Initiative Update:
Unions Build Warchest to Restrict Referendum and Remove Vote Threshold for State Budget

Over the past week, more than $1 million has been put forward by government employees' unions to support an initiative that would overturn the vote threshold for the state budget, and eliminate the people's right to put certain fees and tax-like fees to a referendum. Supporters of the initiative (09-0057), a committee called "Teachers, Firefighters and Nurses for an On-Time Budget," have raised $1.2 million to date.

Cal-Tax, the CalChamber and other opponents of the initiative have formed "Stop Hidden Taxes," a campaign committee that filed papers with the secretary of state February 17.

While the initiative's proponents did not intend to change the vote threshold on taxes or make changes to Proposition 13's property tax limitations, the language of the initiative is unclear as to whether or not new taxes or tax increases could be passed by a majority vote. The title issued by the attorney general states: "Changes Legislative Vote Requirement to Pass a Budget from Two-Thirds to a Simple Majority. Retains Two-Thirds Vote Requirement for Taxes." Upon analysis of the initiative, Cal-Tax believes that it is unclear if the two-thirds requirement for taxes could be waived if the new tax or tax increase were included in a budget bill or budget trailer bill, and if such a bill were to include an appropriation. As drafted, the initiative allows budget bills and budget trailer bills to be passed with a simple majority vote. Specifically, the initiative amends Article IV of the California Constitution, adding: "Notwithstanding any other provision of law or of this Constitution, the budget bill and other bills providing for appropriations related to the budget bill may be passed in each house by roll call vote entered in the journal, a majority of the membership concurring..."

Since 1933, California has required that the state budget needs a two-thirds legislative vote for passage. In 1978, voters approved Proposition 13, which required a two-thirds vote of the Legislature for new or increased taxes.

Cal-TaxReports, February 22, 2010

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