Overview of Proposition 218
"The Right to Vote on Taxes Initiative"
Presented To The Senate Local Government Committee
- Restrict local government revenue raising ability. Bring
greater uncertainty to local government finance.
- Reduce the amount of fees, assessments, and taxes that
individuals and businesses pay. Increase voter-approval
requirements for local taxes, assessments and fees.
- Reduce spending for local public services.
Proposition 218 affects most local government revenues,
including garbage collection fees, fire assessments, and
utility user taxes. The only local revenues not affected
directly by Proposition 218 are: fees for local services not
related to property, gas and electric charges, fees collected
as a condition of property development, and
All new assessments and some existing assessments. Existing assessments
exempt from the measure's provisions are those that meet at least one of the
- The assessment was previously approved by voters--or by all the property owners at the time
the assessment was created.
- All the funds raised from the assessment are pledged to bond repayment.
- All the funds raised from the assessment are used to pay for sidewalks, streets, sewers, water,
flood control, drainage system or vector control programs (such as mosquito abatement).
- Only "special benefits" are assessable. Local governments may not impose assessments to pay
for the cost of providing a general benefit to the community.
- No property owner's assessment may exceed his or her proportionate share of the cost of the
- Property owners must vote to approve all assessments. Property owners' votes are weighted in
proportion to the amount of assessments they would pay.
- All new and existing "property-related" fees.
- There is little consensus as to what constitutes a "property-related fee", however, Proposition 218 explicitly exempts
from this definition gas and electric charges and fees
imposed as a condition to property development.
- No property owner's fee may exceed his or her
proportionate share of costs for the property-related service.
- Local governments may not divert property-related fee
revenues to pay for other governmental programs.
- Local governments may not impose a property-related fee
for a service not immediately available to the property
- Local government must notify all property owners before
imposing a property-related fee. Some fees would be
subject to voter approval.
Initiatives and Taxes
- Any local tax, assessment or fee may be reduced or
repealed through the initiative process.
- General taxes imposed after December 31, 1994 without a
vote of the people must be placed on the ballot for
ratification within two years.
- Charter cities must submit proposed general taxes to a
majority vote of the people.
- Local government must secure two-thirds voter approval for
any tax to be used for special purposes, even if the tax
revenues are to be placed in a locality's general fund.
If Proposition 218 is adopted by the voters, we estimate that:
- Local government revenue reductions statewide would likely
exceed $100 million annually in the short run--and
potentially hundreds of millions of dollars annually over the
longer term. (The actual fiscal impact would depend on local
government actions, voter decisions and court
- Individual and business payments to local government
would decline by comparable amounts.
- In general, these local government revenue losses would
result in similar reductions in spending for local public
services. Because local governments vary significantly in
their reliance upon taxes, fees, and assessments, this
measure's impact on individual communities would differ
- Local governments would have increased costs to hold
elections, recalculate fees and assessments, notify the
public, and defend their fees and assessments in court.
These local increased costs are unknown, but could exceed
$10 million initially, and lesser amounts annually after that.
- School and community college districts, state agencies,
cities and counties, and other public agencies would have
increased costs to pay their share of assessments. The
amount of this costs is not known, but could total over $10
million initially, and increasing amounts in the future.
218 is a major measure with significant implications for local governments,
property owners, businesses, and California residents.
measure would restrict local government's ability to raise most forms of revenue.
This restriction would result in lower payments by individuals and businesses
to local government--and less spending for local public services.
218's (1) requirement that many existing fees, assessments and taxes be recalculated
and submitted to a vote, (2) expansion of the initiative powers, and (3) shift
of burden of proof in lawsuits challenging fee and assessment amounts all serve
to increase local residents' direct control over local government finances,
but decrease the certainty in local government finance.