In 2004, California’s local governments were well on their way to protecting their tax dollars from state raids. They’d work for years to write and qualify a ballot initiative of their own, Prop 65, that would have forced legislative leaders to win voter approval before taking or borrowing major local tax revenues for state purposes. It also had tough language limiting the state’s ability to impose mandates on local governments without reimbursements.
By my reading, Prop 65 would have made the local government piece of the current budget deal virtually impossible. But Prop 65 lost.
Why? Local governments never campaigned against their own measure. Instead, the locals struck a deal with the governor and legislature on a compromise measure, Prop 1A that appeared on the ballot alongside Prop 65. The locals promised as part of the deal to tell voters to go no on 65, and yes on 1A.
It is under Prop 1A that the legislature reached into local tax revenues to cinch its latest budget deal. (Important note: Local governments have contested the state’s interpretation of 1A and threatened to sue).
Prop 1A had important protections for local government, but they weren’t nearly as strong as those in Prop 65. Prop 1A didn’t require voter approval for modifying local tax revenues; in fact, it permits limited, short-term shifting of local property taxes and requires repayment. It also allowed the state to reallocate various tax revenues under some circumstances. Redevelopment agencies were exempt from 1A’s protections. And the language restricting the state’s ability to impose mandates is looser in 1A than in 65.
Politics is the art of the possible. A Prop 65 campaign, with opposition from some elected leaders (and almost certainly from education interests, who didn’t want locals to have more protection than schools) would have been harder than a Prop 1A campaign, which won easily. But there are some compromises we make that we later regret. For local governments, the exchange of Prop 65 for Prop 1A may be one of those compromises.