state government is pushing the envelope even further. The governor recently signed Assembly Bill 1923, requiring the Fresno County Registrar of Voters to place a citizens’ initiative sales tax increase for transportation on the November ballot. The state did this over the objections of the Fresno County Board of Supervisors after it lawfully exercised its discretion under the elections code to order a study of the measure, which would have delayed it past the 2026 ballot deadline and placed it on the 2028 ballot.

This is no way to run a railroad.

There is no “citizens’ initiative tax increase exception” from the two-thirds vote requirement in Prop. 13. Courts have simply made it up. Californians who are already struggling with the high cost of living have been forced to pay even higher prices because judges have made it easier to raise taxes.

Prop. 43 will restore the two-thirds vote requirement for all local special taxes, including any tax increases placed on the ballot by a citizens’ initiative. It’s a constitutional amendment, overriding court precedents that say otherwise.

General taxes, such as those that direct the revenue into a city or county general fund to be spent as elected officials decide, would continue to require only a simple majority vote.

Some local government officials may believe voters will not approve general taxes, so they would prefer to tell voters the money from a new tax will be spent only on a specific, urgent need. Their problem isn’t the constitution, it’s trust — if voters don’t trust local elected officials to spend tax money on the most important priorities first, a majority may vote ‘no’ on any tax unless they know what it will fund and it’s guaranteed in writing.

Those same officials undoubtedly benefit from having a court-created loophole to raise special taxes without the need for a two-thirds vote. The loophole has been growing with every election. Multiple “citizens’ initiative” tax increases are on the November ballot, racing to squeeze through the opening before voters can hammer boards over it.

Prop. 43 gives California voters the opportunity to restore what state courts have eroded: a taxpayer protection in the state constitution that requires local special taxes to have the approval of two-thirds of voters to pass.