SAN FRANCISCO (CN) — The California Supreme Court heard arguments Wednesday in an unusual case that will determine whether voters see a ballot measure in November that would bring massive change to how the state imposes taxes.
The issue before the high court is whether the Taxpayer Protection and Government Accountability Act is an improper revision of the state’s constitution and if it should be removed from the ballot because it would disrupt essential governmental power.
That in itself is a rare request, as courts typically shy away from stopping voters from weighing in on ballot questions.
The voter-initiated measure would give Californians the last word over new or increased state taxes by requiring a statewide vote. It would apply to any new or increased taxes approved since Jan. 1, 2022 — making it retroactive.
This is a fundamental change in the power of the Legislature, attorney Margaret R. Prinzing argued Wednesday, and already is wreaking havoc among local governments. These governments currently are in the budgeting process and are making decisions based on the uncertainty of the act.
“If this passes, they may lose multiple sources of revenue,” Prinzing said, referring to the retroactive trigger.
Taxing decisions are made by the Legislature for a reason, Prinzing said. It’s composed of full-time lawmakers with staff, all of whom are privy to the expenditures and revenues of the state.
That taxing power was key to Prinzing, calling it one of the Legislature’s foundational powers. The act would alter that power, putting it in the hands of voters. That makes it a revision to the constitution and reason for the high court to remove it from November’s ballot.
Any ballot measure tweaks the state constitution, Prinzing said in reply to a question, but the act would impose a fundamental change — altering the structure of government and its power.
“That’s what’s happening here,” she added.
Associate Justice Goodwin H. Liu spoke about the structure of government when questioning attorney Thomas Hiltachk, who argued in favor of keeping the act on the ballot. Liu asked if the act shifted the state from a republican, meaning representative, form of government to one that’s a direct democracy.
Liu also asked if the measure would, in effect, create a fourth branch of government by shifting taxing power to the electorate.
“Isn’t that the major reworking of government in this measure?” Liu asked.
Hiltachk argued the California Constitution puts all political power in the hands of the people, adding that voter approval has been a concept in government since the state’s inception. California lawmakers, he said, don’t have unilateral power over taxation.
He also said the act isn’t a fundamental change in government. Liu pushed back on that, pointing to a provision in the act that would remove the ability of governments to set fees, including fees and fines for parks, traffic offenses and overdue library books.
That would lead to, for example, a senior center needing its City Council to approve fees it wanted to charge.
“We’re talking about every decision, down to the library fines,” Liu said. “That’s the breadth of the measure.”
Hiltachk replied that all fines and fees were enacted by statute before the rise of the bureaucratic state several decades ago, which he said has enabled unelected government workers to raise billions of dollars without any legislative oversight. The act would roll back the current status quo, giving voters checks and balances.
“It does not revise the constitution in any way,” he added.
Pivoting to Prinzing, Liu asked why the act isn’t merely another back-and-forth in the negotiation of how government should operate.
Prinzing argued that the scope and nature of the act make it different. Proposition 13, the 1978 measure which restricts property tax increases, made “discreet” changes in the state’s taxing power. The Taxpayer Protection and Government Accountability Act affects all taxing power.
Justices also questioned whether they should wait to decide until after the election. The high court could potentially stay the measure and remove portions of it they found improper.
Delaying that decision, while supported by precedent, would lead to negative consequences and in some cases already has, Prinzing said, pointing to local governments’ budgeting issues.
Hiltachk said the case “begs” for review after the election, as the justices only had speculation as to the act’s effects currently.
California Secretary of State Shirley Weber said in 2023 that the act has qualified for the ballot, though it has not been certified to appear on the November ballot as of press time.
The question of whether to remove the act from the ballot reached the high court after Governor Gavin Newsom, the Legislature and longtime Democratic operative John Burton asked for review. It’s rare for the state Supreme Court to hear a case that hasn’t worked its way through the courts, though it does happen.
Attorney Michael G. Colantuono, who wrote an amicus in the case, has said this was a good candidate for immediate review because of the destabilizing effect the act is already having on local governments.
However, the challenge to the ballot measure isn’t the only method of circumventing the act. Assembly Constitutional Amendment 13 would require any ballot measure seeking to raise a vote threshold for future initiatives to pass by the margin it proposes.
In this case, it would mean the taxpayer accountability act would need a two-thirds vote, not a simple majority.
Assemblymember Christopher Ward, a San Diego Democrat and author of that measure, has said he’s seen abuse in voter-initiated ballot measures. His amendment would affect initiatives placed on a ballot via signatures, not those by lawmakers.
Ward’s constitutional amendment passed the Legislature last year and was signed by the governor. It’s slated to appear on the November ballot and would be retroactive if passed — meaning it will apply to the taxpayer accountability act if it's passed, even if they're on the same ballot.
The high court is expected to rule by June 27, the deadline for measures to qualify for the ballot.
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