How this low-profile ballot measure could make it harder to raise taxes

Will California make it harder for voters to raise taxes? Maybe, if a statewide ballot measure passes in November.

This fall, San Diego County voters will choose whether to raise the sales tax by half a cent to fund certain services — a decision they’ll make by a simple majority vote, thanks to the fact that a coalition of nonprofits and labor unions, not elected officials, placed the effort on the ballot.

For six years now, tax measures placed on the ballot by citizen signature-gathering efforts have been subject to a lower approval threshold than measures that originate with governments.

But that could be about to change, under a proposition pushed by prominent anti-tax advocates.

Proposition 43, if passed, would raise the passage threshold for special tax measures that are placed on the ballot by citizen-led initiatives, changing from from a simple majority to two-thirds.

Supporters say it would close a loophole the courts created years ago. Opponents say it would make it nearly impossible for local governments to raise revenue to fund vital services.

Arguably, both are correct.

In California, how tax increases make their way to the ballot — and what kind of tax increase they appear as — can determine how much support they need to pass.

And those thresholds have changed over time.

The first major change took place in 1978, with Proposition 13, explains Michael Coleman, a municipal finance expert who created the California Local Government Finance Almanac.

While Proposition 13 may be better known for how it capped future property tax rates, it also made another key change: It set new voter requirements for what the measure called special taxes.

Those special taxes weren’t defined in the measure, and after it passed, it took a few years for the courts to decide they meant taxes whose revenue is earmarked for a specific purpose, Coleman said.

Nearly two decades later, voters further locked that in when they approved Proposition 218 in 1996, requiring special taxes to win approval from two-thirds of voters in order to pass. General taxes required a majority vote.

Most general obligation bonds — bonds that local governments sell to pay for projects in the community — also require two-thirds voter approval.

School bonds are the exception and would not be affected by Proposition 43, thanks to voters’ 2000 passage of Proposition 39.

Proposition 39 allowed school bond measures that meet certain criteria to pass with the support of 55% of voters, instead of two-thirds. Such bonds must fund only facilities and face annual audits, and the measures must appear on the ballot in a regularly scheduled election.

The result wasn’t just that school bonds became easier to pass. California school boards also became much more likely to place bond measures on ballots in the first place, said Mark Baldassare, survey director at the nonpartisan Public Policy Institute of California.

“You got two things working towards school bonds: How are the local officials responding to (the bond), and then how are the voters responding to it?” he said.

Beyond school bonds, it historically hadn’t mattered much how tax measures landed on the ballot.

But that changed after a 2018 cannabis ballot effort in the Inland Empire ultimately led to new legal distinctions between government-led measures and those placed by citizens initiatives.

The distinction came after a group in Upland sought a ballot measure that the city deemed a general-purpose tax. Because of restrictions in Proposition 218 on when such a tax could go on the ballot, the city planned to put it to voters in 2020 — which didn’t sit right with the organizers.

“They sued, and they said, ‘We’re a citizens initiative. This is special. We shouldn’t have to abide by the rules of these other tax rules,’” said Coleman.

The courts would ultimately agree — and go further, based on the Upland decision. San Francisco argued, based on the Upland decision, that citizens initiatives also shouldn’t be subject to a two-thirds threshold to pass. The courts ultimately agreed with that argument, too.

The result is that for the past six years, special tax measures placed on ballots by citizens initiative have been able to pass with a majority. Those taxes already passed would be grandfathered in if it passes.

This year, the Howard Jarvis Taxpayers Association put Proposition 43 on the ballot in an effort to raise that threshold back up to the two-thirds requirement.

The organization says the measure would simply close a loophole the courts created. “They invented this exception,” said Susan Shelley, the group’s vice president of communications.

In her group’s opinion, Upland and subsequent decisions have deprived Californians of what the organization regards as their constitutional protections. Proposition 43 aims to change that.

“All it does is require a two-thirds vote for all local special taxes — no matter how they get on the ballot,” Shelley said. “It’s not retroactive. It doesn’t affect anything that’s passed it before. It doesn’t affect anything that’s on the ballot at the same time.”

The measure’s opponents have called the idea undemocratic and a threat to local budgets.

Bill Barnes, the campaign director at the Nonprofit Housing Association of Northern California, one of the funders of the No on Prop. 43 campaign, disagrees with supporters’ framing of the current threshold as a loophole.

“That’s why Jarvis is back to change the Constitution,” he said. “If it were a loophole, it wouldn’t need a constitutional amendment to change the rules.”

To Barnes, it doesn’t “seem very democratic” that a minority of voters can block a measure to fund needed local services, even if nearly two-thirds of voters support it.

“California’s local communities have different needs,” he said. “Some communities may want to fund public safety, others may want to fund affordable housing, others may want to fund parks or libraries.”

Darrell Roberts, president of the California Professional Firefighters labor union, said bringing back the two-thirds threshold would make it harder for communities to pass “life-saving measures.”

Two years ago, voters in Los Angeles County passed a special tax measure placed on the ballot by citizens initiative to add a fourth firefighter to county fire trucks.

Because that measure was placed on the ballot by citizens initiative, it needed only a simple majority to pass, which it did. More than four years earlier, before the threshold was lowered, a fire district parcel tax had failed with approval from about 52.6% of voters.

Fire calls are completed faster now, Roberts said, but if Proposition 43 were law, such measures would have a much harder time winning approval. “The last thing we want to do is make it more difficult for our communities in the state of California to make it more difficult to keep them safe,” he said.

Recent polling on Proposition 43 suggests the measure could face a tough battle to pass, though much is still uncertain.

A new poll released Friday by the UC Berkeley Institute of Governmental Studies found the measure trailing among likely voters, with 40% saying they opposed the measure, 31% in support and another 29% still undecided.