California’s cities and counties are scrambling to lock in tax increases before voters get a chance to make that process harder, setting up a busy November ballot dominated by fights over local revenue.
At the center of the rush is Proposition 43, a statewide measure that would reverse a 2020 California Supreme Court decision and require that citizen-initiated tax measures — those placed on local ballots through petition drives rather than by city councils or county boards — win two-thirds voter approval, the same threshold already required for taxes proposed directly by government bodies.
The court’s earlier ruling held that initiative-driven tax measures needed only a simple majority to pass. That decision opened the door to a wave of local tax proposals, many backed by public employee unions, since the lower bar made passage far easier. Now, with tax-limitation groups pushing Prop. 43 onto the November ballot, local officials and union-backed campaigns are racing to get their own tax measures approved before the rules potentially tighten.
Beyond that political calculation, local sales tax hikes face another obstacle: a state cap limiting local sales taxes to no more than 2 percentage points above California’s base rate of 7.25%, capping most areas at 9.25% total. The Legislature, however, routinely grants exceptions. Gov. Gavin Newsom last week signed Senate Bill 762, which allows 10 cities, two counties and one town to exceed that ceiling — not just for this election, but through 2031. The exemption applies even to tax measures placed on the ballot through voter initiatives.
These jurisdictions will join a growing roster of California communities already taxing above the standard cap. In the Inland Empire and greater Los Angeles region, Lancaster and Palmdale currently have the state’s highest combined sales tax rate, at 11.25%. A legislative analysis of SB 762 warned that other cities could soon approach similarly steep rates.
That same analysis acknowledged a long-standing critique of sales taxes: they disproportionately burden lower-income residents, who tend to spend a larger share of their earnings on taxable goods. The California Taxpayers Association raised similar concerns in opposing the bill, arguing that piling on more local sales taxes runs counter to state leaders’ promises to ease California’s high cost of living.
With so many tax measures crowding local ballots this fall, scrutiny is also turning to how public agencies promote them. State law bars the use of taxpayer funds for campaign advocacy, but the boundary between neutral public information and persuasive messaging is often blurry — and enforcement by the state’s Fair Political Practices Commission is inconsistent.
Last week, the commission determined that Nevada County had improperly spent nearly $35,000 on mailers urging residents to support a 2022 sales tax increase. The county was fined $31,500, though that penalty will also be paid using public money. Notably, the tax measure in question failed, receiving only about 48% support — meaning the improper campaign spending would not have overturned the outcome even had it passed.
A similar controversy is now unfolding in the Bay Area, where a proposed regional sales tax hike aimed at raising roughly $1 billion annually for public transit has drawn a legal challenge. Critics allege that the official ballot language plays up the benefits of the tax while downplaying its cost, and warns of service cuts if voters reject it. Opponents have asked a Santa Clara County judge to order revisions to make the wording more neutral.
The dispute is only the latest chapter in a long-running debate over how California’s local governments seek — and sometimes stretch the rules to secure — voter approval for new taxes.
Original source: CalMatters
