BELL, McANDREWS & HILTACHK, LLP
ATTORNEYS AND COUNSELORS AT LAW
455 CAPITOL MALL, SUITE 600
SACRAMENTO, CALIFORNIA 95014
(916) 442-7757
FAX (916) 442-7759
www.bmhlow.com
January 4, 2022
Anabel Renteria
Initiative Coordinator
Office of the Attorney General
State of California
PO Box 994255
Sacramento, CA 94244-25550
Re: Initiative 21-0042 - Amendment Number One
Dear Initiative Coordinator:
21-0042 AmdL#I
RECEIVED
JAN 0 4 2022
INITIATIVE COORDINATOR
ATTORNEY GENERAL'S OFFICE
Pursuant to subdivision (b) of Section 9002 of the EIections Code, enclosed please find Amendment #1 to Initiative No. 21-0042 "The Taxpayer Protection and Government Accountability Act." The amendments are reasonably germane to the theme, purpose or subject of the initiative measure as originally proposed.
I am the proponent of the measure and request that the Attorney General prepare a circulating title and summary of the measure as provided by law, using the amended language.
Thank you for your time and attention processing my request.
Sincerely,
4.4(4:4-___-------,..j.
Thomas W. Hiltachk
ATTACHMENT 2
21 —0042 Amdt.#I
The Taxpayer Protection and Government Accountability Act [Deleted codified text is denoted in strikeout. Added codified text is denoted by italics and underline.] Section 1. Title
This Act shall be known, and may be cited as, the Taxpayer Protection and Government Accountability Act.
Section 2. Findings and Declarations
(a) Californians are overtaxed. We pay the nation's highest state income tax, sales tax, and gasoline tax. According to the U.S. Census Bureau, California's combined state and local tax burden is the highest in the nation. Despite this, and despite two consecutive years of obscene revenue surpluses, state politicians in 2021 alone introduced legislation to raise more than $234 billion in new and higher taxes and fees.
(b) Taxes are only part of the reason for California's rising cost -of -living crisis. Californians pay billions more in hidden "fees" passed through to consumers in the price they pay for products, services, food, fuel, utilities and housing. Since 2010, government revenue from state and local "fees" has more than doubled.
(c) California's high cost of living not only contributes to the state's skyrocketing rates of poverty and homelessness, they are the pushing working families and job -providing businesses out of the state. The most recent Census showed that California's population dropped for the first time in history, costing us a seat in Congress. In the past four years, nearly 300 major corporations relocated to other states, not counting thousands more small businesses that were forced to move, sell or close. (d) California voters have tried repeatedly, at great expense, to assert control over whether and how taxes and fees are raised. We have enacted a series of measures to make taxes more predictable, to limit what passes as a "fee," to require voter approval, and to guarantee transparency and accountability. These measures include Proposition 13 (1978), Proposition 62 (1986), Proposition 218 (1996), and Proposition 26 (2010).
(e) Contrary to the voters' intent, these measures that were designed to control taxes, spending and accountability, have been weakened and hamstrung by the Legislature, government lawyers, and the courts, making it necessary to pass yet another initiative to close loopholes and reverse hostile court decisions.
Section 3. Statement of Purpose
(a) In enacting this measure, the voters reassert their right to a voice and a vote on new and higher taxes by requiring any new or higher tax to be put before voters for approval. Voters also intend that all fees and other charges are passed or rejected by the voters themselves or a governing body elected by voters and not unelected and unaccountable bureaucrats.
(b) Furthermore, the purpose and intent of the voters in enacting this measure is to increase transparency and accountability over higher taxes and charges by requiring any tax measure placed on the ballot - 1 ATTACHMENT 2
either at the state or local level—to clearly state the type and rate of any tax, how long it will be in effect, and the use of the revenue generated by the tax.
(c) Furthermore, the purpose and intent of the voters in enacting this measure is to clarify that any new or increased form of state government revenue, by any name or manner of extraction paid directly or indirectly by Californians, shall be authorized only by a vote of the Legislature and signature of the Governor to ensure that the purposes for such charges are broadly supported and transparently debated. (d) Furthermore, the purpose and intent of the voters in enacting this measure is also to ensure that taxpayers have the right and ability to effectively balance new or increased taxes and other charges with the rapidly increasing costs Californians are already paying for housing, food, childcare, gasoline, energy, healthcare, education, and other basic costs of living, and to further protect the existing constitutional limit on property taxes and ensure that the revenue from such taxes remains local, without changing or superseding existing constitutional provisions contained in Section 1(c) of Article XIII A. (e) In enacting this measure, the voters also additionally intend to reverse loopholes in the legislative two- thirds vote and voter approval requirements for government revenue increases created by the courts including, but not limited to, Cannabis Coalition v. City of Upland, Chamber of Commerce v. Air Resources Board, Schmeer v. Los Angeles County, Johnson v. County of Mendocino, Citizens Assn. of Sunset Beach v.
Orange County Local Agency Formation Commission, and Wilde v. City of Dunsmuir.
Section 4. Section 3 of Article XIII A of the California Constitution is amended to read:
Sec. 3(a) Every levy. charae. or exaction of any kind imposed by state law is either a tax or an exempt charae.
(b)f1) fa) Any change in state she law which results in any taxpayer paying a new or higher tax must be imposed by an act passed by not Tess than two-thirds of all members elected to each of the two houses of the Legislature, and submitted to the electorate and approved by a maiority vote. except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property, may be imposed. Each Act shall include:
(Al A specific duration of time that the tax will be imposed and an estimate of the annual amount expected to be derived from the tax.
!81 A specific and Jeaally bindina and enforceable limitation on how the revenue from the tax can be spent. if the revenue from the tax can be spent for unrestricted aeneral revenue purposes then a statement that the tax revenue can be spent for "unrestricted aeneral revenue purposes" shall be included in a separate. stand-alone section. Any proposed chance to the use of the revenue from the tax she be adopted by a separate act that is passed by not less than two-thirds of all members elected to each of the two houses of the Leaislature and submitted to the electorate and approved by a maiority vote. (.) The title and summary and ballot label or question reauired for a measure pursuant to the Elections Code shall. for each measure providing for the imposition of a tax, including a measure proposed by an elector pursuant to Article 11 include:
(A) The type and amount or rate of the tax;
19) The duration of the tax; and
2 ATTACHMENT 2
(C) The use of the revenue derived from the tax.
(c) Any chanae in state low which results in any taxpayer oavina a new or hiaher exempt chorae must be imposed by an act passed by each of the two houses of the teaislature. Each act shall specify the type of exempt chorae as Provided in subdivision let, and the amount or rate of the exempt charae to be imposed.
LiL4b}As used in this section and in Section 9 of Article ll, "tax" means evervaRy levy, charge, or exaction of any kind imposed by the -State state law that is not an exempt charae. }b ow g+ (el As used in this section. "exempt charge" means only the following:
(1) c therF irr*zsnd c specific benefit ring. id griviiegi virte..41 lircct%/ #e tf aw that previA ti 411 AC ..c+:'hc,gee,-a„d-w; i,h taw is,-ne114 scAN:vZ 11,14 Ctwts afEo. *g t e- a cfit a:-grzntiri tt-i ppivilsgts te; pry✓.
(1) 42) A reasonable charge for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the fease-nabic actual costs to the State of providing the service or product to the payor. (214 A charge iniposed-for the reasonable regulatory costs to the State incident to issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. 13) A levy, charge. or exaction collected from local units of government: health care providers or health care service plans that is primarily used by the State of California for the purposes of increasina reimbursement rates or Payments under the Medi -Cal praaram, and the revenues of which are primarily used to finance the non-federal portion of Medi -Cal medical assistance expenditures. (4) A reasonable charge imposed for entrance to or use of state property, or the purchase, rental, or lease of state property, except charges governed by Section 15 of Article XI. (5) A fine, or penalty, or -ether .rr mvti i sJn�e lncludlna any applicable interest for nonpayment thereof imposed by the judicial branch of government or grs 5ieto, as s rasilt—e# a state administrative enforcement aaencv pursuant to adiudicatory due process, to punish a violation of law. (61 A levy, charge. assessment or exaction collected for the promotion of California tourism pursuant to Chapter 1 (commencinie with Section 139951 of Part 4.7 of Division 3 of Title 2 of the Government Code. (f)44 Any tax or exempt charge adopted after January 1, 2022 2 9, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax or exempt charge is reenacted by the Legith`i rs c^ law by the Gsverr-tor in compliance with the requirements of this section. fe)(1)444The State bears the burden of proving bye-prependcvr�^c if #-�+clearand convincina evidence that a levy, charge, or other exaction is an exempt charge and not a tax, The State bears the burden of proving by clear and convincina evidence that the amount of the exempt charge is reasonable and that the amount charged does not exceed the actual cost of providing the service or product to the armor. fiat the f-lei7,t is rig Mors OAP! nric3e*7/ `c a7vrr'ki V(YAltick1111117. tv tf t;.:Ver+IfFICOZ1 ac•�� 3 ATTACHMENT 2
that the - w ij, h thaw mine is ■;near by 2 f&i: `\"\'C3C2r1 kkIc ru . c-; obip it the be .,Cam e 4 F govern ntal activity
p)'^r'r hG�r�ir`-ar ■", rn?9r the a__ _......_..__. ___...., (2) The retention of revenue bv, or the payment to, a non-governmental entity of a levy. charge. or exaction of anv kind imposed by state law. shall not be a factor in determining whether the levy. charae. or exaction is a tax or exempt charae.
(3) The characterization of a levy. charge, or exaction of anv kind as beina voluntary. or Paid in exchange for a benefit. privilege. allowance. authorization. or asset. shall not be a factor In determining whether the levy. charae, or exaction is a tax or an exempt charge. (4) The use of revenue derived from the levy. charae or exaction shall be a factor in determinina whether the levy charge. or exaction is a tax or exempt charae. fhJ As used in this section:
(1) "Actual cost" of providina a service or product means: (il the minimum amount necessary to reimburse the aovernment for the cost of orovidina the service or product to the Pavor. and (iii where the amount charaed is not used by the government for anv purpose other than reimbursina that cost. in computina "actual cost" the maximum amount that maybe imposed is the actual cost less all other sources of revenue including, but not limited to taxes, other exempt charaes. Grants. and state or federal funds received to provide such service or product
(2) "Extend" includes. but is not limited to. doina any of the following with respect to a tax or exempt charge: lengthening its duration. delavina or eliminatina its expiration, expanding its application to a new territory or class of payor, or expanding the base to which its rate is applied. (3) 'Impose" means adopt enact reenact. create. establish. collect. increase or extend. (4) "State law" includes. but is not limited to, anv state statute, state reaulation. state executive order. state resolution. state rulina. state opinion letter. or other lea& authority or interpretation adopted. enacted enforced, issued, or implemented by the legislative or executive branches of state government. "State law" does not include actions taken by the Regents of the University of California. Trustees of the California State University, or the Board of Governors of the California Community Colleaes.
Section 5. Section 1 of Article XIII C of the California Constitution is amended, to read:
Sec. 1. Definitions. As used in this article:
(a) "Actual cost" of providing a service or product means: (i) the minimum amount necessary to reimburse the government for the cost of orovidina the service or product to the payor, and (til where the amount charged is not used by the government for anv purpose other than reimbursina that cost. in computina "actual cost" the maximum amount that maybe imposed is the actual cost less all other sources of revenue including, but not limited to taxes. other exempt charges, Grants, and state or federal funds received to provide such service or product.
(b) "Extend" includes, but is not limited to, doina anv of the following with respect to a tax, exempt charge, or Article XIiI D assessment, fee. or charae: lenathenina its duration, delaying or eliminating its expiration, expanding its application to a new territory or class of payor, or expanding the base to which its rate is applied
4 ATTACHMENT 2
jL } "General tax" means any tax imposed for general governmental purposes. (d) "impose" means adopt. enact. reenact. create. establish. collect. increase. or extend. fe) f -) "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity. or an elector pursuant to Article 11 or the initiative power Provided by a charter or statute.
If) "focal law" includes. but is not limited to, any ordinance. resolution. regulation. ruling. opinion letter. or other legal authority or interpretation adopted enacted enforced issued or implemented by a local aovernment.
fq) $} "Special district" means an agency of the State, formed pursuant to general law or a special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies. &L{4} "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.
(el As used in this article, and in Section 9 of Article 11, "tax" means every aoy-levy, charge, or exaction of any kind, imposed by a local govcr n^onntient law that is not an exempt charae., except the f "owing:
in As used in this section. "exempt charae' means only the following:
CO A shw.rze i:r+peseJ fr c ivccific 3ianf_rrce ar privileg2 stirs t'% iz '._ -at previdet! fa tb nViiinc ed, nd whi..h awed 7%.1:.11110111d .z t) Isvcl xi nt of conferring the b.,nefit �ary n.: the-pFiyilege.
L 4- .) A reasonable charge imposed for a specific local government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable actual costs to the local government of providing the service or product.
4.} A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. (3)44} A reasonable charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property.
l� {5} A fine; or penalty, er etheu mo etert ct4.7.a■ includina any applicable interest for nonpayment thereof, imposed by the judicial branch of government or a local government administrotive enforcement aaencv pursuant to adiudicatory due process, as a result of to punish a violation of law. (5146) A charge imposed as a condition of property development. No levy. charae. or exaction reaulatina or related to vehicle miles traveled may be imposed as a condition of property development or occupancy. 16) {74An A iti inti property rcbted gees assessment fee, orcharae4 seelin accefelaRee with the-previ&ieis-e# subiect to Article XIII 0, or an assessment imposed upon a business in a tourism marketing district a parking and business improvement area. or a property and business improvement district. 5 ATTACHMENT 2
(7) A charge imposed for a specific health care service provided directly to the pavor and that is not provided to those not charged. and which does not exceed the reasonable costs to the local aovernment of providing the health care service. As used in this paragraph. a "health care service" means a service licensed or exempt from licensure by the state pursuant to Chanters 1.1.3. or 2 of Division 2 of the Health and Safety Code.
i Mcr_-. Ihip'.irdnn of +.wing by a ^ .,a. -ancr cf*r_ vide nit r ler /, :kir e; ..4hor a ctio nit t ten, ttr1t tI .�%'� mare4han nece h :ori. it ; r , to TAX:,!" th a�icrda�.lc :vitt' of
c'i*' hehthorc carte:caDeeats. t. c�v,vr'�.rcf:a�
feasonable-FelatieleN; •i tf-: poysr's i!wrtsra sr., rr be cfitS ei ed fre--, lira gr'rer onio1/:ct»'t -.
Section 6. Section 2 of Article XIII C of the California Constitution is amended to read:
Sec. 2. Local Government Tax Limitation. Notwithstanding any other provision of this Constitution:
(a} Every levy, charge, or exaction of any kind imposed by local law is either a tax or an exempt charae. All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes. (b) No local law govenament, whether proposed by the aovernina body or by an elector. may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body. (c) Any go7Z. I ■xV47,.! /x irrzvscd, wi*o►t :iter apt a 'n I, i"1 pr,.. l sal government o., e after.`.nurr, 57 -and p For to_thn effecti le(c ckkair crticlr_. chap-c-entinuo only if vcrwiel ‘.e"i_ of kt.. 'totets-vetin ir. zr.alroii ;ems.: �c ;i the citio .which eierti�r rt►r_" !'e
.mithin-twe yew. of the-effectrr lite of tI art c .ra : n�: m€e with sulactivickn (b). (e) No local law go,... ment. whether proposed by the aovernina body or by an elector. may impose, extee:!, sr risey..rra any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. fdl The title and summary and ballot label or auestfon required for a measure pursuant to the Elections Code shall, for each measure providing for the imposition of a tax. include:
11) The type and amount or rate of the tax;
121 the duration of the tax: and
13) The use of the revenue derived from the tax. if the proposed tax is a general tax. the phrase "foraeneral government use shall be reauired. and no advisory measure may appear on the same ballot that would indicate that the revenue from the general tax will, could, or should be used for a specific purpose. fel Only the aovernina body of a local aovernment. other than an elector pursuant to Article Il or the initiative power provided by a charter or statute, shall have the authority to impose any exempt charae.
The aovernina body shall impose an exempt charge by an ordinance snecifvina the type of exempt charae 6 ATTACHMENT 2
as provided in Section 111) and the amount or rate of the exempt charae to be imposed. and oassed by the governing body. This subdivision shall not apply to charges specified in paragraph (7) of subdivision (1) of Section 1.
f fi No amendment to a Charter which provides for the imposition. extension, or increase of a tax or exempt charge shall be submitted to or approved by the electors. nor shall anv such amendment to a Charter hereafter submitted to or approved by the electors become effective for anv purpose. (a) Any tax or exempt charge adopted after January 1. 2022. but prior to the effective dote of this act. that was not adopted in compliance with the reauirements of this section is void 12 months after the effective date of this act unless the tax or exempt charge is reenacted in compliance with the reauirernents of this section.
(h)(1) The local aovernment bears the burden of proving by clear and convincina evidence that a levv. charae or exaction is an exempt charae and not a tax. The local aavernment bears the burden of orovina by clear and convincing evidence that the amount of the exempt charae is reasonable and that the amount charged does nor exceed the actual cost of providina the service or oroduct to the oavor. (2) The retention of revenue bv, or the payment to. a non-aovernmental entity of a levy. charae. or exaction of any kind imposed by a local law. shall not be a factor in determinina whether the levy. charae. or exaction is a tax or exempt charae.
(3) The characterization of a levy. charae. or exaction of anv kind imposed by a local law as being paid in exchange for a benefit, privilege. allowance, authorization, or asset. shall not be factors in determinina whether the levy. chortle, or exaction 15 a tax or an exempt charae. (4) The use of revenue derived from the levy. charae or exaction shall be a factor in determinina whether the levy. charae. or exaction is a tax or exempt charae.
Section 7. Section 3 of Article XIII D of the California Constitution is amended, to read:
Sec. 3. Property Taxes, Assessments, Fees and Charges Limited (a) No tax, assessment, fee, of charge. or surcharge. includina a surcharae [used on the value of property. shall be assessed .e; upon any parcel of property or upon any person as an incident of property ownership except:
(1) The ad valorem property tax ifnp vd -,:•••,:vv:r:( +i, described in Section 1(a) of Article XIII and Section 1(a) of Article Xl(! A, and described and enacted pursuant to the voter approval reauirernent in Section 1(b) gArticle XIII A.
(2) Any special non -ad valorem tax receiving a two-thirds vote of aualiffed electors pursuant to Section 4 of Article XIII A, or after receiving a two-thirds vote of those authorized to vote in a community facilities district by the Leaislature pursuant to statute as it existed on December 31, 2021. (3) Assessments as provided by this article.
(4) Fees or charges for property related services as provided by this article. 7 ATTACHMENT 2
(b) For purposes of this article, fees for the provision of electrical or gas service shall not be deemed charges or fees imposed as an incident of property ownership.
Section 8. Sections 1 and 14 of Article XIII are amended to read:
Sec. 1 Unless otherwise provided by this Constitution or the laws of the United States:
(a) All property is taxable and shall be assessed at the same percentage of fair market value. When a value standard other than fair market value is prescribed by this Constitution or by statute authorized by this Constitution, the same percentage shall be applied to determine the assessed value. The value to which the percentage is applied, whether it be the fair market value or not, shall be known for property tax purposes as the full value.
(b) All property so assessed shall be taxed in proportion to its full value. (c) All proceeds from the taxation of Property shall be apportioned according to law to the districts within the counties.
Sec. 14. All property taxed by state or local government shall be assessed in the county, city, and district in which it is situated. Notwithstandina any other Provision of law. such state or local property taxes shall be aonortioned accordina to law to the districts within the counties.
Section 9. General Provisions
A. This Act shall be liberally construed in order to effectuate its purposes.
B. (1) In the event that this initiative measure and another initiative measure or measures relating to state or local requirements for the imposition, adoption, creation, or establishment of taxes, charges, and other revenue measures shall appear on the same statewide election ballot, the other initiative measure or measures shall be deemed to be in conflict with this measure. In the event that this initiative measure receives a greater number of affirmative votes, the provisions of this measure shall prevail in their entirety, and the provisions of the other initiative measure or measures shall be null and void. (2) In furtherance of this provision, the voters hereby declare that this measure conflicts with the provisions of the "Housing Affordability and Tax Cut Act of 2022" and "The Tax Cut and Housing Affordability Act," both of which would impose a new state property tax (called a "surcharge") on certain real property, and where the revenue derived from the tax is provided to the State, rather than retained in the county in which the property is situated and for the use of the county and cities and districts within the county, in direct violation of the provisions of this initiative. (3) If this initiative measure is approved by the voters, but superseded in whole or in part by any other conflicting initiative measure approved by the voters at the same election, and such conflicting initiative is later held invalid, this measure shall be self-executing and given full force and effect.
C. The provisions of this Act are severable. If any portion, section, subdivision, paragraph, clause, sentence, phrase, word, or application of this Act is for any reason held to be invalid by a decision of any court of competent jurisdiction, that decision shall not affect the validity of the remaining portions of this Act. The People of the State of California hereby declare that they would have adopted this Act and each and every portion, section, subdivision, paragraph, clause, sentence, phrase, word, and application not 8 ATTACHMENT 2
declared invalid or unconstitutional without regard to whether any portion of this Act or application thereof would be subsequently declared invalid.
D. If this Act is approved by the voters of the State of California and thereafter subjected to a legal challenge alleging a violation of state or federal law, and both the Governor and Attorney General refuse to defend this Act, then the following actions shall be taken:
(1) Notwithstanding anything to the contrary contained in Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code or any other law, the Attorney General shall appoint independent counsel to faithfully and vigorously defend this Act on behalf of the State of California. (2) Before appointing or thereafter substituting independent counsel, the Attorney General shall exercise due diligence in determining the qualifications of independent counsel and shall obtain written affirmation from independent counsel that independent counsel will faithfully and vigorously defend this Act. The written affirmation shall be made publicly available upon request. (3) A continuous appropriation is hereby made from the General Fund to the Controller, without regard to fiscal years, in an amount necessary to cover the costs of retaining independent counsel to faithfully and vigorously defend this Act on behalf of the State of California. (4) Nothing in this section shall prohibit the proponents of this Act, or a bona fide taxpayers association, from intervening to defend this Act.
9 ATTACHMENT 2