Legislators Propose Making Passage of New Taxes Easier

​(May 13, 2013) The California Chamber of Commerce is opposing a half dozen measures awaiting action in the Senate this week that will make it easier for lawmakers to approve new taxes.

All the measures, which are on the CalChamber “job killer” list, propose amending the State Constitution to lower the vote requirement for tax increases from two-thirds to 55%, thereby adding complexity and uncertainty to the current tax structure and pressure to increase taxes on commercial, industrial and residential property owners.

  • SCA 3 (Leno; D-San Francisco) gives school districts and community colleges new authority to enact a parcel tax for education programs through the lowered vote requirement.
  • SCA 4 (Liu; D-La Cañada Flintridge) and SCA 8 (Corbett; D-San Leandro) give local governments the new authority to enact special taxes, including parcel taxes, for transportation projects.
  • SCA 7 (Wolk; D-Davis) gives local governments the new authority to enact special taxes, including parcel taxes, to finance library construction.
  • SCA 9 (Corbett; D-San Leandro) gives local governments the new authority to enact special taxes, including parcel taxes, to finance community and economic development projects.
  • SCA 11 (Hancock; D-Oakland) simply gives local governments new authority to enact special taxes, including parcel taxes, through lowering the vote threshold.

Blanket Authority

A chief concern with these proposals is that they provide blanket authority to the local government entity, school district or community college district to impose the designated tax.

There are few parameters or restrictions under which the tax may be imposed, other than that the revenue be used for the designated purpose.

With such broad discretion in the type or scope of the tax to impose on real property, the CalChamber is concerned that the constitutional amendments could lead to targeted taxes at the local level against unpopular taxpayers, industries, products or property.

Disproportionate Impact

For example, a parcel tax could be disproportionately directed at commercial property within the local jurisdiction, thereby potentially undermining Proposition 13 protections and discriminating against commercial property versus residential.

Similarly, a special sales tax could be imposed solely on sweetened beverages or high calorie items.

The CalChamber appreciates the current financial pressure many cities, counties, or special districts are under to maintain levels of funding for important services, such as services for educational entities, but does not believe amending the Constitution to reduce the level of local voter approval necessary to impose nearly any type of tax is proper.

The current two-thirds vote requirement for taxes provides a mechanism by which voters can still approve tax increases while protecting the interests of a small minority of taxpayers.

The business community consistently maintains that if a tax is necessary, it should be only temporary and broad based so that the impact is minimized as the tax is uniformly shared by all instead of an individual business, industry, or taxpayer.

Reducing the threshold for voter approval of a new tax increases the threat of unfair and economically harmful targeted taxes.

Action Needed

All these proposed constitutional amendments are scheduled to be considered in the Senate Governance and Finance Committee on May 15.