I never considered that requiring elected legislators to approve taxes and fees devised by unelected bureaucrats to be an “abomination.”
But that’s the exact language Gov. Jerry Brown used to refer to the Tax Fairness, Transparency and Accountability Act of 2018 when he signed Assembly Bill 1838 last Thursday.
California voters have a history of supporting taxpayer protections. Beginning with Proposition 13 in 1978 and continuing through Proposition 218 in 1996 and Proposition 26 in 2010, voters have continually voiced their frustration with politicians in the Capitol and city halls across the state who are all too eager to raise taxes and fees.
Recent court decisions have gutted the protections enacted by voters under Proposition 218 and Proposition 26 and made it not only easier for politicians to raise taxes, but also easier for them to divert taxpayers’ money away from their intended uses.
In response to these court decisions and a flurry of proposed local general tax increases, a coalition of business leaders and taxpayer advocates, with major funding from the American Beverage Association, came together to support a ballot measure that would restore taxpayer protections and increase government transparency and accountability on new taxes and fees.
As part of the transparency and accountability language in the initiative, the Tax Fairness Act would have required elected officials to clearly identify how revenues can be spent before any tax or fee is enacted. Additionally, it would have required that revenues only be spent where voters approved and not diverted to other purposes. As a result of these provisions, new or increased local taxes would need to be approved by a two-thirds vote, so that the tax could be “broadly supported and transparently debated.” It would also have required new or increased regulatory taxes and fees to return to the legislature for a two-thirds approval.
Public employee unions and city leaders across the state were quick to sound the alarm.
Leading the campaign against the initiative, Service Employees International Union California argued that the initiative would devastate local governments by limiting their ability to find new sources of revenue to balance their budgets.
They portrayed the Tax Fairness Act as a malicious attempt by Big Soda to exact retribution for recently enacted local soda taxes by raising the approval requirement for all local taxes. But in that characterization, they ignored both the proliferation of local tax increases across the state and the never-ending onslaught of state taxes, fees and charges Californian taxpayers face.
It appears it doesn’t matter if California’s families are economically strangled by a putrid mesh of taxes, fees, housing, energy and transportation costs. We need to keep it as easy as possible for cities, counties and other municipalities to raise taxes to fund pension debt obligations and meet the demands of public employee unions.
Given the threat of voters enacting a measure that would raise the bar for increasing local taxes, the public employee unions and their allies took their aim at the beverage industry, looking for a compromise to bring them to the table and cool their support for the Tax Fairness Act.
By establishing a statewide moratorium on new taxes on groceries, including sodas, at the local level, through 2030.
So on the last day for the Tax Fairness, Transparency and Accountability Act of 2018 to be withdrawn from the ballot by its proponents, the legislature passed and Brown signed Assembly Bill 1838. Shortly thereafter, the tax fairness initiative was withdrawn.
You can’t blame the proponents of the initiative for its withdrawal. The campaign would have been costly and faced significant and well-funded opposition from SEIU, other public employee unions, the League of Cities and others. With other high priority fights, such as the flawed rental housing initiative, qualified for the ballot, it’s prudent to be selective about picking your battles and avoid spreading yourself too thin.
The unfortunate downside is that, for the time being, we can expect cities and counties to continue selling us more tax increases that make big promises while delivering little in return.
General tax increases are nothing more than blank checks paid to the order of politicians with no legally enforceable transparency or accountability.
I’ve said it before, and I’ll say it again: If a community has a specific need that requires additional funding, then let the voters and taxpayers of that community decide to tax themselves and meet that need via special taxes. This is the only way to hold politicians accountable with taxpayer dollars.
A two-thirds vote may seem difficult to get to, but it really isn’t. If the Tax Fairness Act had been law since 2010, more than 80 percent of proposed local general and special tax measures that were approved would still have been approved.
In the meantime, get ready for a dog and pony show to promote majority-vote tax increases every time pension debt payments balloon. Informing taxpayers how revenues could be spent creates an aura of transparency, but it’s a far cry from telling them how their money will be spent.
California taxpayers don’t need window dressings. We need real transparency, accountability and fairness.
And contrary to what our governor may say, that’s no abomination.