California Supreme Court agrees to consider pulling tax measure from 2024 ballot

In a rare action, the state Supreme Court granted a hearing Wednesday on a request by Gov. Gavin Newsom and Democratic legislators to remove an initiative from the November 2024 state ballot that would require voter approval for any increase in state or local taxes or fees.

The justices denied their request to immediately cancel the vote on the ballot measure, but told its sponsors and state election officials to “show cause before this court” why the measure should go before the voters. Written arguments are due by mid-February, with a hearing to follow. All seven justices signed the order.

The initiative, a proposed state constitutional amendment supported by business groups, has collected enough signatures to qualify for the ballot. But Newsom and the Legislature’s Democratic majority contend the measure would so drastically weaken the historic powers of the state’s elected leaders and lawmakers that it would amount to a “revision” of the California Constitution, which cannot be done by initiative.

The court usually waits until voters approve a ballot measure before deciding whether it is constitutional. But in 2018 the justices removed a ballot-qualified initiative that proposed to divide California into three states.

The court never decided whether the measure would amount to a constitutional revision, rather than just an amendment, because its sponsor dropped the plan after it was removed from the ballot. A revision would require two-thirds legislative approval before being submitted to the voters.

“This radical effort led by wealthy business interests impermissibly seeks to completely restructure our system of government in a way that will hobble the state’s ability to respond to future crises,” Omar Rodriguez, a spokesperson for Newsom, said in a statement Wednesday. “We are pleased the Court decided to hear this important case.”

Sponsors of the measure, including Rob Lapsley, president of the California Business Roundtable, said the court’s action “threatens the voters’ constitutional right to act as a check and balance for the governor and Legislature.”

“We will continue to defend the right and voice of voters to the Court and ensure that this highly popular and much-needed measure appears before voters next November,” said Lapsley, joined by leaders of the Howard Jarvis Taxpayers Association and the California Business Properties Association.

Current law allows the Legislature to increase state taxes by a two-thirds majority vote. The proposed ballot measure would retain that standard but would also require a majority of California voters to approve the increase before it could take effect.

State law does not now require legislative or voter approval of state or local regulatory actions with financial effects, such as an increase in licensing fees. The ballot measure would classify those actions as taxes requiring approval from state or local lawmakers, by a two-thirds majority in some cases.

And it would apply retroactively. Any tax or fee by a state or local government since the start of 2022 would be canceled unless approved within 12 months by the voters or lawmakers cited in the ballot measure.

That provision “poses an immediate threat to vital state and local services that are so important to our cities’ residents,” mayors of San Francisco, Oakland, San Jose and several other cities said in a filing with the court. If the measure remains on the ballot, they said, “Our cities will be forced to reassess and potentially slash lawfully prepared budgets” even before the election to avoid financial emergencies if voters approve the measure.

“The measure’s limitations on the ability to approve new taxes will have devastating effects on K-12 education finance,” the California School Boards Association said in a filing urging the court to hear the case and remove the measure from the ballot.

In an emergency petition in September, lawyers for Newsom and state lawmakers said that if the measure became law, “administrative agencies would lose the power to do much of the work they do today under legislative delegated authority, such as assessing fees for the disposal of hazardous waste (at the state level) and setting fees for trash collection or charges for health care at public hospitals (at the local level).”

State officials said the retroactivity standard would apply to 15 bills already signed by Newsom that could affect fees or taxes, and at least 131 such measures passed by local governments since the start of last year.

But supporters of the measure said similar predictions of financial disasters proved to be unfounded after voters approved, and the court upheld, Proposition 13, the 1978 initiative that slashed property taxes in California to no more than 1% of assessed value and limited increases to 2% per year. A follow-up measure, Prop. 218 in 1996, requires voter approval for any new city or county taxes, and a two-thirds majority for taxes that would raise money for specific local programs.

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