Friday, October 11, 2024

California’s Unstoppable Taxation Machine

By Edward Ring

Friday, October 11, 2024

 

Every two years, in addition to electing their state and local officials, Californians participate in so-called citizen democracy, a process by which they approve or reject legislation in the form of ballot initiatives. This election season is no exception, except for the fact that what’s on the ballot, as well as what was removed from it, says a lot about who really runs the state.

 

The run-up to California’s November 2024 election is a battle between, on the one hand, grassroots activists and businesses who are desperate to stop the onslaught of new taxes and, on the other hand, public-sector unions and their kept politicians for whom there can never be enough tax revenue. The outcome could redefine California politics for decades. What precipitated this battle was activists’ and industry groups’ surprising success in qualifying a citizens’ initiative for the ballot, the Taxpayer Protection and Government Accountability Act.

 

This initiative had game-changing potential on par with the legendary 1978 Jarvis-Gann initiative, or Proposition 13, which itself was the result of a taxpayer revolt in California triggered by voters’ perception of out-of-control increases to their property taxes. Approved by an overwhelming 65 percent of voters, Proposition 13 modified the state constitution to limit property-tax increases to 2 percent per year. Two other provisions in Proposition 13 were equally transformative. The first required a two-thirds vote of the state legislature to increase non-property taxes. The second required local governments to refer new tax proposals to the ballot with two-thirds voter approval required for passage. These severely restricted state and local elected officials’ ability to raise taxes, but, over the years, they’ve been slowly undermined by subsequent initiatives, legislation, and court rulings. The Taxpayer Protection and Government Accountability Act of 2024 aimed to close the loopholes and restore the original provisions of Proposition 13.

 

In response, Governor Gavin Newsom filed a case with the California Supreme Court, arguing that the Taxpayer Protection Act would “hamper state and local government’s ability to pay for key services provided to taxpayers, from trash collection to public safety.” The court, six out of seven members of which were appointed by Democratic governors, agreed with Newsom and, outrageously, took the Taxpayer Protection and Government Accountability Act off the ballot before voters could have a say. If those judges had been presiding over California’s highest court in 1978, then the only advantage that Californian taxpayers still enjoy relative to other states — what remains of Proposition 13 — might have never been allowed on the ballot, either.

 

In California, the only way to reverse the vote of citizens in a ballot initiative is to launch a competing initiative that overturns it. And because the state legislature can place initiatives onto the state ballot without having to undergo the messy and expensive process of gathering signatures on a ballot petition, its Democratic supermajority swiftly came up with two initiatives to counter the Taxpayer Protection and Government Accountability Act.

 

One of them seeks to widen a loophole opened in 2000, when the California Teachers Association qualified a state ballot initiative that lowered to 55 percent the majority required for voters to approve borrowing for public-school construction projects. With the typically massive spending the CTA is capable of, its “Yes” campaign conned 53 percent of voters into approving the measure. But why stop there? Now the state legislature is asking voters to also lower to 55 percent the approval threshold for “housing projects and public infrastructure.” Needless to say, “infrastructure” has come to mean almost anything, which means that if voters approve this measure, almost any new bond proposal will only require a 55 percent majority to pass. It doesn’t take a policy wonk to recognize how these initiatives carve gaping loopholes into 1978’s Proposition 13.

 

The other initiative introduced by the state legislature, however — which thankfully won’t be on the state ballot until November 2026 — would, if passed by voters, upend Proposition 13 completely. With a tortured title guaranteed to scare off low-information voters and befuddle all but the most diligent, the “California Vote Requirements for Initiatives Requiring Supermajority Votes Amendment” would require “initiated constitutional amendments proposing increased voter approval requirements for state or local measures to be approved by the same majority requirements they propose.” If you think that sounds convoluted, that’s because it is. The state legislature is attempting to make it impossible to impose, for example, a two-thirds supermajority requirement on new tax proposals unless two-thirds of voters approve of such a requirement.

 

Imagine the dynamics that this measure — which, by the way, will only require a 50 percent plus one majority to take effect — would create. Any group opposed to more taxes would have to not only go through the multimillion-dollar process of funding a signature-gathering campaign to qualify a ballot initiative (which, to repeat, the state legislature does not need to do) and ensure support from a majority of voters; it would also have to ensure that a sufficiently large majority of voters vote yes on the initiative. If, for example, only 54 percent of voters approved of an initiative to institute a 55 percent threshold for approving new taxes, the effort would fail. Who would take that risk? Goodbye to anti-tax ballot initiatives.

 

The Taxpayer Protection and Government Accountability Act, an initiative led by Californians who wanted to restrain their one-party government from raising taxes limitlessly, was considered so serious a threat by that party that its use of a packed California Supreme Court to remove the initiative from the ballot was not enough. That was just the legal response. On top of that, the public-sector-union controlled Democratic mega-majority in the state legislature came up with two counter-initiatives. We expect Democrats to spend tens of millions to campaign for them.

 

If California voters approve these initiatives, they may forget about ever reining in government spending or preventing endless tax increases. Given an entrenched regime that runs on cronyism, and an eviscerated initiative process, that would no longer be an option.

 

And all this from the people who lecture us all about “protecting our democracy”!

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