Local governments, and the special interests which covet more public funds to sustain them, are pursuing new taxes with a vengeance. Despite California having the top tax rates in the nation, it’s never enough for politicians and bureaucrats.
While progressives’ pursuit of ever higher taxes is built into their DNA, there seems to be even heightened urgency this year. The reason for that is that a pending statewide initiative that restores a key provision of Proposition 13 slams the door on a court-created loophole.
Since 1978, all local special taxes have required a two-thirds vote of the electorate. But ignoring precedence and the plain language of Proposition 13, a 2017 decision from the California Supreme Court in California Cannabis Coalition v. City of Upland created a massive loophole resulting in all kinds of unconstitutional taxes – backed by tax-and-spend special interests.
Since Upland, several local initiative tax increases have been declared “approved” despite falling short of Proposition 13’s two-thirds vote requirement for special taxes (taxes dedicated to a specific purpose). The Upland loophole has allowed special interest groups to write initiatives that raise taxes, direct the money to themselves, and pass them with just a simple majority.
The pending statewide initiative measure, the Local Taxpayer Protection Act (LTPA) to Save Proposition 13, restores the state constitution to its original meaning by closing the Upland loophole. Polling on the measure, on track to qualify for the November 2026 ballot, reveals substantial support, particularly among homeowners who are high-propensity voters.
The substantial likelihood that LTPA will be approved by voters explains the mad rush to impose new and higher taxes.
A prominent example of this rush involves transit systems in the Bay Area. Earlier this month, the Legislature passed California Senate Bill 63 from Sen. Scott Wiener, D-San Francisco, and the bill is now sitting on Gov. Gavin Newsom’s desk for signature.
If approved, the measure would allow the affected counties to impose an additional sales tax of 1% in San Francisco and 0.5% in other counties to help fund public transit operations. The transit agencies that would see a share of the tax revenue include the San Francisco Metropolitan Transportation Agency, BART, AC Transit, Caltrain, SF Bay Ferry and Golden Gate Transit.
The push to impose regional taxes in the Bay Area has a tortured history. Regional Measure 4, a $20 billion bond proposal by nine Bay Area counties, never got off the ground because of pressure from local taxpayer groups, including a group of activists who called their organization “20 Billion Reasons.” Their scrutiny and opposition were so intense that the regional authority proposing the bond decided at the last minute to drop the effort entirely. Transit advocates are hoping for better luck this time, but negative publicity for almost all the regional transit districts, especially BART, suggests an uphill battle for the tax increase.
Another tax aiming to exploit the Upland loophole is a proposed extension of a half-cent, multi-billion dollar transportation tax in Fresno County. In addition to the fact that the proposal seeks to bypass Proposition 13 (very popular in the Central Valley) there are allegations that much of the planning is being done outside of public view.
According to a story in the San Joaquin Valley Press, “A complaint filed Sunday with the Fresno County District Attorney’s Public Integrity Unit alleges that Fresno’s Council of Governments and Transportation Authority are violating California’s marquee transparency laws to host the shadow committee and their efforts could be teetering on the verge of misusing taxpayer funds in support of political advocacy surrounding the prospective ballot measure.”
Why the secrecy? In theory, in order to qualify for the Upland loophole, the tax should be initiated by a “citizens group.” But invariably, these taxes are coming from government interests which then try to create a veneer of local voter support. But there’s just so much lipstick you can put on a pig.
Local taxpayer advocates need to watch all these efforts very carefully. Local politicians and special interests will do everything they can to prevent voters from being fully informed about the threats to their financial wellbeing.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.