Withdrawal of the Taxpayer Protection Act could haunt the American Beverage Association
By now, political observers have heard how a series of negotiations in Sacramento resulted in three initiatives slated for the November ballot being withdrawn by their respective proponents. The blame (or credit, depending on your perspective) for these deals has been attributed to a 2014 bill authored by then-Senate Leader Darrell Steinberg, D-Sacramento, which allows proponents to withdraw an initiative even after it has qualified for the ballot. It was believed that this reform would result in more compromises being hammered out with the Legislature on contentious issues.
One of the measures withdrawn last week was the Taxpayer Protection Act, which would have strengthened a number of existing constitutional provisions including the two-thirds vote for local taxes. While a broad coalition of business and taxpayer groups backed the measure, and even provided significant input into its drafting, the lion’s share of financial support came from the American Beverage Association.
Faced with massive opposition from local governments and public-sector labor organizations, ABA decided to strike a deal with the Legislature to prohibit any future local soda tax increases between now and 2030 in exchange for removing the Taxpayer Protection Act from the ballot. The decision may also have been based, at least in part, on the perception that other potential financial backers for the campaign would be focused on other initiatives on the November ballot.
Nonetheless, ABA’s decision to withdraw the measure in exchange for limited protection for a specific industry blindsided many interests in the Capitol, including taxpayer organizations which were excited for an opportunity to campaign for strong taxpayer protections in an absurdly high-tax state.
Whether the Taxpayer Protection Act would have passed will be the subject of speculation for years. But it’s now a moot point. What isn’t moot, however, is whether the deal itself, and the similar negotiated agreements on measures addressing issues related to lead paint and consumer privacy, are a reflection of good government or whether they lead to “extortion light.”
Interestingly, political commentators have viewed these negotiated withdrawals differently. Some see them as all that is wrong with Sacramento while others see them as forcing the legislature to do its job. Most fall in the first category. Joel Fox, who puts out the Fox and Hounds blog, wrote a piece entitled “Weaponizing the Initiative Process.” Long time Sacramento Bee columnist Dan Walters, who now writes for CALmatters, calls what happened “genteel extortion.”
On the other hand, veteran Los Angeles Times columnist George Skelton liked the fact that three potentially confusing measures have been taken off the ballot. He also observes that “unlike … initiatives, bills can later be easily tweaked by the Legislature to fix flaws.” But Skelton’s observation reveals another downside to these deals: Will the parties keep their word?
The decision by ABA to withdraw the Taxpayer Protection Act resulted in the enactment of legislation that they presumably believed would protect their interest for more than a decade. But almost immediately, interest groups, including health organizations that have targeted “sugary drinks” for years, filed a new initiative measure specifically targeting that industry. And unlike the Taxpayer Protection Act, which had broad support from an array of business and taxpayer groups, a measure seeking higher taxes just on soda might leave ABA alone in the opposition camp.
Compounding the soda industry’s problems might be a little noticed legal issue. The compromise was incorporated into a so-called “trailer bill,” which allows language to take effect immediately without a two-thirds vote of each house. But the legality of this process is the subject of an unrelated case brought by HJTA in the Court of Appeal for the Third Appellate District. If a court eventually rules the practice of using budget trailer bills to enact substantive legislation as unconstitutional, the “deal” could be nullified.
Because ABA can’t withdraw its withdrawal, some would call this poetic justice.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.