Goodbye, Two-Thirds Voter Threshold for Taxes Passed by Initiative

BY JIM SUTTON

I recently asserted that the Citizens’ Plan for San Diego ballot measure – which would raise funds to promote San Diego tourism, expand the Convention Center, build a football stadium, and other inter-related matters – requires a majority and not a two-thirds vote, even though others disagreed. A landmark appellate court decision issued last week confirms that only a majority vote is needed.

In a unanimous March 18 ruling, the state’s Fourth District Court of Appeal concluded that the provision in the California Constitution regarding a two-thirds vote for approving “special” taxes earmarked for a particular purpose only applies when a city council or board of supervisors is pushing the tax increase, and not when the tax increase is placed on the ballot through a citizens’ initiative. The court certified its ruling for publication so that it will be binding on future courts in San Diego and throughout the state.

The case, California Cannabis Coalition v. Upland, arose out of a dispute between a citizens’ coalition that wanted its medical marijuana initiative to appear on a special election ballot in late 2015, and the city of Upland, which claimed that the constitutional provision mandated that the initiative appear on the regular November 2016 election ballot. When the coalition submitted the petition signatures, the city sued and obtained a ruling that the initiative could not be voted on at a special election.

But the appellate court overturned that decision and made an important distinction between taxes imposed by local governmentand taxes imposed by a voter-approved citizens’ initiative. Whereas the regularly scheduled election rule and two-thirds vote requirement apply to taxes imposed by the government, they do notapply to taxes proposed by citizens through the initiative process. The court put it simply: “taxation imposed by initiative is not taxation imposed by local government.”

The Upland case extends an earlier appellate court decision that upheld a 10-cent surcharge on paper bags in Los Angeles County even though the funds are being used for specific purposes. In sum, these two opinions deliver a one-two punch to the argument that the Citizens’ Plan requires a two-thirds vote. The Upland case also improved the chances of passage for another proposed measure to increase hotel taxes to pay for a new Convention Center/football stadium, or convadium.

The court took a walk down memory lane with respect to constitutional restrictions on tax increases: Proposition 13, the original groundbreaking statewide initiative that limited the power of local government to increase property taxes; Proposition 62, which gave voters powers to approve or reject certain tax increases proposed by state and local government; Proposition 218, which expanded these powers and Proposition 26 (2010), which shut down the practice of mislabeling “taxes” as “fees.” The court confirmed that these constitutional amendments were all designed to protect taxpayers by limiting the power of local government to impose taxes, but were not limits on the power of the people to impose taxes via the initiative process. As the court confirmed, the initiative is “one of the most precious rights of our democratic process.”

As this important democratic process plays out, the voters will decide whether the Citizens’ Plan and/or the new convadium measure are good public policy. In the meantime, let’s be clear that when one or both of these measures appear on the November ballot, they will only need 50 percent plus one, not two-thirds, of the votes to become law.

Jim Sutton is a political and election law attorney and the managing partner of the Sutton Law Firm. You can reach him at jsutton@campaignlawyers.com.