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UNDER THE DOME
2018 WAS A GOOD YEAR FOR TAXPAYERS

By David Wolfe, HJTA Legislative Director

It is not often this column gets to report good news to taxpayers regarding the affairs of the California Legislature. After all, legislative Republicans (historically the most friendly to taxpayers) have been complicit in eight separate tax-increase votes since 2013. With friends like these, who needs enemies? But I’m proud to report that for the first time in the last two years, and only the third time in the last six years, no new taxes were approved by the State Legislature in 2018! Importantly, Proposition 13 also remains completely protected.

Of course that’s not to say legislators didn’t try to raise taxes and undermine Proposition 13’s two-thirds vote protections. Even with a $130 billion budget and a $9 billion surplus, it wasn’t enough for them. Here’s a list of the taxes that were proposed this year, and ultimately defeated:

  • Assembly Constitutional Amendment 4 would have lowered Proposition 13’s two-thirds vote requirement for special taxes in order to fund affordable housing programs. There’s no denying California has an affordable-housing problem, as evidenced by the fact that one-third of households spend half their take-home pay on rent, and only about the same percentage is able to afford a median-priced home, currently over $550,000. But lowering the vote threshold to pass special taxes, which includes parcel taxes, won’t make home ownership more affordable.
  • Senate Constitutional Amendments 6 and 22 were measures that sought to lower Proposition 13’s two-thirds vote requirements to 55 percent to fund special tax increases on local transportation and education programs respectively. Regarding parcel taxes, remember that while everyone gets to vote on these measures, only property owners pay. That speaks to how imperative it is that Proposition 13’s protections remain in place.
  • Assembly Bill 2303 was a 10 percent tax on small business vendors who contract for services with private California prisons.
  • Assembly Bill 2497 placed a tax on guns and ammunition.
  • Assembly Bill 2486 placed a $100 million tax on opioid distributors in order to fund treatment programs.
  • Senate Bill 794 imposed a three percent point-of-sale tax on fireworks.
  • Assembly Constitutional Amendment 13 imposed an additional one percent income tax increase for those making over a million dollars a year in order to provide universal higher education.
  • Senate Bill 993 placed a sales tax predominately on business services that would cost tens of billions of dollars.
  • Assembly Constitutional Amendment 2 reimposed a billion dollar “snack tax” that voters roundly repealed back in 1992. The methodology of this tax is unfair and punitive. Bottled water was listed as a snack to be taxed. Granola bars were included, but granola was not.

If that weren’t enough, further taxes were introduced to fix two legitimate and serious concerns. Currently, there are about a million California residents, mainly in the Central Valley, without access to clean water. A bill would have added a $1-per-month water tax on a majority of California property owners to pay for fixing this. In order to get around the two-thirds tax requirement, legislators gave individuals the ability to opt out of paying this. The only problem was that the opt-out language included no specifics. Would people have to opt out every month? What about those people who have their bill automatically paid by credit card? Would they even know that the tax existed?

This water tax, the first in the nation, would have cost millions of dollars annually for water agencies to implement as they monitored who opted in and out of paying every month. Ultimately, a permanent tax is not needed to solve a one-time $120 million problem. This is especially true when one considers all the existing funding sources that could pay for clean water, including the state General Fund and existing bond funds. If government can’t provide clean drinking water without taxing it first, it calls into question what our elected officials’ fiscal priorities really are.

Finally, another budget bill would have imposed a tax of up to 80 cents per month on cell phones to fund a new 911 system, which hasn’t been upgraded in over 30 years. While HJTA doesn’t dispute the need for such a system, especially after recent deadly fires across California, a permanent tax increase is not needed to pay for a one-time appropriation that totals $170 million dollars. Put another way, that’s .01 percent of the entire General Fund budget. Public safety funding should be a priority in a budget with a $9 billion surplus.

Don’t forget to go to the Legislation & Legal section of this website to learn more about the positions HJTA took on legislation important to you. As always, it remains a pleasure to serve you in the Capitol hallways in Sacramento.

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