Taxpayer Protection Act Removed from November Ballot
July 2024
Number 32
On June 20, 2024, the California Supreme Court ruled that the ballot initiative designated as Initiative 1935 and known as the “Taxpayer Protection and Government Accountability Act” (TPA) amounts to an impermissible revision of the Constitution and ordered the Secretary of State to refrain from placing it on the November ballot. In its unanimous decision, the Supreme Court concluded the TPA would “accomplish such far-reaching changes in the nature of our basic governmental plan as to amount to a revision” of the California Constitution.
Background
The proposed TPA would have made sweeping changes to the requirements for the State and for local governments to adopt, increase, and defend taxes, fees, and revenue raising measures.
Regarding local governments, the TPA would have, among other changes: (1) extended the two-thirds voter approval requirement for local special taxes to apply not only when the tax is proposed by a local governing body but also when the tax was proposed by the electorate through the voter initiative process; (2) subjected all local fines and fees, including rental fees, to mandatory voter approval and to voter referendum; (3) voided any tax or exempt charge adopted after January 1, 2022, that was not adopted in compliance with the requirements of the TPA unless the tax or exempt charge was reenacted in compliance with the requirements of the TPA; (4) limited “exempt charges” to actual costs (as opposed to reasonable costs); and (5) required additional information about the type, amount, rate, duration, and use of revenues derived from a tax to be included in the 75-word ballot question for local tax measures.
On behalf of the Education Legal Alliance of the California School Boards Association (CSBA), Lozano Smith prepared and filed an amicus curiae brief in support of the efforts to remove the TPA from the November ballot.
The TPA Is a Constitutional Revision
While a voter initiative may place a constitutional amendment on the ballot, under State law a constitutional revision may only be accomplished by convening a constitutional convention or by the Legislature submitting a constitutional revision to the voters for approval. The Supreme Court characterized a constitutional revision as one that makes “far reaching changes in the nature of our basic governmental plan or, stated in slightly different terms, that substantially alter[s] the basic governmental framework set forth in our Constitution.”
In reviewing the changes proposed by the TPA, the Supreme Court determined the TPA would transform (1) the State Legislature’s power to levy taxes, (2) the balance of power among the State Legislature, State executive agencies, and the electorate over the setting of fees, and (3) the authority of local government agencies to set fees without legislative approval or the possibility of referendum. In classifying the TPA as a constitutional revision, Supreme Court concluded that the TPA would “shift so much authority, in such a significant manner, that it would substantially alter our framework of government.” As the TPA has not met the procedural requirements applicable to a constitutional revision, the Supreme Court ordered it removed from the November Ballot.
While the Supreme Court’s conclusion that the TPA is a constitutional revision is based on the totality of the changes proposed by the TPA, the Supreme Court’s analysis in its Opinion suggests that certain individual components of the TPA might, on their own, also be considered constitutional revisions. The Supreme Court claimed one provision would “significantly alter the existing constitutional balance between direct democracy and representative democracy,” while another would “materially reshape the nature and volume of the Legislature’s everyday work and its overall function and efficacy in our system of governance.” Referring to the aspects of the TPA that primarily affect local governments, the Supreme Court determined that “[i]n sum, the TPA would affect all local revenue measures—big or small, essential or nonessential—to an extent that leaves no aspect of government untouched.” The issue-by-issue analysis present in the Supreme Court’s opinion has the potential to present potentially significant hurdles to the reappearance of certain provisions of the TPA in future Statewide voter initiatives.
Finally, the Supreme Court determined that preelection review was appropriate where “the challenge is based upon a claim . . . that the proposed measure may not properly be submitted to the voters because the measure is not legislative in character or because it amounts to a constitutional revision rather [than] an amendment.”
Takeaways
Many local agencies have had to make significant changes to their election and ballot procedures, including changes to the 75-word ballot questions for their local tax measures, in order to accommodate the TPA requirements. Going forward, TPA-related revisions to 75-word ballot questions will no longer be necessary. Tax revenues from non-TPA compliant local tax measures that were adopted after January 1, 2022, and were threatened by the proposed retroactive application of the TPA, no longer have this issue to contend with.
If you have any policy considerations or questions about what the removal of the TPA from the November Ballot means for your local agency, or for any other Public Finance related questions, please contact the authors of this Client News Brief or any attorney at one of our eight offices located statewide. You can also subscribe to our podcasts, follow us on Facebook, Twitter and LinkedIn or download our mobile app.
Number 32
On June 20, 2024, the California Supreme Court ruled that the ballot initiative designated as Initiative 1935 and known as the “Taxpayer Protection and Government Accountability Act” (TPA) amounts to an impermissible revision of the Constitution and ordered the Secretary of State to refrain from placing it on the November ballot. In its unanimous decision, the Supreme Court concluded the TPA would “accomplish such far-reaching changes in the nature of our basic governmental plan as to amount to a revision” of the California Constitution.
Background
The proposed TPA would have made sweeping changes to the requirements for the State and for local governments to adopt, increase, and defend taxes, fees, and revenue raising measures.
Regarding local governments, the TPA would have, among other changes: (1) extended the two-thirds voter approval requirement for local special taxes to apply not only when the tax is proposed by a local governing body but also when the tax was proposed by the electorate through the voter initiative process; (2) subjected all local fines and fees, including rental fees, to mandatory voter approval and to voter referendum; (3) voided any tax or exempt charge adopted after January 1, 2022, that was not adopted in compliance with the requirements of the TPA unless the tax or exempt charge was reenacted in compliance with the requirements of the TPA; (4) limited “exempt charges” to actual costs (as opposed to reasonable costs); and (5) required additional information about the type, amount, rate, duration, and use of revenues derived from a tax to be included in the 75-word ballot question for local tax measures.
On behalf of the Education Legal Alliance of the California School Boards Association (CSBA), Lozano Smith prepared and filed an amicus curiae brief in support of the efforts to remove the TPA from the November ballot.
The TPA Is a Constitutional Revision
While a voter initiative may place a constitutional amendment on the ballot, under State law a constitutional revision may only be accomplished by convening a constitutional convention or by the Legislature submitting a constitutional revision to the voters for approval. The Supreme Court characterized a constitutional revision as one that makes “far reaching changes in the nature of our basic governmental plan or, stated in slightly different terms, that substantially alter[s] the basic governmental framework set forth in our Constitution.”
In reviewing the changes proposed by the TPA, the Supreme Court determined the TPA would transform (1) the State Legislature’s power to levy taxes, (2) the balance of power among the State Legislature, State executive agencies, and the electorate over the setting of fees, and (3) the authority of local government agencies to set fees without legislative approval or the possibility of referendum. In classifying the TPA as a constitutional revision, Supreme Court concluded that the TPA would “shift so much authority, in such a significant manner, that it would substantially alter our framework of government.” As the TPA has not met the procedural requirements applicable to a constitutional revision, the Supreme Court ordered it removed from the November Ballot.
While the Supreme Court’s conclusion that the TPA is a constitutional revision is based on the totality of the changes proposed by the TPA, the Supreme Court’s analysis in its Opinion suggests that certain individual components of the TPA might, on their own, also be considered constitutional revisions. The Supreme Court claimed one provision would “significantly alter the existing constitutional balance between direct democracy and representative democracy,” while another would “materially reshape the nature and volume of the Legislature’s everyday work and its overall function and efficacy in our system of governance.” Referring to the aspects of the TPA that primarily affect local governments, the Supreme Court determined that “[i]n sum, the TPA would affect all local revenue measures—big or small, essential or nonessential—to an extent that leaves no aspect of government untouched.” The issue-by-issue analysis present in the Supreme Court’s opinion has the potential to present potentially significant hurdles to the reappearance of certain provisions of the TPA in future Statewide voter initiatives.
Finally, the Supreme Court determined that preelection review was appropriate where “the challenge is based upon a claim . . . that the proposed measure may not properly be submitted to the voters because the measure is not legislative in character or because it amounts to a constitutional revision rather [than] an amendment.”
Takeaways
Many local agencies have had to make significant changes to their election and ballot procedures, including changes to the 75-word ballot questions for their local tax measures, in order to accommodate the TPA requirements. Going forward, TPA-related revisions to 75-word ballot questions will no longer be necessary. Tax revenues from non-TPA compliant local tax measures that were adopted after January 1, 2022, and were threatened by the proposed retroactive application of the TPA, no longer have this issue to contend with.
If you have any policy considerations or questions about what the removal of the TPA from the November Ballot means for your local agency, or for any other Public Finance related questions, please contact the authors of this Client News Brief or any attorney at one of our eight offices located statewide. You can also subscribe to our podcasts, follow us on Facebook, Twitter and LinkedIn or download our mobile app.
As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.
