☆ Susan Shelley: Californians rejected Prop 5 but were denied a vote on the Taxpayer Protection Act (2/3)
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The Upland loophole lets local governments hike taxes with only 50% approval. But HJTA’s Susan Shelley argues this contravenes the CA Constitution, which requires two-thirds. She says voters were denied a chance to close the loophole because Sac blocked the Taxpayer Protection Act. This let extreme sales and parcel taxes sail through down in LA. An Opp Now exclusive Q&A.
Opportunity Now: You mentioned earlier that the Prop 5 campaign said they were “just asking the question” about making it easier to raise bonds. But when it came to the Taxpayer Protection Act, the state clearly didn’t want to “just ask the question”—they didn’t even allow it on the ballot.
Susan Shelley: You know, 1.4 million people signed petitions to put the Taxpayer Protection Act on the ballot; and it was polling very, very strongly. Had the California Supreme Court not given in to the governor's demand to take it off the ballot for what we think was an invalid reason, it absolutely would have passed.
We would have closed the Upland loophole, which makes it easier to raise taxes if they're proposed as a so-called “citizens’ initiative.” Several taxes passed, supposedly not needing a two-thirds threshold as the Constitution requires, but rather a simple majority.
So the sales tax in Los Angeles will be going up under Measure A; and Measure E, the new parcel tax will be added to property tax bills in the Los Angeles County Fire District because of citizens’ initiative tax increases that did not reach the two-thirds threshold. We would have closed that loophole with the Taxpayer Protection Act, but it was removed from the ballot.
ON: So just like Prop 5 would have snap-retroactively passed local bonds on the same ballot that only got 55%, the TPA would have immediately required Measure A and Measure E to stick to the constitutional two-thirds requirement?
SS: Yes.
ON: And they didn’t get two-thirds, but passed with the bare majority requirement due to their citizens’ initiative status—because the California Supreme Court rejected the Taxpayer Protection Act, which would have closed that loophole?
SS: Yes. In a 2017 case, the California Supreme Court suggested that the Constitution doesn’t apply to citizens’ initiatives, which is a very creative interpretation, and one we think is incorrect.
Actually, it has not been decided. It was only sort of indicated in dicta by the Supreme Court that perhaps the Constitution doesn't apply in the same way to a citizens’ initiative tax increase, and the appellate courts pushed that forward. Then they cited each other to push it forward, and here we are.
From 2017 to 2024, this has been going on; and the California Supreme Court has not taken any of the appeals of these cases challenging these citizens’ initiative tax increases, which in some cases are very entwined with government, government employees, elected officials, or other government appointees.
ON: Where has the government been involved in citizens’ initiatives?
SS: It happened in San Diego with Prop C, a Convention Center tax. The campaign was run by someone who's on the board of the city-owned Convention Center—that's a little bit questionable. And in Los Angeles, with Measure A, you have a situation where the Board of Supervisors had to sponsor legislation in Sacramento to allow another increase in the sales tax specifically for a measure exactly like Measure A. But then it's a so-called citizens’ initiative.
It’s a workaround for them to evade the two-thirds vote requirement. They have erased an important taxpayer protection without a vote of the people, without a Supreme Court decision actually deciding this issue with reasoning to support it.
ON: And statewide, voters approved Prop 2 and Prop 4, each of which is $10 billion in borrowing. This happened despite them voting down Prop 5. What explains the ballot splitting?
SS: Well, Prop 2 and Prop 4 are bonds that are repaid out of the general fund at the state level. They did not come with an immediate tax increase the way the local bonds do.
ON: But what about the matching local bonds for Prop 2?
SS: Yes, Prop 2 is accompanied by many local education bonds because of a local match that is required to get the state funds. But I think voters didn't really know about that. Prop 2 and Prop 4 are $10 billion each of new debt, but it'll probably cost $18 billion each to pay back over 35 or 40 years.
I think people did not realize that this is something the state could and should have paid for out of the budget. Anything that is a high priority, like clean water, fire mitigation, or fixing dilapidated schools, should be paid for out of the budget. Not on the credit card with interest.
ON: So it seemingly comes down to information. If people knew how directly Prop 2 affects their actual taxes, they might have voted against it, like they did with Prop 5?
SS: I think so. A reasonably funded campaign to oppose Prop 2 and Prop 4 would have defeated them both.
ON: But you had to focus limited resources on Prop 5?
SS: Yes, the Howard Jarvis Taxpayers Association is a member-supported organization. We don't have massive amounts of money to spend when we're acting alone in a campaign, as we were with Prop 5. That was our priority because it was an attack on Proposition 13, and it was going to cause property taxes to go up indefinitely.
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