1 August 7, 2024
To: Stefan Chatwin, City Manager
Marlene Subhashini, Assistant City Manager
City of Foster City
From: Dane Hutchings
Managing Director
Renne Public Policy Group
RE: RPPG Summary of Six Ballot Measures Impacting Local Governments
Summary
California voters will make many important decisions on the November 5 ballot. Besides electing a president, congressional and state representatives, community leadership and reviewing local measures, voters will decide the fate of ten (10) statewide propositions. Six of these measures, if approved, will have financial and policy impacts on local governments in the following areas: vote thresholds for local bonds, criminal justice reform, rent control, increasing minimum wages, and funding projects with state climate and school bonds. The remaining four measures address other policy issues and are listed at the end.
For many local governments, however, the biggest news associated with the November ballot has already occurred. Thanks to the advocacy efforts of a coalition of local government agencies, labor groups, public safety, infrastructure advocates and others —along with leadership from Governor Gavin Newsom and Democratic legislators—the California Supreme Court ruled that the sweeping limitations on state and local tax and fee authority proposed by the Taxpayer Protection and Government Accountability Act (TPGA) was a constitutional revision, and ineligible for the ballot. In a relate d move, the Legislature also shifted ACA 13 (Ward) to the November 2026 ballot. ACA 13 i was adopted by the Legislature as a strategic
counterpoint to the TPGA, by prohibiting initiatives from increasing voter approval thresholds for state or local measures unless voters approved the initiative by an equivalent vote.ii
The Legislature also removed from the ballot SCA 2 (Allen), which proposed to repeal Article 34, requiring a vote on public housing projects. This measure had been recently shifted from the March to November ballots. The analysis of SCR 157 (Allen), which authorized the removal of SCA 2 from the ballot, mentioned challenges reaching voters on a crowded ballot, and that SB 469 (Allen) of 2023, had partially addressed the issues.
Below is a quick guide to the six propositions impacting local governments, organized by policy areas, with a brief summary, background on the politics, and implementation issues.
Local Vote Thresholds
Brief Summary: Proposition 5. No Title. Reduces the local vote threshold requirement from two -thirds (2/3rds) to fifty-five (55) percent for local public infrastructure and affordable housing financing proposals using general obligation bonds paid for with increases in ad valorem property taxes. If this proposal is approved by a majority of statewide voters, the reduced vote threshold will apply to local measures, including those appearing on the same ballot.
2 The Politics: This measure provides voters the opportunity to reduce vote thresholds for local bonds which invest in infrastructure or affordable housing. Voters approved a similar reduction for school facility bond measures via Prop. 39 of 2000. This measure initially qualified for the March 2024 primary ballot with the approval of ACA 1 (Aguiar-Curry) in 2023, but it was later moved to the November ballot. In its initial form, the measure also proposed to reduce vote thresholds for special taxes and parcel taxes. However, in June, the Legislature approved ACA 10 (Aguiar- Curry), which narrowed it to only apply to general obligation bond measures and revised the definitions of “infrastructure” and “affordable housing.” In addition to ACA 10, the Legislature approved AB 2813 (Aguiar- Curry) containing additional implementation provisions. Supporters include local government agencies and infrastructure, affordable housing, and labor and public safety groups . A nticipated opponents are anti -tax groups and some business organizations.
Implementation: In addition to the implementation language contained in AB 2813, local agencies should expect legislative efforts in 2025 to further define and interpret its provisions.
Criminal Justice Reform
Brief Summary: Proposition 36. The Homelessness, Drug Addiction, and Theft Reduction Act. Increases criminal penalties for drug dealers who distribute fentanyl and other hard drugs; increases penalties for repeated theft and shoplifting; allows individuals convicted for possession of fentanyl and other “hard drugs” with two prior felony convictions to complete mandatory court-supervised drug and mental health treatment in lieu of further incarceration. Authorizes convictions for certain repeated crimes to be served in state prison rather than county jail. Imposes a two-thirds vote requirement on legislation that furthers this proposition’s purposes but allows majority votes on measures that either expand the definition of “hard drugs,” or the list of applicable prior convictions.
The Politics: District attorneys and major retailers sponsoring this measure attribute California’s challenges with homelessness, drug addiction, and repeated retail theft to the passage of Proposition 47 of 2014, which reduced criminal sanctions for possession of vario us hard drugs and theft. The Governor and legislators attempted to negotiate the removal of this proposition from the ballot by offering a package of legislation, including an alternative ballot proposal, aimed at addressing the underlying issues with more targeted approaches. As supporters of Prop. 47, they sought to retain its remedial approach to criminal justice and avoid major increases in imprisonment. Ultimately, those negotiations broke down.
But in a somewhat related move, the adopted state budget reduced 22,100 prison beds between prison closures and deactivated 42 prison housing units. It is unclear whether legislators will send the package of criminal justice legislation to the Governor or await the voter decision. In July, the Governor announced he will be campaigning against this measure.
Implementation: Tensions over criminal justice issues in the Legislature will not likely abate if this measure is approved by voters. The Governor and legislators, who oppose approaches to criminal justice that result in major increases in incarcerated individuals, were unsuccessful in their effort to remove this measure from the ballot. If voters approve Prop. 36, that does not mean their perspectives will change. As reflected in the state budget’s reduction of 22,100 prison beds, efforts to frustrate its implementation can be expected through lawsuits and other actions.
Local Rent Control
Brief Summary: Proposition 33. Justice for Renters Act. Prohibits the Legislature from limiting the right of any city, county, or city and county, to maintain, enact or expand residential rent control. Repeals the
3 state “Costa-Hawkins Rental Housing Act,” a state law which prohibited the imposition of local rent control laws on housing units constructed on or after February 1, 1995. Costa- Hawkins also prohibits the application of rent control to single -family units and condominiums and allows landlords to set rents at market rates upon the vacancy of a tenant.
The Politics: The Costa-Hawkins Act was enacted by the Legislature in response to concerns by apartment owners, developers, and real estate groups arguing that local rent control ordinances chilled market incentives to develop new housing units. Thus, the law prohibited the application of local rent control ordinances to new units and voided “vacancy control” provisions which prohibited landlords from raising rents when tenants moved out. The Legislature also enacted AB 1482 (Chiu) in 2019, which imposed, with various exceptions, a statewide cap on annual rent increases (of 5%, plus inflation, not to exceed 10%) for existing multifamily housing units more than 15 -years old. The sponsor of this measure is the AIDS Healthcare Foundation, which proposed two similar unsuccessful measures in 2018 and 2020. The opposition coalition is led by the California Apartment Association.
Implementation: While this measure would restore the “right” of local agencies to implement rent control policies, this flexibility could be blunted by other state laws. For example, local agencies could face resistance to aggressive rent control policies by the Department of Housing and Community Development when reviewing housing elements, especially if the Department deems rent control measures to be an impediment to the production of new rental housing units.
Minimum Wage
Brief Summary: Proposition 32. Living Wage Act of 2022. Increases the state minimum wage from $16 to $18 per hour. This rate would be effective January 1, 2025, for employers with 26 or more employees, and on January 1, 2026, for employers with 25 or fewer employees. Future increases are indexed to inflation. These provisions apply to private employers and state and local agencies.
The Politics: The findings accompanying this proposal identify challenges low-income adults and families face in earning sufficient income to meet basic needs. If this measure is approved by voters, California’s minimum wage would be nearly $2 more than Washington State ($16.23), and $3 or more per hour than all other states. Still, several California cities impose a local minimum wage in the $18 range, with the highest being West Hollywood at $19.08. The California Legislature also recently enacted a $20 minimum wage for fast-food workers and a $25 minimum wage for health care workers (which was delayed by the recent state budget over concerns over state cost impacts). While an opposition coalition has yet to officially form, concerns often raised with minimum wage increases is that they can make California less economically competitive and cause businesses to reduce hours or switch to technological solutions that eliminate jobs.
Implementation: This measure will have a range of impacts for local agencies. Increases in the minimum wage affect costs for staffing entry level positions and perhaps add pressure for increased wages throughout the workforce. Private employers in the community could respond by reducing hiring, cutting hours, or deciding to relocate to other states. Yet, even if the voters approve this measure, it is unclear how long this threshold will last. Nothing in this proposition keeps the Legislature from proposing further increases in the minimum wage. $18 per hour may appear comparatively low or inequitable to legislators who have already approved $20 for fast food workers, and $25 for health care workers.
4 State Climate Bond
Brief Summary: Proposition 4. Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024. Proposes a $10 billion “climate bond” allocated as follows:
• $3.8 billion for safe drinking water, drought, flood, and water resilience. • $1.5 billion for wildfire and forest resilience.
• $1.2 billion for coastal resilience.
• $1.2 billion for biodiversity protection and nature-based climate solutions. • $850 million for clean air.
• $700 million for park creation and outdoor access.
• $450 million for extreme heat mitigation.
• $300 million for climate -smart, sustainable, and resilient farms, ranches, and working lands programs.
The Politics: This measure was placed on the ballot by the Legislature with SB 867 (Allen) . Discussions of a potential climate bond have been underway in the Legislature for several years, viewed as an opportunity to both augment state investments to address climate -related issues and offset reductions from recent budget deficits. While Prop. 4 is framed as a “climate bond,” it still allocates funding to many categories found in past “resources” bonds approved by voters since 2000. The Senate Floor analysis for SB 867 lists many environmental organizations in support with no registered opposition.
Implementation: A major change from prior state resources bonds is a focus on assisting disadvantaged communities. This measure requires projects to demonstrate significant benefits and offer workforce development opportunities for disadvantaged communities, severely disa dvantaged communities and vulnerable populations, as those terms are defined. A minimum of 40 percent of the funding is reserved for disadvantaged communities, and 10 percent for severely disadvantaged communities. Eligible applicants include a wide range of public agencies and non -profits. Priority is required to be given to projects that leverage private, federal or local funding, or produce the greatest public benefit.
State School Bond
Brief Summary: Proposition 2. The Kindergarten Through Grade 12 Schools and Local Community College Public Education Facilities Modernization, Repair and Safety Bond Act of 2024. Proposes a $10 billion school facilities bond, assisting both K-12 schools and community colleges. Of this amount, $8.5 billion is allocated to K-12 schools (including $3.3 billion for new construction, and $4 billion for modernization or replacement of existing facilities). The remaining $1.5 billion is allocated for community colleges.
The Politics: This measure was placed on the ballot by AB 247 (Muratsuchi). School facility funding relies on three main sources: developer fees, local school bonds, and state general obligation school bonds.
Over the last three decades, voters have approved a series of state school facilities bonds, with the most recent being a $9 billion measure in 2016. Those funds have been exhausted for several years, and in 2020 a $15 billion bond, Prop. 13, failed. Tensions have continued to grow in legislative negotiations over school bonds, between amounts allocated to new school construction in affluent areas versus “modernizing” facilities in economically challenged communities. These tensions remain evident in the listing of supporters and opponents in the Senate Floor analysis. While AB 247 secured broad support from the development community, labor, and many school districts, some school districts and organizations remain in opposition.
5 Implementation: This measure directs more resources than prior school bonds to schools facing challenging circumstances. Preferences in allocation formulas account for schools with limited bonding capacity and/or with higher percentages of students in poverty, foster youth, or English learners.
Increased flexibility is also provided to fund the repair or replacement of recreational, library and kitchen facilities, improve energy efficiency, remediate lead contamination, address seismic safety issues, and construct transitional kindergarten classrooms, preschool facilities and facilities for school nurses and counselors. Special assistance is also offered for small school districts with less than 2,501 students. Up to $600 million is also allocated to renovate or construct facilities for career technical education.
Four Other Ballot Measures
Below are the four other measures identified by the Secretary of Stateiii that will be decided by voters on the November ballot:
Proposition 3 . Establishes a fundamental right to marry and repeals prior provision that only marriage is between a man and a woman is valid and recognized.
Proposition 6. Prohibits the Department of Corrections from disciplining an inmate for refusing to work.
Proposition 34. Requires certain health care providers to spend 98% of revenues from the federal discount prescription drug program on direct patient care.
Proposition 35. Makes permanent the existing tax on managed health care insurance plans, which the state uses to pay for health care services for low -income families and other groups covered by the Medi-Cal program.
i https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240ACA13 ii Moving ACA 13 to the 2026 ballot also serves as a potential deterrent to the sponsors of the Taxpayer Protection and Government Accountability Act to propose a similar measure. iii https://www.sos.ca.gov/elections/ballot-measures/qualified-ballot-measures