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Is California headed for another tax revolt?

Howard Jarvis speaking to crowd after California Proposition 13 victory, 1978.
Mike Meadows/LA Times

via UCLA Library Special Collections
Howard Jarvis speaking to crowd after California Proposition 13 victory, 1978.

It’s an eternal struggle in California: Businesses want to cut taxes while governments say doing so would decimate services. Three competing measures headed for the November ballot could drastically change California’s tax landscape.

It’s been 46 years since California voters approved the landmark Proposition 13 — which limited property tax hikes — and taxpayer advocate Howard Jarvis famously declared “a new revolution against the arrogant politicians” and a “tax, tax, tax, spend, spend, spend” philosophy.

Politically and demographically, California is a very different place now than it was in the 1970s. But battle lines are being drawn up both on the ballot and in court in preparation for another war over taxes.

It’s an eternal struggle in the Golden State: Business groups want to make it harder to raise taxes, while state and local governments say cutting them would decimate critical services.

Three competing measures headed for the November ballot could drastically change California’s tax landscape.

At the center of the melee is a measure aiming to place severe restrictions on new taxes and tax increases at the state and local level.

Governor Gavin Newsom and legislative leaders are suing to have it removed from the ballot, and lawmakers approved two conflicting ballot questions which could create a ballot heavy with confusing and conflicting tax proposals in November.

The business-backed measure known as the “Taxpayer Protection and Government Accountability Act” would require voter signoff of all new taxes or tax increases, both at the state and local level.

“California’s overtaxed. You could give them all the money in the world and it still would not be enough,” said Jon Coupal, current President of the Howard Jarvis Taxpayers Association. The group was created in the aftermath of Prop 13’s passage to defend it.

Demonstration during Howard Jarvis speech on Long Island, 1978.
Bernard Gotfryd/Newsweek
via Library of Congress Archives
Demonstration during Howard Jarvis speech on Long Island, 1978.

Coupal pointed to California’s budget situation — which fell from a $100 billion surplus in 2022 to a deficit as high as $73 billion this year — as evidence that state lawmakers are spending too much.

He believes the conditions are ripe for another tax revolt, citing $32 billion in pandemic fraud at the state’s unemployment agency, a ballooning price tag for the high speed rail project, and the narrow passage of Newsom’s Proposition 1, a $6.4 billion bond to fund housing and behavioral health treatment.

“I don’t think the average Californian is anti-government at all,” Coupal said. But he added that residents “expect a level of service higher than the average American” and don’t want to see waste.

Meanwhile, the cost of housing, gas and groceries keep climbing. Coupal said it’s reminiscent of the conditions preceding Prop 13. “You have political elites who appear to be very disconnected from the concerns of ordinary Californians, particularly working poor and middle class,” he said.

Opposing the Taxpayer Protection Act is a coalition of state and local government officials and a broad swath of labor unions representing public employees.

The California League of Cities argues it could decimate municipal budgets and the ability for cities, towns and counties to raise revenue for critical services.

“Preventing and reducing homelessness, planning for more housing, picking up the trash, paving streets and roads, or guaranteeing that someone will be there when you dial 911. This is what’s at stake for our residents if this measure is to pass,” said Ben Triffo, a lobbyist for the League.

The ballot measure would also reclassify government fees as taxes, meaning voters would have to approve those, too. It would nullify certain taxes or tax increases approved since January 2022, unless they are approved by voters in an election.

“Is someone going to want to vote for a parking meter rate? That’s how expansive this measure is,” Triffo said.

Voters may not get the chance to weigh in at all, if Newsom and Democratic legislative leaders have their way.

They argue the ballot measure is so sweeping that it is a constitutional revision — not a constitutional amendment — and are asking the California Supreme Court to remove it from the ballot.

While voters can amend the state constitution, only the Legislature can propose a revision.

In court documents, lawyers for Newsom and the Legislature describe it as “unlike any measure that has ever gone before the voters with respect to the sweeping changes it would make to California’s fundamental governmental structure, the foundational powers of its branches, and the government’s ability to provide the essential government functions required by a functioning state.”

Newsom spokesperson Erin Mellon said the governor, who has a business background, “is not a proponent of tax increases” but warned the ballot measure would “effectively block the state’s ability to quickly respond to major challenges.”

“The recession 15 years ago underscores the need for government to use every tool in the toolbox to respond to crises,” Mellon said.

Newsom and lawmakers are asking the court to make a decision by late June, when the Secretary of State must certify the November ballot.

Meanwhile, state lawmakers have already approved two more tax-friendly ballot questions to go before voters in November in another attempt to defeat the measure:

  • ACA 1 would make it easier for local governments to raise certain special taxes by lowering the required voter approval threshold from 67% to 55%. It also would nullify the Taxpayer Protection Act or any other ballot measures dealing with taxes on the same ballot if ACA 1 gets more votes. 
  • ACA 13 would subvert any future attempts to raise voter thresholds on ballot measures (including those dealing with taxes) by requiring them to play by their own rules. For example, if a measure seeks to impose a 60% voter approval threshold, that measure would also have to be approved by 60% of voters.  

Study finds most Californians think state government wastes ‘a lot’ or ‘some’ funding

All of these conflicting tax-related questions could work to the advantage of the Democratic leaders opposed to the Taxpayer Protection Act, said Mark Baldasarre, survey director with the nonpartisan Public Policy Institute of California.

“If people feel like ‘I don’t know enough to decide, I’m confused, it’s too complicated,’ they'll vote no on everything, and what voting no on everything would do is keep the status quo,” he said.

Californians are divided on taxes, according to a February PPIC survey. About half — 48% of adults — say they prefer to pay higher taxes in return for more government services. The other half — 49% of adults — prefer lower taxes and fewer services.

Still, an overwhelming 91% believe the state government wastes “a lot” or “some” money. Voters had similar sentiments leading up to Prop 13’s passage in the ‘70s, Baldasarre said.

“As much as things have changed since 1978 in California — demographically, politically, socially, economically — there's such an undercurrent all the time of concerns about spending and taxes,” he said.

In other words, he said, when it comes to taxes, the more things change, the more they stay the same.

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