California Supreme Court Strikes Taxpayer Initiative from November Ballot
In a Rare Pre-Election Review, California Supreme Court Strikes Ballot Measure that Would Revise Constitution to Limit Revenue-Raising Authority of State and Local Governments
On June 20, 2024, the California Supreme Court issued a preemptory writ of mandate striking the so-called “Taxpayer Protection and Government Accountability Act” (“Measure”) from appearing on the November ballot. In Legislature of the State of California et al. v. Weber (Hiltachk), the Court unanimously ruled that the Measure “would fundamentally restructure the most basic of governmental powers” and “strip the Legislature of the authority to promptly raise revenues when necessary.” The Court’s ruling was based on Constitutional law and precedent that allow for voters to seek an amendment to the Constitution, but “far reaching changes in the nature of our basic governmental plan as to amount to a revision” exceed the power of the citizen’s initiative. The Court’s ruling not only protects the “indispensable” revenue raising powers of state and local governments, but also provides clear and reasoned guidance on the primacy of the Constitution, and the limits on the initiative power.
By way of background, the Measure is a voter initiative that attempts to increase the procedural and substantive requirements for state and local governments to adopt, increase and defend necessary revenue raising measures, and would have retroactively invalidated certain local taxes and fees implemented prior to the Measure’s passage. Perhaps the most profound aspect of the Measure is its shifting of the traditional budgeting function from the Legislature to the voting public.
The California State Legislature and Governor Newsom (collectively “Petitioners”) filed a pre-election challenge requesting that the Measure be removed from the November ballot, and sought immediate review before the California Supreme Court. Petitioners argued that the Measure fundamentally revises the California Constitution. While a voter initiative may place a constitutional amendment on the ballot, a constitutional revision may only be accomplished by convening a constitutional convention or by the Legislature submitting a constitutional revision to the voters for approval.
The Court typically reviews constitutional challenges to an initiative after an election in order to avoid disrupting the electoral process, and to protect the fundamental right of the people to amend the California Constitution through the initiative process. However, in rare circumstances, the Court will conduct pre-election review where the challenge goes to the power of the voters to adopt the initiative in the first place. And the Court will only order removal from an otherwise qualified measure if it is confident that the challenge is “meritorious and justifies withholding the measure from the ballot.”
Here, and in line with Petitioners’ arguments, the Court determined the Measure constitutes an impermissible revision for three key reasons. First, the Measure would strip the Legislature of its authority to promptly raise revenues when necessary by eliminating the Legislature’s ability to levy taxes without prior voter approval, or set fees without approval by both houses of the Legislature, including fees set by State agencies. Second, the Measure shifts power among the Legislature, state executive agencies, and the electorate over the setting of fees. And third, the Measure would transform the authority of local government agencies, such as cities or special districts, to set fees.
The Court’s holding relieves State and local agencies from relying on voter approval to raise necessary revenue in a way that, according to the Court, would “fundamentally rework the fiscal underpinnings of our government at every level.” The Measure is the second time in recent years in which proponents have proposed an initiative seeking to curtail State and local rate making authority, and the Court’s opinion provides guidance that delineates the boundary of the initiative power and reinforces constitutional protections for State and local governments.
For more information about this decision, contact Dean Atyia or Lutfi Kharuf.
Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.
