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California Supreme Court Rejects Taxpayer Protection Act

By June 21, 2024June 26th, 2024No Comments

In a blow to overtaxed Californians, the State Supreme Court has blocked a forthcoming ballot measure seeking to require voter approval before the State can institute further tax increases.  

Voter approval of tax increases has always been a hot-button issue in California, but the topic has gained increased momentum recently with skyrocketing inflation and the rising cost of living in the Golden State.  Many voters are frustrated and unlikely to hike taxes even further.  

The Taxpayer Protection and Government Accountability Act (“TPA”) looked to seize on current public sentiment and require that every new tax proposal go before voters for approval.  Key to the discussion here is that the measure was submitted as a ballot initiative, which can pass through a simple majority of the vote and not a Constitutional Amendment, which requires more onerous steps.  

Proponents of the measure were seeking to have the initiative placed on the November ballot and with the current economic environment in California, believed it would likely pass as an initiative with a simple majority vote.  

Opponents of the measure, including the State Legislature itself and Governor Gavin Newsom, along with organized trade and labor unions, strongly opposed the ballot measure, arguing that because it so broadly impacted funding for State and local governments, its mission could only be accomplished through a formal Constitutional Amendment.  They sued to stop it from being placed on the November ballot.  

A unanimous California Supreme Court agreed with the State and has permanently blocked the TPA in Legislature of the State of California v. Weber, S281977.  The measure will not appear on the November ballot.  

The Supreme Court held that requiring voter approval for all tax increases constitutes such a sweeping and monumental change to our system of government, it must be done through Constitutional Amendment, not the initiative process.  Specifically, the Court held that because the TPA fundamentally alters California’s “basic plan of government”, such a change can only be accomplished through the Constitutional amendment process.  

Amending the California Constitution poses a significant challenge because that can only be done through a constitutional convention or a supermajority vote of both houses of the State Legislature.  Neither the California Assembly, nor the California State Senate, have signaled any interest in lowering Californian’s taxes (as evidenced by the fact that they opposed this ballot measure) and as California faces an astronomical $26.7 billion budget deficit (which some analysts believe is closer to a $45 billion deficit.)

So, what is the takeaway from the Court’s ruling?  The State of California and local agencies rely heavily on increased taxes to fund their ongoing operations.  Any efforts to limit the taxing authority of the State will be met with a heavy-hand and with strong legal challenges.  Given that the current State Supreme Court seems unwilling to allow the initiative process to change California’s taxing structure, it is likely that California will continue to see increased taxes, especially given the current budget deficit.  Opponents of tax increases will have a difficult time finding an ally on this topic in the California Courts.

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