California Supreme Court Confirms: They Ripped a Big Hole in Prop 13 & 218

Supreme Court of California and the Court of Appeal for the First Appellate District (Photo – Coolcaesar)

Back in 2017, many breathless legal observers (including me) thought that the California Supreme Court had just opened up a major loophole in Prop 13/Prop 218 restrictions on raising local taxes. The two voter-enacted amendments to the state constitution otherwise require that any new taxes receive a two-thirds vote to go into effect.

By Ethan Elkind

But the Court ruled that year in California Cannabis Coalition vs. City of Upland that the supermajority hurdle did not apply to taxes put on the ballot through citizen petitions. Some legal experts and advocates pushed back on how much of a loophole the decision opened, suggesting that the case was overblown.

Now today we have confirmation that in fact the Supreme Court did dramatically scale back the two-thirds hurdle that has stymied local revenue measures.

The case at issue arose in San Francisco, where Proposition C (to fund homeless services through a new corporate tax) passed by a majority, but not two-thirds. The measure was placed on the ballot by a citizen petition, so the city attorney had determined that only a simple majority was needed, based on the 2017 decision.

The Howard Jarvis Taxpayers Association sued, lost and appealed, but last week the California Supreme Court declined to review. So, barring any new cases or contrary appellate court rulings on this same issue, the case is closed, so to speak. That is, unless the voters approve a new restriction to close this loophole, as Prop 218 was originally placed on the ballot to close previous loopholes in Prop 13 based on an earlier California Supreme Court decision.

The ramifications?

Any local government that wants to raise revenue for purposes like new transit or wildfire prevention could theoretically ask a nonprofit or business group to conduct signature gathering to place the measure on the ballot. Then they would only need a simple majority approval at the ballot box. In short, as I wrote back in 2017, this decision could be transformational for local “self-help” efforts to fund badly needed infrastructure projects and services.