The election of Jerry Brown brings to the policy mix his commitment to submit tax increases to a public vote. The passage of Proposition 25 gives to the Democratic majority in the Legislature, and Governor Brown, the ability to shape the next state budget to meet their vision and priorities, without the need to seek votes from the Republican minority.
If the Governor or his legislative allies want to achieve their budget goals in part with new taxes, how could they do it?
First, voter approval could only be obtained by calling a statewide special election, which itself is certainly not unusual. California voters have participated in three special elections between 2003 and 2009. Some observers believe that the most likely date would be May 17, which coincides with the Los Angeles mayoral election. This date is convenient because it lands just shy of a month before the beginning of the fiscal year, by which time the Legislature must approve a budget or forfeit their pay.
A tax increase proposal could get on the May 17 ballot by one of three methods.
First, the Legislature could propose a constitutional amendment that enacts or increases taxes. But this would require a two-thirds vote of the Legislature, which defeats the purpose of passing Proposition 25 in the first place.
Second, the Legislature could amend existing initiatives that have a legitimate nexus to taxes. This only requires a majority vote. As I discuss in this article, there are several previously-approved initiative measures that might be candidates to bootstrap new or higher taxes. The risk is that a court may not find a close enough nexus to a law previously enacted by initiative and the new tax being proposed.
Third, a Democratic interest group ally, such as government employee unions, could sponsor an initiative to attempt to qualify in time for a May special election. Although it would be quite expensive to muster the signature gathering resources to meet that time frame, with sufficient cooperation from key state and county officials it technically could be accomplished.
Once a tax proposal lands on a special election ballot, the hard part begins.
Voters have already opined on a large number of tax proposals in recent years – all to the negative:
· In 2010, voters rejected a vehicle tax to pay for parks and repealing tax incentives for corporations. They also rejected a tax on lobbyists to pay for campaigns for the Secretary of State.
· In 2009, voters rejected extending income, sales and vehicle taxes for two years to address the budget deficit.
· In 2006, voters rejected an income tax surcharge on high wealth individuals for preschool, a tobacco tax, an oil severance tax, a statewide parcel tax for schools, and a corporate tax for public finance of campaigns.
That’s nine tax increase proposals defeated on ballots going back five years before a 2011 special election. Unless the voters quickly shed their antipathy toward politicians and believe that spending is under control and deficits a thing of the past, I would not expect a newly sympathetic audience for new taxes.