Panel: What Government is Looking For? More Taxes.

Joel Fox

Editor and Co-Publisher of Fox and Hounds Daily


The legislature passed a gas tax and a document tax to fund housing for the homeless and other fees this last session but taxes will be on the agenda when they meet again, according to a panel at the Valley Industry and Commerce Association’s (VICA) annual business forecast conference held last week.

CALMatters columnist Dan Walters told the business members in attendance that with the income tax now at 13.3% and the sales tax pretty much at maximum levels the next big tax battle will be over a split roll property tax increasing business property tax.

Walters called it the “highest agenda item” and the “Holy Grail” for the public sector unions, education associations and others tax increase advocates.

Walters warned that it would not be easy to pass a split roll. He could not envision the constitutional amendment needed to alter Proposition 13 and create a split roll making it through the legislature–even with Democrats holding a supermajority. The amendment would have to come via the initiative process but Walters predicted that there would be a serious effort to push through a split roll in the next few years.

Los Angeles Daily News columnist Susan Shelley said the talk of the split roll is hurting business opportunities in California. She argued that Amazon’s quest for an additional headquarters and its 50,000 good paying jobs will not end up in California because of talk of a split roll.

Amazon wants to build 8 million square feet of office space. They will hear the rhetoric around changing Proposition 13 for business and Amazon won’t come to California, she said.

Other taxes of concern to the business community may also reappear in the legislature. Marc Joffe of the Reason Foundation mentioned a tax on services and Assemblyman Vince Fong said the oil severance tax would probably be debated again.

Fong said that the last legislature saw a combined $373 billion in taxes and fees introduced last year.

Walters noted that many of those tax bills failed because the Democratic supermajority is not a monolith. He said many of the bills die before a vote is taken so many of the Democrats do not have to go on the record for or against a tax.

Many taxes could also show up in local elections thanks the California Supreme Court’s decision in California Cannabis Coalition vs. City of Upland.  As reported here the court determined that local initiatives are not controlled by the requirements in Proposition 218 as local governing bodies are. Many have interpreted that to mean that special (earmarked) taxes could pass with a simple majority vote instead of the two-thirds vote Prop 218 mandated for special taxes.

A flood of local taxes could occur because of the crushing financial pressure public employee pensions are asserting on local government budgets.

Walters said that city councils are hesitant to go to voters with a tax to pay for pensions. However, fire and police unions could get behind initiatives for tax increases. The campaign would feature the popular fire and police officials seeking more tax revenue to expand services rather than presenting arguments about pensions.

Walters predicted that such a measure would appear in some municipality on next year’s ballot. If it turns out that a court agrees the tax is permissible under the Upland ruling there will be lots more such measures on subsequent ballots, Walters said.

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