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Neon Tommy - Annenberg digital news

Proposition 26 Would Widen California's Financial Mess

Paresh Dave |
November 1, 2010 | 11:47 a.m. PDT

Executive Producer

Proposition 26 would widen the definition of taxes, making it harder for the state Legislature to approve measures to raise revenues.

Since oil companies began to help bankroll the campaign in favor of Proposition 26 a couple weeks ago, the Nov. 2 ballot initiative has been getting tremendous press. But all of the literature is vague, giving few clear-cut examples of what sort of fees, as they are called now, would suddenly become harder to increase in the future and what sort of levies would a bitterly-partisan state Legislature find near-impossible to impose.

The Yes on 26 campaign is mum, perhaps realizing their already uphil battle would become tougher if people knew the benefits they are deriving from fees the state Legislature, county and local governments passed with simple majority votes. They would not provide examples or speculate on a California under Prop 26 to Neon Tommy or the San Jose Mecury News. They throw around a number, saying Californians are charged $10 million in hidden taxes, but refuse to offer details behind the calculation.

If Prop 26 passes, any fee a government charges for a service would actually be considered a tax as long as the service benefits even one more individual other than the payee of the fee. When this threshold is reached, the state Legislature would have to pass the levies with a two-thirds votes--as they have always had to with taxes. County and local governments would need to solicit two-thirds approval from their voters to enact the measures.

Environmental groups in the state have latched onto this idea to mean that sanctions called for under AB 32, the state's climate change law, would be near-impossible to pass. Instead of being able to create up-front fees for environmental polluters with a simple majority vote, the Democratic majority would need to pull enough Republican votes to muster two-thirds approval. Why? Because stopping pollution benefits all residents of the state rather than just the polluter paying the fees. The monetary support for Prop 26 spiked in mid-October after backers of Proposition 23 learned the measure was not likely to pass.

Voting against Prop 26 would preserve the status quo. Supporting Prop 26 would create a new set of challenges for California.

  • If Prop 26 passes, the gas tax swap agreed to last year's budget negotiations would be struck down. Unless state legislators can reapprove it with a two-thirds vote, the state would add $1 billion to its deficit.
  • County and local ordinances would be protected until they have to renewed, increased or adjusted for inflation, opponents say. That means more propositions and more elections as each of these measures goes to the voters for two-thirds approval.
  • All of the new taxing activity could mean even more opportunities for lobbyists to jump into decisions across the state. Debates could also lead to litigation about how broadly Prop 26 should be applied.

San Diego voters will decided Tuesday on Proposition D--a measure that would increase the city's sales tax by a half-cent if the city is able to enact certain reform measures. The measure requires two-thirds of voters to approve for passage.

In San Jose, a recycling program was started through a fee of about $20 per ton of trash charged on garbage haulers. Supporters note this may be reclassified if say San Francisco tried to do the same thing in 2011 under Prop 26. It would have to go on the ballot, and again, get voter approval.

The measure is too wide and too messy to be effective. Voters should have say in taxes, and governments, like cell phone companies, may be charging more fees than they should. However, Prop 26 doesn't solve much of that problem.

Reach executive producer Paresh Dave here. Follow him on Twitter: @peard33.



 

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