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Dan Walters

Walters: Supreme Court Makes Local Tax Hikes Easier



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In a roundabout, passive way, the California Supreme Court last week handed a big victory to the advocates of higher taxes.

Without comment, the justices declined to take up a state appellate court decision that would allow specialized local government taxes to be increased by a simple majority of voters, if they are placed on the ballot by initiative petitions rather than by the governments themselves.

Dan Walters


The victory for tax proponents, especially government worker unions, was an equally large defeat for anti-tax organizations such as the Howard Jarvis Taxpayers Association. However, it also may bring more ballot box budgeting and indirectly weaken the role of city councils and other locally elected boards.

Proposition 218, approved by California voters in 1996, declares that local governments seeking more revenue must win voter approval. Proposals for general purpose revenue through increases in sales taxes or other levies need only simple-majority approval. However, if cities, counties and other local governments seek new taxes for specific purposes, Proposition 218 requires two-thirds votes.

Three years ago, the state Supreme Court issued a decision called “Upland” because it dealt with a ballot measure on taxing marijuana in that Southern California city.

Two of the Tests Were San Francisco Taxes

Writing the 5-2 majority opinion, Supreme Court Justice Mariano-Florentino Cuéllar declared, “Multiple provisions of the state constitution explicitly constrain the power of local governments to raise taxes. But we will not lightly apply such restrictions on local governments to voter initiatives.”

He thus implied that special purpose taxes placed before voters via initiative may not be affected by the two-thirds vote requirement for taxes sought by governments themselves.

Quickly, special purpose taxes placed on the ballot via initiative that garnered less that two-thirds votes were challenged by the Jarvis organization and other taxpayer groups, but trial court judges differed sharply on whether Cuéllar’s opinion did, indeed, validate them.

Two of the tests were San Francisco taxes placed on the ballot via initiatives personally sponsored by members of the city’s Board of Supervisors, one for early childhood education, the other to battle homelessness. Both received less than two-thirds votes, but a local judge, Ethan Schulman, validated them anyway.

In June, a San Francisco-based appellate court upheld Schulman on the homelessness taxes and the Jarvis organization appealed to the state Supreme Court, which last week validated the appellate court ruling by refusing to take it up.

Local Government Officials Prefer To Ask Voters for General Revenues

The tax on business gross receipts for homelessness services will raise as much as $300 million a year. “San Francisco voters have the right to direct democracy and self-government,” City Attorney Dennis Herrera said in a statement. “We’re pleased that this legal victory will free up millions of dollars to provide services, housing and mental health treatment for those who most desperately need it in our city.”

The Supreme Court’s action, or non-action, also validates other disputed special purpose taxes, including another for early childhood education in San Francisco, an Oakland parcel tax for education and a Fresno sales tax for parks. Local judges had blocked the Oakland and Fresno taxes, declaring that Proposition 218 required them to have two-thirds votes.

Local government officials prefer to ask voters for general revenues because they are more flexible. But advocates for particular causes prefer special purpose taxes to prevent revenues from being diverted elsewhere.

The way is now clear for interests with the wherewithal to qualify and pass ballot measures, such as unions, to push for taxes that benefit their members, thus reducing the authority of local elected officials to set budget priorities.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He has written more than 9,000 columns about the state and its politics and is the founding editor of the “California Political Almanac.” Dan has also been a frequent guest on national television news shows, commenting on California issues and policies.