Will California Supreme Court Knock Anti-tax Measure off November Ballot?

When California’s voters 46 years ago passed Proposition 13, its iconic property tax limit, they ignited a perpetual conflict over how much tax money state and local governments need and who should supply it.

Since 1978, public employee unions and other beneficiaries of government spending have repeatedly tried to repeal Prop. 13’s barriers and make it easier to enact new taxes.

At the same time, business interests and anti-tax groups such as the Howard Jarvis Taxpayers Association, named for Prop. 13’s chief sponsor, have backed additional ballot measures to make new taxes more difficult.

As the conflict raged, pro-tax interests became dominant in the Capitol and in local governments, but the anti-tax faction mostly prevailed in post-Prop. 13 ballot battles. In 2020, for example, voters rejected a union-sponsored ballot measure that would have changed Prop. 13 to allow higher taxes on commercial real estate.

Concurrently, California courts have eroded some of the taxation barriers the anti-tax forces erected. In 2020, the state Supreme Court made raising local taxes easier by declaring that tax measures proposed by initiative needed only simple majority voter approval, rather than two-thirds.

The nearly half-century of skirmishing over taxation is reaching a climax of sorts this year in the form of a ballot measure, backed by the California Business Roundtable, that would require voter approval of new state taxes, increase the threshold of voter approval for taxes to two-thirds, and reclassify many fees as taxes needing voter approval.

It shapes up as the mother-of-all taxation battles with deep-pocketed interests on both sides – but only if it actually appears on the ballot.

Gov. Gavin Newsom, the Legislature’s Democratic leaders and local government officials want the state Supreme Court to declare that the measure is not a constitutional amendment, as its sponsors claim, but rather is so sweeping that it constitutes a constitutional revision that cannot be placed before voters via initiative petition.

On Wednesday, lawyers made their arguments to the court’s seven justices, who must decide whether the measure can appear on the ballot by June 27, the deadline for preparing ballots and other material for the November election.

Margaret Prinzing, an Oakland attorney representing Newsom and other opponents, argued that the measure would strip the Legislature of its constitutional power to raise taxes and the governor of authority to enact fees, thus making fundamental changes in California’s system of government that qualify it as a constitutional revision.

Thomas Hiltachk, a Sacramento attorney who specializes in ballot measures with a conservative bent, countered that the Constitution recognizes voters as the ultimate political authority and the proposed measure merely underscores that primacy. He told the court that it could review its constitutionality after the election if it passes, rather than short-circuit the process by knocking it off the ballot.

The justices questioned both attorneys sharply on the dividing line between a constitutional amendment and a revision, but gave little indication of how they are likely to rule. They probably lean against the measure personally, given the court’s dominance by appointees of Democratic governors, but in past cases have tended to uphold the initiative process.

Allowing the measure to proceed would merely shift the battle to the electoral arena but that has its own complications. The Legislature has also placed a constitutional amendment on the ballot that would, if it gets more votes than the anti-tax measure, raise the threshold for passage of the latter to two-thirds – the same margin proposed for taxes.

That would probably ignite a post-election clash in the courts, thus extending California’s version of medieval Europe’s Hundred Years War.

Dan Walters is a writer with CalMatters.

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