Measure to restrict tax increases cannot appear on November ballot, California Supreme Court rules

LOS ANGELES, CA - DECEMBER 05: California Supreme Court holds court for the first time in Los Angeles since before pandemic, in North Tower of Ronald Reagan State Office Building on Tuesday, Dec. 5, 2023 in Los Angeles, CA. (Irfan Khan / Los Angeles Times)
The California Supreme Court, pictured in December, ruled unanimously that the "Taxpayer Protection and Government Accountability Initiative" shall not appear on November ballots. (Irfan Khan / Los Angeles Times)

A ballot measure that would have required voter approval for any future state tax increases violates the state Constitution and will not be allowed to appear on November ballots as planned, the California Supreme Court ruled Thursday.

Justice Goodwin Liu, the author of the opinion for the unanimous court, wrote that the changes proposed by the measure "would substantially alter our basic plan of government" and could be enacted only through a revision to the state's Constitution.

The rare ruling by the state's highest court to remove an otherwise qualifying ballot measure comes just days before ballots must be finalized. It marks a major last-minute victory for Democratic leaders and labor unions, which had warned the measure would hamstring good governance in favor of corporations if passed.

State leaders, who brought the lawsuit challenging the measure, had also argued that the measure usurped their authority.

Izzy Gardon, a spokesperson for Gov. Gavin Newsom, said in a statement that "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."

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Assembly Speaker Robert Rivas (D-Hollister) said he was "very pleased" the court had "rejected this unlawful and extreme effort to take power away from local communities to pay for essential services like police and firefighters."

Business interests and taxpayer advocacy groups had championed the measure and collected the signatures needed to put it on the ballot, arguing its passage was vital for continued job creation and company retention in California.

In a joint statement, several major backers of the measure, including Rob Lapsley, president of the California Business Roundtable, accused the high court of putting "politics ahead of the Constitution."

They said Newsom — with the court's complicity — had "effectively erased the voice" of more than 1 million voters who had signed the petition to put the measure on ballots.

"The state Supreme Court has now sent a signal that they are part of the progressive agenda in California, that we are a one-party state in California and there is no independent judiciary," Lapsley said in a follow-up call with reporters.

California Senate Republicans who backed the measure also denounced the decision as partisan.

Senate Minority Leader Brian Jones (R-Santee) said he was "disgusted" with the ruling.

"The court has failed in its duty to the people of California and our democratic system and instead simply caved to pressure from the governor and legislative Democrats," he said.

Sen. Brian Dahle (R-Bieber) called the ruling a "slap in the face to California citizens" by judges "at the request of the very people who want to raise our taxes time and time again."

Before Thursday, Democratic lawmakers and labor unions were trying to land an agreement with Lapsley to voluntarily remove the measure from the ballot.

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Thursday's decision does not give proponents enough time to amend the measure before the June 27 deadline to finalize November ballot initiatives. Lapsley said the measure's backers will be regrouping, working to boost support or opposition to other November measures, and trying to figure out the best approach to tax reform in 2026.

"We're going to look at every option strategically available to us, including some ideas that have not been discussed," he said.

In an attempt last year to thwart Lapsley's initiative, Democrats in the Legislature voted to place a countermeasure on the ballot called Assembly Constitutional Amendment 13 to raise the bar for the tax measure — and others like it — to be approved by voters.

Assemblymember Christopher M. Ward (D-San Diego), who carried the countermeasure, said Thursday that he plans to keep it on the ballot.

The proposal struck down Thursday, officially known as the Taxpayer Protection and Government Accountability Initiative, would have expanded the requirements necessary for a statewide tax increase from a two-thirds vote of the Legislature to a two-thirds vote by lawmakers and approval by a majority of California voters.

It would have also changed the threshold for passing local special taxes from a majority vote to a two-thirds vote of the people. Taxes on things such as income or the sale of goods fund a variety of government expenses through the state's general fund.

Local governments would have been required to vote on any fee increases — which can currently be approved administratively — and a majority of the state Legislature would have had to vote to approve any state fee increases, which are often approved by state agencies and boards. Fees often are used to cover the cost of specific government services.

Business groups argued the measure was necessary to add more checks on the taxing habits of progressive state leaders. Democratic leaders and lawmakers, joined by unions and other liberal allies, said the measure would undermine the Legislature's ability to balance the state's budget without threatening progressive policy priorities.

Liu wrote that the court did not take a position on the "wisdom" of the "fundamental changes" included in the measure. Rather, it simply concluded that those changes would be a "revision" of the state's Constitution and "fundamentally restructure the most basic of governmental powers." Such an overhaul can be enacted only through the established protocols for changing the Constitution, he wrote, not through a voter initiative.

"The TPA would exclude the levying of new taxes from the Legislature’s control by requiring voter approval of all such measures. In so doing, it would disturb the long settled understanding," Liu wrote, that the "power of taxation" is an "indispensable power" of the Legislature, "without which it would become impossible for that body to perform its functions."

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Former Gov. Jerry Brown, who joined opponents in asking the court to remove the measure from the ballot, appointed Liu to the court in 2011.

Jonathan Underland, a spokesperson for a labor-backed campaign opposing the measure, praised the high court's decision.

"The Supreme Court's decision to take this dangerous initiative off the ballot avoids a host of catastrophic impacts, protecting billions of dollars for schools, access to reproductive healthcare, gun safety laws that keep students safe in classrooms and paid family leave," he said.

Members of the Service Employees International Union in California — a major labor organization that had worried about the effects of the measure on funding for teachers, police officers, firefighters and other public sector employees — also praised the decision.

David Huerta, the group's president, said in a statement that the measure "was a flagrant attempt by a few extremely wealthy real estate developers to undermine our entire democratic system and our voice as voters and devastate the vital services Californians rely on — all to avoid paying their fair share."

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This story originally appeared in Los Angeles Times.