By Timothy A. Bittle, Director of Legal Affairs
Wait a minute. “By Timothy A. Bittle, Director of Legal Affairs”? I thought Bittle retired! I thought Laura Dougherty was the Director of Legal Affairs! What gives?
Well, I was supposed to retire. In fact, my retirement party was calendared, invitations had gone out, people were RSVP’ing, and I had already picked up my Walmart Greeter vest. But then Laura accepted a job at the Commission on State Mandates. Bad for my retirement, but good for taxpayers because the Legislature is constantly heaping new duties on local governments that cost money to implement, and the Commission decides who must bear those costs — local taxpayers or the State. Laura will be a voice for taxpayers.
Since Laura’s departure meant that HJTA would be shorthanded at a time when several cases had deadlines looming, I decided to postpone my retirement. For now, I am the acting Director of Legal Affairs until we find a qualified attorney to take my place. In case the position is still open by the time this publication reaches you, feel free to send any interested attorneys to our website, HJTA.org, where they can scroll down to the bottom of the homepage and click the link for Employment Opportunities.
Now that we’ve cleared that up, let’s talk about the initiative that HJTA recently filed with the Secretary of State, which we’re calling The Local Taxpayer Protection Act to Save Proposition 13. Several of our Members are wondering, if they help collect signatures to qualify this measure, how do we know the courts won’t remove it from the ballot like they did last time? Let me answer that question.
Our last initiative, which we called the “Taxpayer Protection and Government Accountability Act,” was an ambitious undertaking. Like the One Big Beautiful Bill, we tried to fix a lot of problems that had weakened taxpayer rights, while adding new rights protecting taxpayers from future tax increases. At great expense, enough signatures were collected to qualify the initiative for the ballot. We launched an aggressive campaign promoting the measure, and polls showed we were gaining support.
Alarmed by the rising poll numbers, Governor Gavin Newsom and those who control the State Legislature filed a lawsuit against the Secretary of State demanding that she remove our initiative from the ballot. Our attorney, who had officially submitted the initiative to the Secretary of State, was named as the Real Party in Interest.
The lawsuit argued that the measure went too far, that it amounted to a revision of the state constitution. As background, the constitution provides that it may be amended by the People exercising their initiative power, but a major revision requires a constitutional convention.
Because Election Day was approaching and therefore time was of the essence, the California Supreme Court agreed to hear the case in the first instance, without the need for a trial or appeal.
Lawyers for the government argued that the centerpiece of the initiative, which required voter approval of any new state taxes, would transform the Legislature from a law-making body into a mere law-recommending body, at least as to taxes, without which government cannot run.
The lawyers also attacked, as prohibited revisions, our proposed expansion of the People’s referendum power to make governmental fees subject to voter approval or rejection through the referendum process, and our proposed requirement that fees be adopted by elected legislative bodies, not by unelected administrative agencies.
Our attorney argued that Propositions 13 and 218 also required voter approval of taxes and fees, and put a greater dent in governmental authority by actually prohibiting certain taxes and fees, yet the Court had upheld those measures against similar attacks.
Nonetheless, the Supreme Court ruled that the proposed requirement of voter approval for new state taxes, the expansion of the People’s referendum power, and the shift of fee-setting authority from unelected to elected officials, especially when combined with the measure’s other proposals, added up to a prohibited revision of the constitution. The Court ordered the Secretary of State to remove our initiative from the ballot.
Does the same fate await our new initiative? No, certainly not. First, today’s measure has fewer elements and is limited to a single section of the constitution, so it cannot have the aggregate impact that influenced the court last time.
Second, today’s measure only closes loopholes in Proposition 13; it does not create any new rights. Our former initiative did both, yet the Court found fault with only the new rights. It had no problem with closing loopholes related to existing rights.
Third, whereas our former initiative would have affected all taxes and fees, today’s measure deals only with taxes levied on real property or on persons as an incident of property ownership. It doesn’t deal with other kinds of taxes, or with fees.
Fourth, our former initiative threatened state revenue. Today’s measure addresses only local revenue. Call me cynical, but I believe that was a big unspoken factor in the Court’s decision to invalidate our former initiative. We’d like to believe in three independent branches of government, insulated by the Separation of Powers. But that’s not how things work in the real world of California politics. In the real world, the Legislature passes, and the Governor signs the budget that funds the State’s court system and pays the salaries of our Judges and Justices. Standing before the Court as the plaintiffs who filed the lawsuit challenging our former initiative were the Legislature and the Governor, who control the Court’s funding. One hand washes the other.
Today’s measure does three things. It restores the two-thirds vote for special taxes (that is, taxes earmarked for a specific purpose), whether proposed by the local legislative body or in the form of a citizens’ initiative. It clarifies that general parcel taxes (that is, parcel taxes that go into the General Fund) are forbidden, whether proposed by the local legislative body or in the form of a citizens’ initiative. And it limits transfer taxes to 0.11 percent of the purchase price when property is sold. Several charter cities have transfer taxes that are many times higher than that, which basically steals all of the seller’s equity.
Each of these three elements closes a loophole in Proposition 13 that was intended neither by those who drafted it, nor by the voters who enacted it. I am confident that today’s measure will not be deemed a revision of the constitution.