February 2, 2010
Pursuant to Elections Code Section 9005, we have
reviewed the proposed constitutional initiative relating to state
approval requirements for taxes (A.G. File No. 09‑0101).
Background
State Tax Increases.
The State Constitution requires a two-thirds vote of each
house of the Legislature for measures that result in increases in
revenues from imposing new state taxes or changing existing state taxes.
This has been interpreted to allow measures that do not result in a net
increase in state taxes to be adopted by majority vote. For example, a
measure that results in higher taxes for some taxpayers but an equal (or
larger) reduction in taxes levied on other taxpayers would not result in
an aggregate increase in taxes. Under current practice, this type of
measure could be passed by a majority vote.
State Taxes, Fees, and Assessments on Real
Property. The Constitution prohibits the state from imposing new
ad valorem taxes or sales taxes on real property. Although the state
historically has not collected significant revenues from fees or
assessments on real property, the Constitution does not prohibit the
state from raising revenues from these sources. In recent years, some
state fees and assessments on real property have been proposed. For
example, the Legislature has considered proposals to impose state fees
or assessments on property owners to pay for fire and flood protection
services.
Proposal
This measure amends the Constitution to constrain
state authority to increase taxes or impose taxes, assessments, or fees
on real property.
State Tax Increases
The measure specifies that any change in a state
statute that results in any taxpayer paying a higher state tax requires
(1) a two-thirds vote of the Legislature and (2) majority approval by
the statewide electorate. (This would include statutes that do not
impose a net increase in revenues but only reallocate tax burdens.) The
measure provides a waiver of the voter-approval requirement in cases of
emergency as long as the tax expires by the next statewide election in
the year after the emergency.
State Taxes, Fees, and Assessments on Real Property
The measure prohibits the Legislature from
imposing any tax, fee, or assessment on real property, or on the sale or
transfer of real property.
Fiscal Effects
The measure makes two significant changes to
state finance. First, the measure requires state statutes that increase
or reallocate state taxes to be approved by two-thirds of the
Legislature and a majority of the state’s voters. Under current law, no
statewide vote is required, and some of these measures (primarily those
with no net revenue increase) can be passed by a majority vote of the
Legislature. The measure also prohibits the Legislature from enacting
certain revenue measures, such as assessments on real property.
The overall revenue impact of these changes would
depend on future actions of the Legislature and voters. By making it
more difficult to pass measures that increase revenues, it is likely
that state revenues would be lower in the future than they would be
otherwise. Given that state revenue measures frequently exceed tens of
millions of dollars, the higher approval thresholds in the measure and
constraints on state authority to impose fees and assessment on real
property could result in major decreases in state revenues and spending.
Summary
The measure would have the following impacts on
state government:
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