Calling the State Supreme Court—Tell Us What You Were Thinking

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

It is time for the California Supreme Court to clarify whether taxes that reach the ballot through citizen initiatives must receive a two-thirds vote to pass. This issue arose when the court decided a case on initiative tax increases in 2017. Whether the courts action meant that a two-thirds vote was necessary to pass local earmarked taxes was left unclear by the court’s decision, yet since then some local jurisdictions plan to collect special taxes passed via the initiative process with a simple majority vote.

As local governments begin the process of collecting those taxes, they face lawsuits, which ultimately will be settled by the Supreme Court. Better sooner than later.

A little refresher on this issue: The case in question is California Cannabis Coalition v. City of Upland. The case centered on provisions of Proposition 218, passed by state voters in 1996, that set vote standards on local governments, including when a measure could appear before voters. Proposition 218 called for all tax measures to appear at general elections. The Cannabis Coalition sought to affirm an initiative can come before voters in a special election.

The court concluded that provisions of Proposition 218 did not bind initiatives; only actions of local governments must follow rules setup in that statewide measure. While an initiative may come before voters in a special election, did the ruling also mean that tax initiatives did not need a two-thirds vote to pass special taxes designated for a specific purpose?

San Francisco officials read the decision and decided they could proceed with special taxes via the initiative with a simple majority vote. In fact, they doubled down on that opinion as twice tax initiatives have passed in the city with less than two-thirds vote. The city wants the money.

Ironically, both San Francisco measures contested in two separate elections were both designated Proposition C.

The first Proposition C passed in June 2018 with a 51% vote. It was a gross receipts tax on commercial leases to use for child-care and early education. The second Proposition C passed in November 2018 with 61% of the vote, a levy against large companies to pay for homeless services.

Lawsuits were filed to say these taxes marked for special purposes require a two-thirds vote and therefore are void.

Similarly, across the Bay, the City of Oakland certified a vote of a November ballot proposition, Measure AA, for education funding that received 62.5% of the vote. Strangely, on the Alameda County election results website it declares the measure needed a 2/3 vote to pass.

However, since the city certified the tax passed and should be collected even without the two-thirds vote, a group of property owners filed a lawsuit saying the tax cannot be collected because it did not achieve a two-thirds vote.

While governments are eager to read the court’s decision in the Upland case to their advantage–that ballot tax measures do not fall under Proposition 218’s vote requirement–not all agree that was the court’s thinking. They argue that the decision was a narrow one focused on when a tax election can come before voters and that the ruling did not upend the vote standard required by Proposition 218.

In fact, the attorney for the winning side in the Upland case said specifically after the decision came down, “I believe that this does not affect one way or the other whether you need a two-thirds vote or simple majority.”

Further, an advisor to the League of Cities declared that the decision did not concern the vote question. Vote requirements would have to be settled with a future case.

Now those cases are here. They may take time to get to the Supreme Court, but ultimately it is that court which has to clarify its intentions when it comes to vote requirements on local initiative special taxes.

The reading from here is simple: whether the taxes result from actions taken by elected officials or come through the initiative process, they are taxes for governmental purposes. When the initiative process is used it stands in for government and is subject to Proposition 218.

Supreme Court, tell us what you were thinking.

 

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