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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 13 Section Name: CONSENT CALENDAR Account Number: 10-1311 File ID: 26-11274 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: City Manager's Office
MEETING DATE: June 01, 2026
SUBJECT:
City of San Mateo Opposing State Ballot Initiative No. 1983 25-0006A1 — Adoption RECOMMENDATION:
Adopt a Resolution opposing proposed statewide Initiative No. 1983 25-0006A1, submitted by the Howard Jarvis Taxpayers Association (HJTA) and qualified for the November 2026 statewide ballot, and authorize the City Manager to communicate the City’s opposition to the California Legislature, the Governor’s Office, the League of California Cities, and other appropriate stakeholders.
BACKGROUND:
The Howard Jarvis Taxpayers Association (HJTA) submitted proposed statewide Initiative 1983 25-0006 (Amendment No. 1), on July 30, 2025. The initiative qualified for the November 2026 statewide ballot on April 21, 2026, as Attorney General File No. 25-0006A1.
The measure would add Section 4.5 to Article XIII A of the California Constitution, imposing sweeping restrictions on local governments’ ability to levy taxes. If approved by voters, it would: (1) permanently eliminate enhanced real property transfer taxes adopted by charter cities, including San Mateo’s, and prohibit any non-ad valorem general tax upon any parcel or upon any person as an incident of real property ownership; (2) require a two-thirds supermajority vote for all local special taxes (subject only to narrow existing constitutional carve-outs that do not benefit San Mateo); and (3) invalidate existing taxes and local measures that do not comply with the new requirements by December 31 of the second year following the initiative’s enactment.
The City of San Mateo is a charter city that relies on locally generated revenue — including its Real Property Transfer Tax (RPTT) and voter-approved special taxes — to fund essential public services and a robust capital improvement program.
Adoption of this initiative would cause severe, irreversible fiscal harm to the City and would override the democratic decisions of San Mateo residents.
DISCUSSION:
Overview of the Initiative
The initiative proposes a new constitutional provision (Section 4.5 of Article XIII A) with the following core elements:
Section (b): No local government, including the electorate of a local government exercising the initiative power, may impose, extend, or increase any special tax without a two-thirds supermajority vote. o(The initiative preserves three narrow existing constitutional exceptions: Article XIII A, Section 4; Article XIII C, Section 2(d); and Article XIII D, Section 3(a)(2).
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oNone of these carve-outs apply to San Mateo’s existing or anticipated tax measures.) Section (c): No local government, including the electorate of a local government exercising the initiative power, may impose: (i) ad valorem taxes on real property (except as provided in section (3)(a)(1) of article XIII D); (ii) any non-ad valorem general tax upon any parcel of real property or upon any person as an incident of real property ownership; or (iii) any transaction tax, sales tax, documentary transfer tax, or other tax related to real property sales, transfers, documents, or recordings — except for the tax, and not exceeding the rate, specified in subdivisions (a) and (b) of Section 11911 of the Revenue and Taxation Code as it existed on January 1, 2025. oThis is a dual limitation: localities may only levy the specific tax instrument described in Section 11911, at a rate no higher than that section specifies. The rates specified in Section 11911 as of January 1, 2025 are $0.55 per $500 (or $1.10 per $1,000) of value — far below San Mateo’s current RPTT rate. oCritically, the prohibition on “any non-ad valorem general tax upon any parcel… as an incident of real property ownership” extends beyond transfer taxes and may sweep in parcel taxes and other property- related levies. The City will need to evaluate all existing taxes for potential exposure under this broader prohibition.
Section (d): Any noncompliant tax enacted prior to the initiative’s effective date becomes null and void on December 31 two years after enactment.
oThis applies to all taxes covered by Section (c) — including not only charter city transfer taxes such as San Mateo’s RPTT, but also any non-ad valorem parcel taxes or other property-related levies that do not comply with the new restrictions.
Section (e): Definitions broadly extend the measure’s reach to charter cities and all forms of local government, and the measure is to be “liberally construed” to effectuate its purposes. oNotably, Section (e) redefines “electorate” to include property owners entitled to vote under the authorizing statute as it existed on January 1, 2025.
oThis definition could affect how future tax measures are structured or challenged, as it may give property owners — beyond registered voters — legal standing to contest locally approved taxes.
Summary of Impacts on the City of San Mateo
The following table summarizes the effect of the initiative on current City tax authority:
Topic Current Law Under Initiative 25-0006
Real Property
Transfer Tax (RPTT)
Charter cities may set their own
RPTT rate above the standard
documentary tax (San Mateo:
0.5% / 1.5%), generating critical
capital improvement revenue.
Charter city transfer taxes permanently eliminated. The City would be capped at the rate specified in Revenue and
Taxation Code Section 11911 as it existed on January 1, 2025 ($0.55 per $500 of value, or approximately 0.11%), a fraction of San Mateo’s current RPTT rate. San Mateo would lose an estimated $10–15 million annually. Additionally, the broader prohibition on non-ad valorem taxes as an incident of real property ownership may expose other City levies to invalidation.
Special Tax Vote
Threshold
Simple majority via citizen
initiative, as upheld by recent
court rulings.
Two-thirds supermajority required for ALL special taxes — all pathways. Narrow existing constitutional exceptions (Art.
XIII C, § 2(d); Art. XIII D, § 3(a)(2)) are preserved but do not benefit San Mateo.
Existing Parcel Taxes
and Local Measures
Valid if approved by simple
majority under prior court
decisions.
Invalidated December 31 of second year after statewide
passage. Applies to transfer taxes and any other
noncompliant property-related levies. Estimated statewide
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Topic Current Law Under Initiative 25-0006
loss of approximately $300 million annually (pending formal LAO analysis of Amendment No. 1).
Local Democratic
Control
Local voters may set local tax
policy through initiative or
council action.
Statewide initiative overrides local voter-approved
measures. San Mateo Measure CC (approved 71.8% of
voters) would be invalidated.
Reasons for Opposition
Staff recommend that the City Council adopt a formal position of opposition to Initiative 1983 25-0006A1 for the following reasons:
1. Loss of Real Property Transfer Tax Revenue Critical to Capital Projects San Mateo’s Real Property Transfer Tax (RPTT) currently generates an estimated $10–15 million annually, revenue that directly funds the City’s Capital Improvement Program (CIP). The CIP finances essential public infrastructure investments including street and sidewalk repair, park improvements, stormwater system upgrades, facility maintenance and renovation, and public safety facility improvements. Under the initiative, the City’s enhanced RPTT rate would be permanently eliminated, and the City would be capped at the standard rate specified in subdivisions (a) and (b) of Section 11911 of the Revenue and Taxation Code as it existed on January 1, 2025 (approximately $0.55 per $500 of value) — a fraction of the current rate. Beyond the RPTT, the initiative’s prohibition on “any non-ad valorem general tax upon any parcel… as an incident of real property ownership” may also jeopardize other City levies tied to real property. The loss of these revenue streams would result in significant deferrals of capital projects, deterioration of public infrastructure, and increased long-term maintenance costs for the City.
2. Invalidation of Voter-Approved Measure CC
San Mateo voters approved Measure CC with 71.8% of the vote, reflecting strong community support for locally determined tax policy. The initiative would retroactively invalidate Measure CC by December 31 of the second year following passage, irrespective of the overwhelming voter mandate behind it. This retroactive elimination of a democratically enacted measure is contrary to principles of local self-governance and disrespects the will of San Mateo voters.
3. Erosion of Local Fiscal Autonomy and Charter City Authority As a charter city, San Mateo has long exercised authority over its local tax structure to meet community needs and fiscal obligations. The initiative expressly applies to charter cities, stripping them of this authority without providing any offsetting state revenue or funding mechanism. The measure would impose a one-size-fits-all statewide tax restriction that does not account for the significant variation in community needs, infrastructure conditions, and financial obligations across California’s diverse local governments.
4. Unprecedented Supermajority Requirement Severely Restricts Future Revenue Options By requiring a two-thirds supermajority for all special taxes — through all pathways, including the citizen initiative process — the measure imposes an extraordinarily high bar for any future local tax. This supermajority threshold has historically been very difficult to achieve and would effectively foreclose the City’s ability to respond to unforeseen fiscal emergencies, infrastructure needs, or community priorities through locally approved tax measures.
5. Statewide Harm to Public Services and Infrastructure
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Fiscal analyses, including estimates by the Legislative Analyst’s Office and independent fiscal analysts reviewing prior versions of the initiative, have projected that measures of this type could eliminate approximately $300 million or more in local tax revenue annually statewide. Staff recommends confirming the LAO’s formal fiscal analysis of Amendment No. 1 (25-0006A1) once published and updating this figure accordingly. Cities and counties across California rely on locally generated revenues to fund fire and police services, parks, libraries, housing programs, and public works. The initiative provides no replacement funding mechanism, meaning the elimination of these revenues would directly harm residents who depend on these services.
6. Undermines State Efforts to Address Housing and Infrastructure The initiative’s proponents argue that eliminating real property transfer taxes will stimulate housing production. However, independent academic research cited in the measure’s own text acknowledges that the relationship between transfer taxes and housing supply is complex. Eliminating local tax authority will reduce immediate funding to support new housing, including roads, water systems, parks, and public facilities. The net effect would likely harm, rather than help, the state’s housing and infrastructure objectives.
7. Overrides Local Democratic Decision-Making
The initiative would override local voter-approved tax measures enacted through democratic processes — including citizen initiatives — with a single statewide constitutional provision. This substitution of state-level constitutional change for local community decision-making undermines the fundamental principle that local governments are best positioned to understand and respond to their communities’ needs.
8. Legal Uncertainty and Administrative Complexity
The measure’s provisions are broadly written and will generate significant litigation. Terms such as “initiative power,” “special tax,” “general tax,” and the scope of retroactivity provisions are likely to be contested in court, creating years of legal uncertainty for local governments and their budgetary planning. The measure directs that it be “liberally construed” to effectuate its purposes, suggesting an intent toward expansive application that would further restrict local fiscal authority beyond what is apparent on the face of the text.
9. Legislative and Coalition Activity
The City’s state legislative consultant, California Public Policy Group (CPPG), reports that the California Legislature is engaging HJTA in negotiations toward a potential legislative resolution, likely advanced through the state budget process.
The League of California Cities (Cal Cities) and labor organizations are coalescing to oppose the measure. Staff recommend that the City formally align with these opposition efforts through adoption of this resolution.
Formal adoption of an opposition resolution will authorize the City Manager to:
• Share the City’s opposition position to the California Legislature, including the City’s state legislative delegation. • Submit the City’s position to Cal Cities and other relevant coalitions. • Direct CPPG to represent the City’s opposition in legislative advocacy activities. •Issue correspondence with the Governor’s Office and other appropriate state agencies.
BUDGET IMPACT:
There is no direct fiscal impact associated with adopting this resolution. Any advocacy activities associated with opposing the initiative will be absorbed within the existing City Manager’s Office and CPPG contract budget.
If Initiative 25-0006 is approved by voters, the City would face estimated annual revenue losses of $10–15 million from the elimination of its enhanced Real Property Transfer Tax rate alone, with additional losses from invalidation of other
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noncompliant taxes. These losses would have a material adverse impact on the City’s Capital Improvement Program and General Fund.
ENVIRONMENTAL DETERMINATION:
This item is not a project subject to CEQA, because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. (CEQA Guidelines Section 15378(b)(5).)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Proposed Resolution Opposing Initiative 25-0006 Att 2 – Draft Letter to the Governor Opposing State Ballot Initiative No. 1983 25-0006A1
STAFF CONTACT
Zachary Reda, Senior Management Analyst
[email protected]
(650) 435-0823