On June 6th, 1978, California voters delivered a shock wave, not just in California, but throughout America. Proposition 13 reduced property taxes by more than half and imposed other restrictions on government’s ability to extract money from citizens and businesses.
Despite Prop. 13’s victory with 64.8 percent of the vote, tax-and-spend progressives immediately filed a lawsuit directly in the California Supreme Court seeking to invalidate the new measure. Fortunately (and perhaps bowing to public sentiment) the court rejected the lawsuit against a variety of constitutional arguments.
However, it wasn’t long before new, more limited, legal attacks against Prop. 13 began working their way up through the courts. The primary target of these assaults was Section 4’s requirement for a two-thirds vote for local taxes. That section provides that, “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district, except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County or special district.” In two separate setbacks for taxpayers, the courts weakened the two-thirds vote requirement via convoluted definitions of both “special taxes” and “special districts.” Both court decisions reduced the scope of the two-thirds vote requirement.
Shortly thereafter, local governments began to impose property taxes in the form of “benefit assessments.” The original purpose of such levies was to finance improvements directly beneficial to specific parcels of property, such as sidewalks. But “benefit assessment” abuse culminated in Knox v. City of Orland which upheld a county wide flat rate parcel tax. In response, HJTA qualified, and the voters enacted, Proposition 218, known as the Right to Vote on Taxes Act (1996) clamping down on, not just fake “benefit assessments,” but also other property-related fees and charges.
At this point, a rational person would think that the California judiciary would recognize that citizens have voted for robust taxpayer protections that should not be weakened by result-oriented court opinions in favor of higher taxes. In fact, Proposition 218 itself made clear that it should be interpreted in a manner to effectuate its purposes of tax limitation.
But the worst was yet to come. In 2017, the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland created an ambiguity as to whether the state constitution applies to local citizens’ initiatives in the same way it applies to measures placed on the ballot by a government body. Since that time, all kinds of unconstitutional taxes – backed by tax-and-spend special interests – have been imposed on Californians costing billions of dollars that they would not otherwise have had to pay had the courts applied the plain language of the constitution. Most insidious of all was Measure ULA in Los Angeles, a massive “special transfer tax” ostensibly for homelessness programs.
The first Upland taxes were special taxes (e.g. sales taxes and hotel taxes) in which the funds were dedicated and, prior to Upland, clearly required a 2/3rds vote. After Upland, if the tax proposal was placed on the ballot by initiative, the appellate courts have held they can be imposed with a simple majority vote.
Next up were the Upland transfer taxes, which are taxes on the sale/transfer of real estate. Because transfer taxes impose a form of “equity theft,” Prop. 13 was intended to prohibit transfer taxes and expressly stated so. But in another judicial ruling, the courts concluded that Prop. 13 only prohibited “special” transfer taxes intended for a specific purpose.
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The Attorney General will issue a “title and summary” of the proposed measure by mid-July. Immediately thereafter, initiative petitions (designed to be downloadable and printed on a single piece of paper) will be available.
Voters are urged to visit www.hjta.org for the latest information on the next fight over taxpayer rights.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.
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