On September 26, 2023, the Governor and the Legislature filed suit in the California Supreme Court seeking to cancel the Taxpayer Protection and Government Accountability Act, commonly referred to as the TPA. (On the ballot, it would become known by a Proposition number just like Propositions 13, 218, and 26.) More technically, they sued its proponent and the Secretary of State, Shirley Weber, asking the Supreme Court to order the TPA erased from the November 2024 ballot.
The TPA would be the next major tax reform initiative amendment to the California Constitution since Propositions 13, 218, and 26. While those measures from the years 1978, 1996, and 2010 are acknowledged as legal constitutional amendments, the Governor and Legislature have argued that in 2024, the TPA is too much change for the government to endure. Therefore, they say, it cannot be allowed to go to you, the voters, to decide the outcome.
But like Propositions 13, 218, and 26, the TPA is just another result of taxpayer unrest with government performance and lack of transparency. It has proposed two sets of features. The first would be a set of corrections to unsatisfactory published court decisions. Nothing unusual. The second would be a set of new rules for taxes and fees designed to increase accountability to the public. Also nothing unusual.
Let’s start with the corrections to unsatisfactory published court decisions. First, in case of any doubt, the people have the right to legislate over court decisions they disagree with. The Supreme Court itself mentioned this in one of the unsatisfactory cases the TPA addresses, Wilde v. City of Dunsmuir. In that case, the Supreme Court had found that citizens could not referend a water rate increase. But the Court said this was because “the voters have not chosen to do so” in their drafting of Propositions 218 and 26. In 2017, the Court more specifically acknowledged that “Proposition 218 was adopted in part to address Knox’s holding,” Knox being an assessment case that dissatisfied voters.
The most infamous case the TPA would overrule is the 2017 decision of California Cannabis Coalition v. City of Upland. There, the Supreme Court opened the door to subsequent appellate decisions finding the two-thirds vote for local special taxes inapplicable when the tax is proposed on voter initiative paperwork. Politicians have used this loophole. The TPA would close it. To correct this incredibly mistaken interpretation of voter intent in Propositions 13 and 218, TPA would enhance the appropriate sections to say “No local government, whether proposed by the governing body or by an elector, may impose” a new tax without two-thirds voter approval.
This Upland fix to restore the two-thirds vote is one of the TPA’s larger changes. Government entities have responded to it with an uproar about “reducing” local tax revenues. But the fact is that local tax revenues weren’t supposed to be raised in this mistaken manner in the first place, and they were only so raised in various local areas starting about four years ago following the mistaken appellate court decisions.
Other TPA corrections would further clarify how to pass taxes and fees. One would make sure the courts characterize all government-created charges as either taxes or fees to allow a clear answer to whether voter approval is required. This has been a problem in cases opening loopholes by finding that a charge could also be “something else.” (See Chamber of Commerce v. California Air Resources Board; Schmeer v. Los Angeles County.) Another correction would stop the use of companion advisory measures regarding how a general tax in a separate measure will be spent. This would clarify that what are truly intended as special taxes need two-thirds approval. (See Johnson v. Mendocino County.) Lastly, if you should be annexed into a new governing area, another correction would give you a right to vote on the new taxes to which you would be subject in that area. (See Citizens of Sunset Beach v. Orange County LAFCO.)
The TPA’s other new rules for taxes and fees would enhance voter consent and transparency from imposition through to collection. To protect Californians against another experience like the unwanted 2017 gas tax hike, the Legislature would have to refer state tax increases for majority voter approval. (This is not unusual. Other states have similar voter approval requirements.) And to protect Californians from rogue and possibly hidden unruly administrative fees, the Legislature would have to approve them and declare the approved rates in the legislation.
The Governor and Legislature’s lawsuit argues that the Legislature’s constitutional powers would be infringed, and that state and local governments will lose too much money. But the Legislature has never had exclusive authority over taxation law. And financial gains or losses shouldn’t be something left to the Supreme Court to calculate. The TPA is, like any other amendment, change the people want to make. By all data available, however, the TPA would not change government finance anywhere near as much as Proposition 13 did in 1978. Proposition 13 has been upheld in all court challenges since 1978.
The HJTA legal team joined the proponents in defending the TPA since it was sued in September. We do not know exactly what will have occurred by the time this article is in your mailbox. A briefing schedule will have concluded by February 14th.
The petition asked for a decision by June 27th, the date the Secretary of State should be placing the TPA on the ballot. Hopefully, the Supreme Court will have heard oral argument, denied the government’s petition, and stepped aside so that the voters can cast their ballots on this important taxpayer protection measure in November.