CITY OF OAKLAND STAFF/COUNCIL ANALYSIS
Proposition 43: Limits Voter's Ability to Raise Revenues for Local Government Services TO: Honorable Members of the Oakland City Council
FROM: Office of Mayor Barbara Lee
STAFF CONTACT: César Macias, State and Federal Affairs Manager, Office of the Mayor SUBJECT: RESOLUTION IN OPPOSITION OF PROPOSITION 43, WHICH, IF PASSED BY VOTERS IN THE GENERAL ELECTION ON NOVEMBER 3, 2026, WOULD AMEND
THE CALIFORNIA CONSTITUTION TO INCREASE THE PERCENTAGE OF VOTERS NEEDED TO APPROVE LOCAL SPECIAL TAXES FROM A MAJORITY TO TWOTHIRDS
RECOMMENDED COUNCIL ACTION
Mayor Barbara Lee recommends that the City Council adopt a resolution opposing Proposition 43, a constitutional amendment on the November 2026 statewide ballot to limit voter's ability to raise revenues for local government services.
Full Text of Measure: Proposition 43: ACA 22 (Wicks). Local taxes: limitation LAO Analysis: Proposition 43 [Ballot]
Summary:
Proposition 43 is a legislatively proposed constitutional amendment (ACA 22) that would change the voter-approval requirements for local special taxes and will appear before voters at the November 3, 2026, statewide general election.
Beginning January 1, 2027, Proposition 43 would require all local special taxes to receive approval from two-thirds of the voters voting on the tax, regardless of whether the measure is placed on the ballot by a local governing body or through the local initiative process.
The measure would also prohibit a local government, including its electorate acting through the initiative power, from imposing an ad valorem tax on real property except as permitted under existing constitutional provisions.
Ballot Description:
Proposition 43 would add Section 4.5 to Article XIII A of the California Constitution and make the following changes to local taxation authority:
Two-Thirds Requirement for All Local Special Taxes
Beginning January 1, 2027, a local government, including the electorate of a local government exercising the initiative power, could not impose, extend, or increase a special tax unless the tax is submitted to the electorate and approved by a two-thirds vote.
Local government-sponsored special taxes are already subject to two-thirds voter approval under Article XIII C. Proposition 43 would extend that same threshold to special taxes proposed through the voter initiative process, reversing the current judicial interpretation that permits those measures to pass with a simple majority.
Ad Valorem Property Tax Limitation
Proposition 43 would prohibit a local government, including its electorate acting through the initiative power, from imposing an ad valorem tax on real property except as authorized by paragraph (1) of subdivision (a) of Section 3 of Article XIII D of the California Constitution. This provision clarifies that the existing constitutional limitation applies to both local governing bodies and local voters acting by initiative.
Prospective Application
The measure would operate prospectively, applying to voter-proposed ballot measures approved after January 1, 2027.
Background:
Proposition 13 and Local Tax Approval Requirements
California's modern local tax framework largely stems from Proposition 131, approved by voters in 1978. Proposition 13 limited property tax rates and established voter approval requirements for local taxes. Specifically, it capped the general ad valorem property tax rate at 1 percent of assessed value, limited annual increases in assessed value, and required two-thirds voter approval for cities, counties, and special districts to impose special taxes.
Proposition 218, approved by voters in 1996, added Articles XIII C and XIII D to the California Constitution. Under Article XIII C, local governments may not impose, extend, or increase a special tax without approval by two-thirds of voters. A special tax is defined as any tax imposed for a specific purpose rather than for general governmental use.
Article XIII C also classifies local taxes as either general or special. General taxes used for general governmental purposes generally require majority voter approval. When proposed by a local governing body, a general tax must generally appear on the ballot at a regularly scheduled general election for members of that governing body, unless an emergency is declared by a unanimous vote.
Article XIII C also expressly preserves the voters' initiative power to reduce or repeal local taxes, assessments, fees, and charges. More broadly, Article II of the California Constitution reserves the initiative power to the people, and courts have traditionally construed that power broadly.
Court Decisions Affecting Initiative Taxes
Recent court decisions have interpreted these constitutional provisions differently when taxes are proposed through the citizen initiative process rather than by a local 1 California Proposition 43, Two-Thirds Vote Requirement for Local Special Tax Initiatives and Property Tax Initiative Prohibition Amendment (2026) - Ballotpedia government.
California Cannabis Coalition v. City of Upland
California Cannabis Coalition v. City of Upland (2017) 3 Cal.5th 924 arose from a local initiative to repeal the city's ban on medical marijuana dispensaries, and impose an annual $75,000 licensing and inspection charge. The City of Upland concluded that because the charge exceeded estimated regulatory costs, it would operate as a general tax and had to appear at a regularly scheduled general election rather than the special election requested by the proponents.
The California Supreme Court held that Article XIII C's election-timing requirement applied to taxes imposed by a 'local government' and did not clearly restrict voters acting through the initiative power. The requirement therefore did not apply to the voter-sponsored initiative. Upland addressed election timing for a voter-initiated general tax, not the approval threshold for a voter-initiated special tax.
San Francisco Proposition C and the Current Majority Threshold Following Upland, the Court of Appeal in City and County of San Francisco v. All Persons Interested in the Matter of Proposition C (2020) 51 Cal.App.5th 703 held that a voter-initiated local special tax may be approved by a simple majority rather than two-thirds of voters. The California Supreme Court declined review.
Subsequent appellate decisions followed the same approach, allowing several voter-initiated local special taxes to take effect with majority approval.
Under current law, the approval threshold for a local special tax therefore depends on how the measure reaches the ballot. A governing-body-sponsored special tax requires two-thirds voter approval, while a voter-initiated special tax may pass with a majority.
Proposition 43 would eliminate that distinction by applying the two-thirds threshold to both.
ACA 13 (Ward)
In 2023, the League of California Cities supported ACA 13 a constitutional amendment dealing with voter thresholds. The measure would have required any state or local initiative measure to conform with any increased voter threshold that it seeks to impose on future ballot measures. For example, if a measure looks to increase the voter threshold of general tax measures from a simple majority (50% +1) to a supermajority (2/3), the measure would be required to pass by that same supermajority.
The measure would have also preserved the right of local governments to place advisory questions on the ballot to ask voters their opinion on the issue.
ACA 13 also stated that the provisions of this constitutional amendment apply to all statewide initiative measures submitted to voters on or after January 1, 2024. It contained intent language stating that the provisions of this measure are not intended to reverse or invalidate provisions of the California Constitution in effect before January 1, 2024, including the provisions of Proposition 13 of 1978.
ACA 13 was originally scheduled to be on the March 2024 ballot, but was subsequently moved to the November 2024 ballot, and then again to the November 2026 ballot.
The 2026 Ballot Agreement
ACA 22, the legislation to place Proposition 43 on the November ballot, is the product of an agreement between state leaders and the Howard Jarvis Taxpayers Association (HJTA). In exchange for the Legislature passing ACA 22 and removing ACA 13 from the November ballot, HJTA withdrew its Local Taxpayer Protection Act to Save Proposition 13 (Initiative 25-0006A1). The proposal included a two-thirds requirement for all local special taxes, restrictions on real property transfer taxes, and the invalidation of certain existing taxes. The League of California Cities opposed the measure based on its effects on existing voter-approved revenues, local taxation authority, and essential local services.
Proposition 43 would operate prospectively and would not repeal or reduce existing real property transfer taxes, invalidate existing voter-approved special taxes, limit documentary transfer tax rates, or create a deadline for local governments to eliminate existing taxes. The result is a new constitutional restriction on future local revenue measures by requiring two-thirds approval for voter-initiated special taxes that may pass by majority vote under current law.
Fiscal Impact:
Proposition 43 would not directly reduce or eliminate existing city revenues. Current real property transfer taxes, parcel taxes, and other voter-initiated special taxes would remain in effect. Its fiscal effects would instead arise when future voter-initiated special taxes receive majority support but fall short of the new two-thirds threshold.
The statewide amount of foregone revenue cannot be reliably estimated because it would depend on the number, structure, tax base, and election results of future local measures.
Existing voter-initiated special taxes illustrate the potential scale of revenue that could be affected if comparable measures are proposed after January 1, 2027. Examples of existing taxes that passed with less than two-thirds support include:
• Los Angeles Measure ULA: approximately $655 million to $1.2 billion annually.
• Santa Monica Measure GS: approximately $54 million annually. • Oakland Measure AA: approximately $30 million to $36 million annually. • Berkeley Measure FF: approximately $15 million annually.
Proposition 43 would not invalidate or reduce revenue from these existing measures.
However, a future measure with the same level of voter support would not take effect unless it received two-thirds approval. These examples are therefore illustrative of the type and magnitude of future locally dedicated revenue that could be foregone, not an estimate of an immediate revenue loss under the measure Additionally, Proposition 43 may also influence how future revenue measures are structured. Communities may favor general taxes, which remain subject to majority approval, over special taxes dedicated to specific purposes. Although this may preserve a path to revenue, it would prevent voters from legally restricting the funds to the program identified in the measure and could place additional demands on a city's general fund.