California Ballot Measure to Limit New Taxes Is Blocked by Supreme Court

Updated 3:05 p.m. Thursday

A sweeping ballot measure that would have made it far more difficult for local and state governments to pass tax increases and raise revenue of all kinds was booted off the November ballot on Thursday by the California Supreme Court.

The measure would have required all state and local tax increases to be approved by voters, even after elected officials approved them. In a unanimous ruling, the court wrote that it must be removed from the ballot because it clearly amounted to a revision of the state Constitution by removing power from lawmakers to approve taxes and by requiring elected leaders to vote on all government fees, like library fines.

Under the California Constitution, revisions must be placed on the ballot by either a constitutional convention or a supermajority vote of the state Legislature; this measure was placed on the ballot through the signature-gathering process.

“The measure exceeds the scope of power to amend the constitution via citizen initiative,” the justices wrote. “It is within the people’s prerogative to make these changes, but they must be undertaken in a manner commensurate with their gravity: through the process for revision set forth in Article XVIII of the Constitution.”

The court wrote that case law has long distinguished between a revision and amendment to the state Constitution — and that a revision makes “far-reaching changes in the nature of our basic governmental plan.”

Dubbed the “Taxpayer Protection Act,” the measure was placed on the ballot by the California Business Roundtable, a group of top business executives, as well as the anti-tax Howard Jarvis Taxpayers Association. They criticized the ruling as a “travesty” and vowed to continue pushing anti-tax measures.

Rob Lapsley, CEO of the Business Roundtable, said the outcome wasn’t a total loss because just the threat of the initiative prevented local and state tax measures from being placed on the November ballot.

“We have major wins,” he said. “We have kept major tax increases off the ballot … because they knew that if this measure passed, it was going to have an impact on all new future taxes.”

Democratic leaders, supported by labor unions, sued to have the measure taken off the November ballot, framing it as an existential threat to the government’s ability to provide services. In a statement Thursday, a spokesperson for Gov. Gavin Newsom praised the ruling.

“We are grateful the California Supreme Court unanimously removed this unconstitutional measure from the ballot,” said Izzy Gardon. “The Governor believes the initiative process is a sacred part of our democracy, but as the Court’s decision affirmed today, that process does not allow for an illegal constitutional revision.”

At oral arguments in May, the justices appeared skeptical of Democrats’ arguments, noting the court’s general reluctance to prevent voters from weighing in on a measure and asking lawyers for the governor why they shouldn’t take up the constitutional question after the election.

But in Thursday’s ruling, authored by Justice Goodwin Liu, the court explained its rationale for preventing voters from weighing in at all.

“We typically review constitutional challenges to an initiative after an election in order to avoid disrupting the electoral process and the exercise of the franchise,” the ruling stated. “But preelection review is proper for challenges that go to the power of the electorate to adopt the proposal in the first instance.”

The opinion noted that the ballot measure didn’t only raise the threshold for passing future state and local taxes — it would have retroactively nullified any taxes and fees adopted since Jan. 1, 2022, that did not comply with the measure’s provisions. Those “rollback provisions,” the court wrote, complicated matters and generated uncertainty, prompting justices to determine that it was appropriate to weigh in before voters.

And the court rejected arguments by the ballot measure backers’ attorneys that the court could take out only the provisions of the measure that amounted to a revision of the Constitution, saying the thousands of voters who signed petitions to place the measure on the ballot did so with the understanding that the entire initiative would move forward.

The ruling was praised by unions and groups representing local governments and slammed by Republicans.

Graham Knaus, CEO of the California State Association of Counties, commended the court for protecting Californians “from unlawful changes to our state constitution that would have crippled essential government functions that our communities rely upon.”

However, state Sen. Brian Dahle (R-Bieber), who ran to replace Newsom in the unsuccessful 2021 recall attempt against the governor, lashed out at the court.

“Today’s ruling is a slap in the face to California citizens as these partisan justices are not only interfering in the initiative process put in place to protect the people’s right to be heard in our democracy, but they’re doing it at the request of the very people who want to raise our taxes time and time again,” he said.