Initiative Update:
Cal-Tax President Teresa Casazza Briefs Reporters on Flaws in Proposition 25: Measure Would Lower Threshold for Taxes Included in Budget, Effectively Repeal Public's Right to Referendum

Cal-Tax President Teresa Casazza, CalChamber President Allan Zaremberg and noted attorney Steve Merksamer held a press conference July 8 to discuss major flaws in Proposition 25 – the so-called "On-Time Budget Act" – that would allow the Legislature to raise budget-related taxes with a bare majority vote, and would effectively repeal the public's right to use the referendum process to challenge tax-like fees and other legislation.

Ms. Casazza said Proposition 25 makes it very easy to increase taxes because the initiative would allow the Legislature to pass a tax with a majority vote, rather than the constitutionally required two-thirds vote, simply by including the tax in a bill that also included an appropriation related to the budget. It would become commonplace, she said, for taxes to be packaged into appropriation bills in order to avoid the two-thirds vote requirement. (Click here for Cal-Tax's analysis of Proposition 25.)

At the press conference, the opponents of Proposition 25 noted that the initiative is deceptively described by supporters as a measure that would lower the vote requirement for the budget, and would penalize lawmakers by docking their pay if a budget is not enacted on time. In fact, the initiative includes language that goes beyond those issues, with the lower vote threshold for taxes included in a budget appropriation bill, and with provisions that would effectively repeal the public's right to the referendum.

"Whether the consequences are intended or unintended is not important," Mr. Zaremberg added. "What is important is that the consequences are real."

Mr. Merksamer, of Nielsen, Merksamer, Parrinello, Mueller & Naylor LLP, said provisions allowing majority-vote budget items to take effect immediately mean the public would not have the right to subject these items to a referendum. Article II, Section 9(a) of the state constitution provides that "The referendum is the power of the electors to approve or reject statutes or parts of statutes except urgency statutes, statutes calling elections, and statutes providing for tax levies or appropriations for usual current expenses of the State." Proposition 25 "effectively eliminates the referendum process in California" and "would allow the Legislature to circumvent one of the most important checks that we the people have on its power," Mr. Merksamer said.

In related news:

Voters Support Majority-Vote Budget if it Retains Two-Thirds Vote on Taxes, Poll Finds. A new Field Poll found that voters would support Proposition 25 based on the belief that it would only change the number of votes needed to pass a budget and would punish lawmakers for a late budget, but would not affect taxes.

Pollsters asked likely voters: "This proposition changes the legislative vote requirement necessary to pass the state budget from two-thirds to a simple majority, but retains the two-thirds vote requirement for tax increases. It also requires that if the Legislature fails to pass a budget bill by June 15 all legislators will forfeit their pay each day until a budget bill is passed. If the election were being held today, would you vote yes or no on this proposition?" (Cal-Tax: As noted in the item above, the initiative would do much more than this. As voters learn about Proposition 25's impact on taxes and their right to the referendum, their attitudes are likely to change.)

The poll found that 65 percent of likely voters would vote yes based on the Field Poll's description, 20 percent said they would vote no, and 15 percent said they were undecided. Democrats supported the measure by 73 percent, and Republicans and non-partisans supported the measure by a margin of 58 percent.

Committee Formed to Oppose Proposition 21, the Car Tax Initiative. A new committee has formed to oppose Proposition 21, an initiative that would impose a mandatory car tax for parking at selected state parks. "Californians Against the Car Tax – No On Proposition 21" is being managed by Rob Stutzman, of Stutzman Public Affairs. Cal-Tax opposes Proposition 21.

Cal-TaxReports, July 12, 2010

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