March 7, 2023
City Council
DATE: March 7, 2023
TO: Members of the City Council
FROM:
Mayor Eduardo Martinez and Councilmembers Soheila
Bana and Claudia Jimenez
Subject:
Resolution Opposing Initiative 21-0042A1
FINANCIAL IMPACT: There is no financial impact related to this item.
PREVIOUS COUNCIL
ACTION:
None
STATEMENT OF THE
ISSUE:
This initiative includes undemocratic provisions that
would make it more difficult for local voters to pass
measures needed to fund local services and
infrastructure, and would limit voter input by prohibiting local advisory measures where voters provide direction
on how they want their local tax dollars spent
RECOMMENDED ACTION:
ADOPT a resolution opposing initiative 21-0042A1
Restricting Voters’ Input and Local Taxing Authority – Mayor Eduardo Martinez, Councilmembers Soheila Bana and Claudia Jimenez (510-620-6581).
DISCUSSION:
An association representing California’s wealthiest corporations and developers is spending millions to push a deceptive proposition aimed for the November 2024 statewide ballot.
The measure creates new constitutional loopholes that allow corporations to pay far less than their fair share for the impacts they have on our communities, including local infrastructure and our environment.
AGENDA
REPORT
March 7, 2023
The measure puts billions of dollars currently dedicated to local services at risk and could force cuts to fire and emergency response, law enforcement, public health, parks, libraries, affordable housing, services to support homeless residents, mental health services, and more.
BACKGROUND
On Feb. 1, 2023, the “Taxpayer Protection and Government Accountability Act,” or AG# 21- 0042A1, qualified for the November 2024 ballot. This measure would negatively impact vital local and state services to the benefit of wealthy corporations. The measure is sponsored by the California Business Roundtable (CBRT) — the lobbying arm of the largest and wealthiest corporations in California.
Cal Cities, along with a broad coalition of local governments, labor, public safety, education, and infrastructure advocates, strongly oppose this initiative.
SUMMARY
The initiative limits voters’ authority, adopts new and stricter rules for raising taxes and fees, and may make it more difficult to hold violators of state and local laws accountable.
Effective date
All new or increased taxes or fees adopted by the Legislature, a city council, or the local voters after Jan. 1, 2022, must comply with the Act’s new rules.
State taxes
All new or increased state taxes will require majority voter approval.
Local taxes
New requirements for voter approval:
when an existing tax is applied to a newly annexed territory. when an existing tax is applied to a new service or product, for example when a utility user tax is applied to a new service.
All new or increased taxes adopted after Jan. 1, 2022, must include a sunset date.
Fees and charges
Requires that charges for access, use and rental of government property be “reasonable” such as fees charged for use of government facilities and public works infrastructure to oil companies, utilities, gas companies, cable companies, and other corporations.
Fees and charges for services and permits may not exceed the “actual cost” of providing the product or service for which the fee is charged. “Actual cost” is the “minimum amount necessary.” Examples include planning services, excavation and encroachment permits, preparation of candidate statement, and permit parking. State and cities have burden of proving by “clear and convincing evidence” that a fee/charge is not a tax, that the amount is reasonable, and that it does not exceed the “actual cost.”
No fee or charge or exaction regulating vehicle miles traveled can be imposed on new development.
March 7, 2023
Fines and penalties [administrative enforcement of state law and municipal codes] May require voter approval of fines and penalties for corporations and property owners that violate state and local laws unless a new, undefined adjudicatory process is used to impose the fines and penalties. Examples include nuisance abatement, organic waste reduction requirements, and failure to maintain a vacant property.
Voters
Local advisory measures are prohibited. No measure may appear on the ballot asking for approval of a general tax that would express the voters' preference for how the tax revenue should be used.
Overturns Upland decision so taxes proposed by initiative are subject to the same rules as taxes placed on the ballot by a city council.
Voters may not amend a city charter to impose, extend, or increase a tax or fee.
Fiscal
Puts approximately $2 billion from fees and charges at risk each year, subject to legal peril.
Puts approximately $2 billion of annual tax revenue at risk. Many tax measures approved between 2022-2024 will need to be resubmitted to voters to comply and be reapproved.
It is recommended that the City Council adopt a resolution opposing the initiative. If adopted, a copy of this resolution should be emailed to the League of California Cities at [email protected].
DOCUMENTS ATTACHED:
Attachment 1 – Draft Resolution
Attachment 2 – Draft Opposition Letter
Attachment 3 – Fiscal Analysis