Prop 43: Raises Voter Threshold for Some Local Tax Measures

Olivia Allen-Price [00:00:00] How much support do you think something should have to pass? 50% plus one? A simple majority? Or much more, like two-thirds in favor?

Ericka Cruz Guevarra [00:00:11] Now in California, certain tax measures only require a simple majority of yes votes, while others require more.

Olivia Allen-Price [00:00:20] And that all depends on how the tax got on the ballot in the first place.

Ericka Cruz Guevarra [00:00:26] If a special tax put on a ballot by citizens through signature gathering, it only needs a simple majority to pass. A special tax is a tax for a specific purpose, like policing, housing, or homeless services.

Olivia Allen-Price [00:00:41] But Proposition 43 would raise that threshold and require more support for special tax measures, even if citizens put it on the ballot.

Olivia Allen-Price [00:00:52] I’m Olivia Allen-Price, host of Bay Curious.

Ericka Cruz Guevarra [00:00:55] And I’m Ericka Cruz Guevarra, host of The Bay.

Olivia Allen-Price [00:00:58] Welcome to Prop Fest, a collaboration between The Bay and Bay Curious. We’re back at it again with another prop breakdown to get you prepped to vote with confidence this November.

Ericka Cruz Guevarra [00:01:09] Today, we’re walking you through Proposition 43. Here’s how it reads on your ballot.

Voiceover [00:01:14] Prop 43 limits voters’ ability to raise revenues for local government services.

Ericka Cruz Guevarra [00:01:24] Here to break down Prop 43 for us is KQED’s politics and government correspondent, Guy Marzorati.

Guy Marzorati [00:01:30] Hey.

Ericka Cruz Guevarra [00:01:30] Guy. Hey. Guy, let’s just dive in here. What is Prop 43 all about?

Guy Marzorati [00:01:35] Yeah, so Proposition 43 is all about raising the voter threshold for citizen initiatives to pass at the local level. So what does that mean? If there is a ballot measure placed on the ballot through citizens gathering signatures, this would require that measure to get two thirds support. So super majority support. If the tax measure is asking voters to raise taxes for a specific issue. And what this measure is in response to. Is what we’ve seen over the last decade where through a series of court decisions, it’s become easier to pass taxes on the local level if citizens through the signature process are bringing a tax proposal to the ballot instead of having elected officials place taxes on a ballot directly.

Ericka Cruz Guevarra [00:02:21] And what’s the difference between a general tax and a special tax?

Guy Marzorati [00:02:25] So a general tax is a tax that could go fund anything. It goes into the city or county’s general fund and elected officials can decide how to spend it however they want. A special tax says this money, if the tax passes, has to go to this specific thing. So maybe it has to build new housing or maybe it had to go fund police and fire. But there’s a specific written description of what the tax would go to that really governs how it’s used. So again, special taxes, money that’s going towards a specific thing, if those are placed on the ballot by elected officials, they require a two thirds vote. And that is how it used to be for any special tax for a long time, until about 2017 when there was a court decision that said, actually, if voters gather signatures and put a special tax on the ballot, it only requires a majority vote. What Proposition 43 does is return it to how it used to be where any special tax that’s on the ballot locally will require a two-thirds support.

Ericka Cruz Guevarra [00:03:31] And why is there a difference there?

Guy Marzorati [00:03:34] Yeah, so this was really just a court interpretation of the law that had been on the books. Proposition 13, which is passed by California voters in the late 70s, said that these special taxes placed on the ballot by local government needed a two thirds vote to pass. And what the court questioned was whether the word government actually applied to the entire citizenry. So folks who are collecting signatures to put things on the They said, well, that doesn’t count as government putting it on the ballot. So that’s when you started to see the difference and you started see some real effects even here in the Bay Area. Look at Proposition C, for example, in San Francisco, 2018. This was a really high profile campaign around raising business taxes specifically to fund homelessness. Now, this was a special tax. The money that was collected had to go towards homelessness services, but it was put on the ballot through the signature process. And as a result, it was able to pass, even though the measure did not get two-thirds support, it got just over 60% support, but it able to take effect and bringing a lot of money to the city. For homelessness services. You even see it on the ballot in the Bay Area this year when voters are considering this region-wide transportation measure that’s only gonna require a majority vote to raise the sales tax to fund to fund BART, to fund Muni, Caltrain, because it was put on the ballet by a group of citizen signatures.

Ericka Cruz Guevarra [00:05:06] That’s interesting. So whatever happens with Prop 43 has the potential to change how we vote on these kinds of measures you were just talking about.

Guy Marzorati [00:05:14] Exactly. Now it wouldn’t affect anything that’s on the ballot this year.

Ericka Cruz Guevarra [00:05:18] Mm-hmm

Guy Marzorati [00:05:19] But if Prop 43 passes, those could be kind of the last of their kind and going forward, we would end up in a situation where those kind of campaigns who are asking for tax increases for very specific purposes would need a two-thirds support.

Ericka Cruz Guevarra [00:05:39] I mean, obviously those are big issues and big measures facing us here in the Bay Area. I mean is this push for a super majority vote on tax measures like this a new idea?

Guy Marzorati [00:05:53] No, this is not a new idea. It’s actually something that has been pushed by anti-tax groups ever since those decisions following 2017. And these groups, the Howard Jarvis Taxpayers Association, most notably, have argued that the courts betrayed the purpose of Prop 13, that they went and created this kind of loophole that allowed these local tax increases with a majority vote when that was never meant to be the purpose, you know, behind this provision in Prop 13.

Ericka Cruz Guevarra [00:06:26] You mentioned earlier the Howard Jarvis Taxpayers Association coming out for this, I mean I feel like that’s a name that I just hear often, but I mean who are they exactly and how might California voters sort of make sense of who this association is and what else they’ve been responsible for?

Guy Marzorati [00:06:45] Yeah, so the Howard Jarvis Taxpayers Association, probably the most notable group in support of Proposition 43, and that goes back to their name, Howard Jarves. He was the proponent of Prop 13, the measure that limited property taxes and other taxes in the late 70s.

Voiceover[00:07:02] A thunderous response for Howard Jarvis, the 75-year-old millionaire who’s been campaigning for 15 years against taxes. This time Jarvis has done it, succeeded with America’s first tax revolution since T was tipped into Boston Harbor.

Guy Marzorati [00:07:18] And this is a group that ever since has been committed to reducing taxes in California, and they see Prop 43 as the next important step to do that.

Howard Jarvis [00:07:28] We have proven that here in California that we, the people, not the politicians, are still the boss.

Guy Marzorati [00:07:38] So, you know, you have those anti-tax groups who have been pushing against this and now they hope to change it with Proposition 43.

Ericka Cruz Guevarra [00:07:52] We’ll have more on Proposition 43 right after this break. By the way, if you appreciate the work we’re doing here on PropFest, consider becoming a KQED sustaining member. Just go to donate.kqed.org slash podcasts. We’ll be right back.

Ericka Cruz Guevarra [00:08:12] Well, let’s talk about the politics of this a little bit more. I mean, how did Prop 43 even get on the ballot in the first place? Who’s really behind it?

Guy Marzorati [00:08:24] The way this got on the ballot is kind of a long and winding road, but I’ll start at the end. This measure was placed on the ballot by the state legislature in a bill written by Democratic Assembly member Buffy Wicks from the East Bay.

Buffy Wicks [00:08:41] Thank you, Mr. Speaker and members, I rise to present ACA 22.

Guy Marzorati [00:08:44] Now the twist to this is that Buffy Wicks opposes this. She opposes the measure that she wrote to get this on the ballot. And the reason for that is that the measure she wrote was really a way to get anti-tax groups to remove a different proposal that they had already qualified for the ballot

Ericka Cruz Guevarra [00:09:04] Okay, what was the original measure that got taken off?

Guy Marzorati [00:09:08] You had anti-tax groups like the Howard Jarvis Taxpayers Association team up with developers and real estate interests to qualify a measure for the ballot earlier this year. And that measure both would have made these changes to the two-thirds requirements for local taxes. They also would have limited real estate transfer taxes, which are a tax that’s assessed when a real estate sale is made. So when a building is sold, when a home is sold in many cases. Local cities and counties apply transfer taxes on really expensive real estate sales. And developers have said this has gotten out of hand and it’s actually hurting development in the state. So the measure that they qualified both would have made this change on local taxes. It also would have capped real estate transfer taxes and it would have gone back and retroactively eliminated many real estate transferred taxes. And Jon Coupal, who’s president of the Howard Jarvis Taxpayers Association. Talked about why his group thinks this is important in an interview on KQED’s political breakdown.

Jon Coupal [00:10:12] We had a very expressed prohibition in the state constitution against real estate transfer taxes. And whenever the courts create a loophole, we have to come back and shut the door.

Guy Marzorati [00:10:24] Now this was seen by opponents as a really bad result for local governments, not only because it would have limited the ability to raise taxes going forward, but also cities rely on those transfer taxes. So there was an effort to try to negotiate and get this measure off the ballot.

Buffy Wicks [00:10:41] Politics is about choices and we often must navigate challenging decisions. Big picture, the vote today protects vital resources for our local communities and it removes the greatest threat to our cities and their fiscal health which is the Taxpayer Protection Act.

Guy Marzorati [00:10:56] So Buffy Wicks, in trying to craft this deal, basically wrote the measure that they committed to keeping on the ballot in exchange for getting the harsher limits on transfer taxes off of it. So she wrote it, it passed the legislature, it got placed on the ballet, and then she immediately made clear, I do not support this idea. This was just the only way I could get a proposal that I viewed as worse off of the ballot.

Ericka Cruz Guevarra [00:11:24] Who else is coming out for prop 43?

Guy Marzorati [00:11:27] Yeah, so in addition to the Howard Jarvis Taxpayers Association, we also have broad support across the Republican landscape in California. The California Republican Party supports Proposition 43. A bunch of other anti-tax groups also have jumped on board. And so you have kind of seen a partisan split in support and opposition to 43.

Ericka Cruz Guevarra [00:11:50] Who else is coming out against Prop 43?

Guy Marzorati [00:11:54] So we’ve seen the California Democratic Party oppose Proposition 43 and also a lot of groups with ties to local government, which is no surprise. They feel like Prop 43 is gonna make it harder to get the revenue needed to run local governments. So for example, the California State Association of Counties, which represents county governments across the state and SCIU California, which a union that represents a lot local government employees. Who potentially could stand to lose if it’s harder for governments to raise revenue in the future.

Ericka Cruz Guevarra [00:12:24] Guy, what is spending looking like for Proposition 43?

Guy Marzorati [00:12:29] So we’re seeing spending in support on paper far more than spending in opposition. Over $14 million spent in support of this. I should just say though that a lot of that money was spent before this idea actually made it onto the ballot. So back when the measure looked a lot different and it had the provisions around transfer taxes, we haven’t seen, for example, big spenders on this like the California Business Roundtable who poured in more than $9 million in support of this earlier in the year. They haven’t continued to spend after this final measure was on the ballot. So it’s unclear whether that big spending gap is actually gonna persist in practice through November.

Ericka Cruz Guevarra [00:13:12] This one is this a little bit of a doozy. So I guess for voters, any advice as they just try and make sense of this particular ballot measure?

Guy Marzorati [00:13:23] Yeah, there’s definitely a lot of kind of twists and turns and complications into how this got onto the ballot. But I guess just to break down the arguments, supporters of prop 43 say if you want to tax residents for specific needs, there should be a broad support for that idea. It should be a two thirds support. If you’re going to raise taxes for a very earmarked cause, whether that be homelessness, public safety, whatever it is, it should be broad support behind it. And they want that two thirds requirement. On those local taxes. Opponents say this is not the time to make it harder for cities, for counties, for local governments to get revenue. A lot of cities and counties are already struggling with their budget. And by passing Proposition 43, it would be harder for citizens to bring tax measures on the ballot to bring more money into those local government coffers.

Some members of the KQED podcast team are represented by The Screen Actors Guild, American Federation of Television and Radio Artists, San Francisco-Northern California Local.