Since Proposition 13 established a requirement for a two-thirds vote by the people for special taxes—that is, taxes earmarked for a special purpose–opponents of the idea have been critical. The major argument they make is that it is better to allow a majority vote because there is transparency in knowing how the tax money is going to be used. The problem is that earmarking taxes ties local budgets into a knot and takes away needed discretionary decision making powers from local elected officials.

Look to San Francisco. Last week the San Francisco Chronicle reported that city supervisors are grappling with all the budget set-asides in the budget forced by voter measures earmarking funds for one purpose or another.

According to the report, initiative driven budget set-asides have increase from $200 million in 1994-95 to $1.2 billion today, with a projection of hitting $1.6 billion for the 2021-22 budget. The earmarked portion of the budget would run 30% of the General Fund that year.

So, if the supervisors wanted to move some of the revenue around to confront a new or growing issue their hands are tied. The money has to stay in the pot designated by the initiative. If there is another item that needs money then someone else will come up with an initiative to raise funds for that item and the budget becomes an even greater Gordian Knot with no Alexander and his sword to relieve the tension.

San Francisco supervisors are exploring the idea of putting expiration dates on funding initiatives, but that would take a vote of the people and would meet with strong resistance from the interests that enjoy the use of the revenue.

Of course, as the city Controller’s Office report noted, San Francisco is unlike other municipalities around the state. San Francisco voters have approved 19 measures that set aside funds. Los Angeles has adopted two, San Diego one and San Jose none. Perhaps, those localities were discouraged by having to achieve a two-thirds vote. In the liberal bastion by the Bay, that standard is not as hard to conquer.

The San Francisco situation reinforces the idea behind requiring an extraordinary vote for earmarked taxes. But a recent California Supreme Court decision could intensify the problem around the state.

As reported here last month, the court ruled that the tax increase requirements under Proposition 218 apply only to government bodies, not citizen initiatives. Many legal experts speculated that this ruling would wash the two-thirds vote requirement for special taxes away. Some cities opposed the lawsuit that established this potential precedent precisely because of the danger of having more earmarked taxes and less discretion for elected officials.

If speculation about the impact of the court’s decision is correct, there will be more earmarked taxes and more frustrated elected officials all around California.