By Laura Dougherty, Director of Legal Affairs
This was truly a shocking disappointment. In the last issue of Taxing Times, I reported that Governor Newsom and certain members of the Legislature had filed a lawsuit in the California Supreme Court seeking to remove the fully qualified Taxpayer Protection and Government Accountability Act (the TPA) from this November’s ballot. I regret to inform you that on June 20th, the Supreme Court actually did it, and without a dissenting opinion. The Wall Street Journal reported the event as “Direct Democracy Dies in California.”
Very briefly, if the TPA had been approved by voters this fall, it would have accomplished tax reform restoring — and building on — Proposition 13 and other major tax reform measures supported by HJTA. As one of our legal allies put it, the TPA was “evolutionary, not revolutionary.” Its main features were requiring simple majority voter approval of new state taxes and restoring the two-thirds voter approval requirement to local special taxes. Transparency would also have been increased through ballot language clarity and reinstatement of fee approval by legislative bodies.
The public is noticeably curious and concerned over what the removal of the TPA means. Is “all political power” still “inherent in the people,” as our Constitution says? Do “they [still] have the right to alter or reform it when the public good may require”? On Wikipedia, there are normally about 150 daily views of the California Supreme Court’s page. But on June 20th, there were 868 and on June 21st, there were 3,512. People apparently wanted to know who would make such a decision against direct democracy in California.
The May 8th hearing had seemed promising. The justices first asked the Governor’s counsel if it was even appropriate to bring such a lawsuit pre-election, which it wasn’t. They also asked why the legislative power isn’t a “shared power” between the Legislature and the people. This was very healthy skepticism.
But the decision published on June 20th tracked almost directly along with the Governor’s counsel’s arguments recited at the May 8th hearing. The court struck the TPA based on perceived “reverberations” and “collective impact,” frighteningly ambiguous terms for future initiatives on any subject.
The decision found the TPA’s “collective impact” to be what is known as an impermissible “qualitative revision.” Taking issue with two features of the TPA, it said the “TPA would shift so much authority, in such a significant manner, that it would substantially alter our framework of government.”
But before I share the two features the high court said disqualified the TPA, we must note the real and effective difference between a “qualitative revision” and a “constitutional amendment.” Both are useful to change the constitution. And because the TPA’s proposed changes did not interfere with any federal fundamental rights, no one disagreed that all the changes were valid options. The high court said “the electorate remains free to modify” the constitution “through appropriate procedures.”
But a “revision,” contrary to an “amendment,” can only be proposed by the Legislature. Hence, while nothing is wrong with the TPA’s proposed changes, the people aren’t allowed to be the one to put them on the ballot. So the people can vote on them if the Legislature itself puts them on the ballot. But why would it?
Of the two TPA features that “shift[ed] so much authority,” the largest was the voter approval of the state taxes provision. The decision said the voter approval requirement on state taxes would interfere with the State Legislature’s “supreme” and “plenary” power to tax you. It said the Legislature uses its “expertise” when crafting taxes, expertise that you cannot have to vote “yes” or “no.” And despite the voters being part of the legislative branch, the “existing constitutional balance” would be disrupted if people voted on state taxes because California would become less of a “republican form of government.”
The second significant issue was the transparency provision requiring legislative approval of fees. This was deemed an improper shift of power between the legislative and executive branches. The decision asserts that the legislative branch has a right to delegate “administrative tasks, including assessing fees and other charges.” In other words, in addition to its supreme power to charge you taxes, the Legislature also has supreme power to create an administrative state to charge you fees it will not oversee.
Meanwhile, political opponents had been making the TPA a matter of class warfare. Though the TPA’s every aim was to increase transparency and consent, opponents had started dubbing it the “Taxpayer Deception Act,” mischaracterizing it as a matter of corporate greed. When the decision came out, their news commentary continued emphasizing the evasion of the alleged corporate greed.
But ironically, the decision approved the part of the TPA that most political opponents were hating on — the restoration of the 2/3 vote for all local special taxes, such as Los Angeles Measure ULA, whether proposed by a governing body, a group of citizens, or a group of citizens hired by a governing body. The class warfare angle on the TPA was directed at this fix, which was painted as robbing local government of money for essential services. The fix would have simply closed the loophole that began six years ago.
This decision is an enormous shift in California taxpayer rights. The power to tax by initiative is considered precious, but the power to ensure taxpayer consent and transparency is clearly not precious nor respected.
Fortunately, Proposition 13 and other pro-taxpayer amendments are still valid, although weakened. HJTA will continue to explore how best to expand taxpayer rights, notwithstanding the horribly unbalanced battlefield on which we must now fight.