Fearing a drop in local revenues if it passes, the Ceres City Council on Monday evening passed a resolution to oppose a proposed ballot initiative titled the “Taxpayer Protection and Government Accountability Act.”
The League of California Cities (Cal Cities), along with a broad coalition including the California Professional Firefighters, SEIU California, California Alliance for Jobs, AFSCME California, and the California Special Districts Association strongly oppose the California Business Roundtable sponsored ballot measure.
A similar ballot measure was yanked in 2018. A new measure was filed in January by the California Business Roundtable in response to the state’s .
City Manager Alex Terrazas said “this measure is far more detrimental to cities than the measure filed in 2018, because it would decimate vital local and state services to the benefit of wealthy corporations.”
The proposition would amend the state Constitution to change the rules for how the state and local governments can impose taxes, fees, and other charges. The Howard Jarvis Taxpayers Association has says the measure is necessary to close a loopholes that allow some local tax increases to pass with a simple majority when voters were told in the ballot materials that a two-thirds vote was required.
According to Jon Coupal, the president of the Howard Jarvis Taxpayers Association, “a true ‘fee’ should not exceed the ‘reasonable’ cost of providing a service, but that’s more theory than reality as local governments pad their general funds by charging excessive fees.”
According to the Legislative Analyst’s Office, by expanding the definition of a tax, increasing the vote requirements for approving taxes, and restricting administrative changes to fees, the measure would make it harder for the Legislature to increase nearly all types of state revenues. The extent to which revenues would be lower would depend on various factors, most notably future decisions made by the Legislature and voters. For example, requirements for legislative approval of fee increases currently set administratively could result in lower fee revenues, depending on future votes of the Legislature. That lower revenue could be particularly notable for some state programs largely funded by fees. Due to the uncertainty of these factors, the LAO cannot estimate the amount of reduced state revenue, but said “it could be substantial.”
Compared to the state, cities and counties generally face greater restrictions to raising revenue. By expanding the definition of taxes and restricting administrative changes to fees, the measure would make it somewhat harder for local governments to raise revenue. Consequently, future local tax and fee revenue could be lower than they would be otherwise. The extent to which revenues would be lower is unknown, but fees could be more impacted. The actual impact on local government revenue would depend on various factors, including future decisions by the courts, local governing bodies, and voters.
