Using Citizen’s Initiatives to Repeal Local Taxes

Local reforms can be initiated by city councils and county boards of supervisors, but they can also be initiated by citizen activists. That’s exactly what’s happened, three times, thanks to the efforts of a group based in Pasadena called “TeaPAC.” Their specialty has been to offer voters the opportunity to repeal local taxes, utility taxes in particular.

First some background. As the chart below shows, in November 2016, local voters in California were offered 193 local bond measures, and 224 local tax measures. As can be seen, local voters approved 94% of the local bond measures, amounting to approximately $2.1 billion in additional loan payments per year. Local voters also approved 71% of new local tax measures, adding nearly $3.0 billion in new taxes per year.

LOCAL TAX PROPOSALS ON NOVEMBER 2016 CALIFORNIA BALLOT

While this evidence – consistent with past elections – suggests California voters tend to support local tax increases, the narrative that has successfully motivated Californians to support new taxes is wearing thin. Proponents of new local taxes, almost always the city management and local elected officials, have claimed new taxes are necessary to support public safety and maintain infrastructure.

This is only half-true. The other side of the story is the fact that public employee benefits – when one includes payments on pension obligation bonds, direct payments to the pension systems, and costs for premium health insurance for active and retired public employees – now comprise between 10% and 20% of city budgets. These percentages go up every year and there is no end in sight.

Voters are realizing that public employees enjoy benefit packages that would be economically impossible to offer to everyone in the private sector, and that these benefit packages are the real reason for tax increases. And when enough of them are willing to sign a petition, getting tax repeals onto local ballots is not a terribly difficult task.

For example, in April 2016, local activist Lawrence Papp, an Arcadia resident for more than 50 years, led a tax repeal effort in that city. To put a citizens initiative onto the ballot in Arcadia, a city with just over 56,000 residents, only 460 signatures were required.

In June 2016, local activists and Glendale residents William A. Taliaferro and John M. Voors successfully led a tax repeal effort in that city.

And very recently, in April 2018, Sierra Madre residents Earl Richey and David McMonigle successfully led a tax repeal effort in that city.

It is important to note the timing of these tax repeal initiatives. A few years ago, California’s statewide ballot initiatives were restricted to every two years during general elections in November. But local ballot initiatives operate under no such restrictions. As reported in Ballotpedia’s summary of California Prop. 218 and subsequent court rulings affecting its implementation:

“For cities and counties that follow the initiative process in state law, a petition with signatures equal to 10 percent of registered voters qualifies an initiative for the next general election ballot, while a petition with signatures equal to 15 percent of registered voters qualifies an initiative for a special election held between 88 and 103 days from petition certification.”

Even in fairly large cities, gathering the requisite signatures is not an overwhelming task for a well organized but small group of activists. For example, in California approximately 45% of all residents are registered voters. This means that in a city of 100,000 residents, there would be 45,000 registered voters, meaning that to force a special election on a citizens initiative would only require 6,750 signatures. To place an initiative onto the next general election ballot would only require 4,500 signatures.

LOCAL TAX REPEALS  –  SAMPLE LANGUAGE

Sierra Madre, April 2018: “Shall the City of Sierra Madre adopt a measure repealing the City’s Utility Users Tax in its entirety?”

Glendale, June 2016: “Shall the City’s longstanding utility users tax be repealed, eliminating approximately 9.5% of the revenues in the City’s general fund annually ($17.5 million this year) that is used to pay for city services such as police, fire, 9-1-1 emergency response, libraries, parks and senior services?”

Arcadia, April 2016: “Shall the City of Arcadia adopt a measure repealing the City’s Utility Users Tax in its entirety?”

The language of the Glendale measure illustrates the barriers facing activists hoping to convince voters to repeal local taxes. Instead of merely asking voters to approve or disapprove the repeal, the wording of the measure infers that there will be cuts to “police, fire, 9-1-1 emergency response, libraries, parks and senior services.”

In Sierra Madre, the special election ballot offered straightforward language on the repeal, but, as can be seen below, an “Advisory Measure” was included, asking voters, if the tax repeal passes, “should the City Council eliminate paramedic services, reduce and outsource police services and library services, reduce code enforcement, and fire suppression service…”

SIERRA MADRE SPECIAL ELECTION BALLOT – 4/10/2018

One way to counter these veiled threats to eliminate public safety and senior services, etc., if a tax repeal passes, is for activists to develop their own advisory measure, to appear on the ballot along the tax repeal measure. Here is a hypothetical example of such an advisory, using the recent Sierra Madre ballot:

HYPOTHETICAL SIERRA MADRE SPECIAL ELECTION BALLOT

Two changes are coming to California in the near future. One, the ongoing costs for pensions and other retirement benefits are going to become unsustainable. Two, the ability for local agencies to modify pension benefits is likely to become easier, depending on the ruling in the CalFire vs. CalPERS case currently before the California Supreme Court.

When these changes come, local ballot initiatives to repeal local taxes will not only be disruptive opportunities to educate voters as to where the money is really going. They may actually get a majority of votes.

REFERENCES

Summary of California Prop. 2018 (governing local ballot initiatives) – Ballotpedia

Laws Governing Local Ballot Initiatives in California – Ballotpedia

TeaPAC – Making California Golden Again (proponent of local tax repeal initiatives)

How to Prohibit Public Money in Campaigns for New Taxes and New Bonds – CLEO Sample Reform

Californians Approve $5 billion per Year in New Taxes – CPC Analysis, December 2016

Will the California Supreme Court Reform the “California Rule?” – CPC Analysis, March 2018

Sierra Madre voters want to keep their utility tax – San Gabriel Valley Tribune, 4/10/2018

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