This month’s election was good news for those who believe Californians’ taxes should be increased. Voters elected Gavin Newsom, who has an expansive and expensive agenda, as governor, and solidified Democrats’ supermajorities in the Legislature – giving them, on paper, unfettered power to raise taxes.
But a willingness to raise taxes was most vividly demonstrated at the local level. Most of nearly 400 city, county and school district tax measures (including bonds that require new property taxes) were endorsed by voters, according to Californiacityfinance.com. Of the 168 tax increases requested by cities, some three-quarters passed. Cities are facing sharp increases in mandatory payments for employee pensions – though that factor was rarely mentioned.
Instead, most local government tax campaigns stressed improvements in police, fire and park services. Since most of the proposals were deemed “general” taxes, only a simple majority was needed to approve them and the money can be used for any purpose.
The state constitution says 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 case that if special-purpose tax measures are put on the ballot by initiative petition, rather than by actual local governments, the two-thirds threshold might not apply.
Pro- and anti-tax organizations want a definitive ruling and two measures passed by San Francisco voters this year, one in June and the other this month, might provide it.
Measure C, put on the June ballot by an initiative petition by the city’s Board of Supervisors and approved by 51 percent of voters, imposes a 3.5 percent tax on local commercial rents (i.e., office buildings), and a 1 percent tax on warehouse rents. Called “Universal Childcare for San Francisco Families,” the measure dedicates tax proceeds to child care and early childhood education.
Commercial property owners and the Howard Jarvis Taxpayers Association sued, saying June’s Measure C is a special tax since its proceeds are designated for one purpose, and thus needed a two-thirds vote.
This month, another Measure C was on the ballot, imposing a 1.5 percent gross receipts tax on large businesses in San Francisco and dedicating revenues to help the homeless. Sixty percent of voters said yes, but proceeds won’t be spent until the first Measure C court case is resolved.
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.
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 for water improvement projects.
But the California Taxpayers Association filed a complaint with the state Fair Political Practices Commission, alleging the county board of supervisors violated state election law by spending taxpayer money on a campaign. If that complaint is upheld, local government drives for higher taxes could be sharply curtailed.
Dan Walters writes on matters of statewide significance for CALmatters, a public interest journalism organization. Email: firstname.lastname@example.org.