California voters will be asked in November to reverse a decision by the state Supreme Court allowing the Legislature and local governments to impose certain fees by a simple majority vote, rather than the two-thirds majority required for increasing taxes.
A business-backed initiative that would overturn the 1997 ruling has qualified for the Nov. 7 ballot after supporters submitted petitions with more than 1 million signatures to the secretary of state's office this week.
The initiative would reclassify as a tax any fee imposed to raise money for other than regulatory purposes. It would apply to any fee imposed after July 1, 1999, a provision proponents said was added to prevent a rush of new fee proposals before the initiative is decided by voters.
Four initiatives have now qualified for the Nov. 7 general election. An initiative that would ease restrictions on contracting out for government services was the first to qualify. Another initiative would require drug treatment in lieu of incarceration for some nonviolent drug offenders. A fourth, to set up a school voucher system in California, qualified Tuesday.
Proponents of a fifth initiative -- reducing the vote requirement for approval of local school bonds -- have submitted signatures to the secretary of state's office to qualify their proposals for the November statewide election.
The tax measure that qualified Tuesday would affect few if any existing fees, according to both proponents and opponents. Fees paid by doctors, architects, contractors and other professionals to state boards that oversee professional conduct are considered regulatory and therefore would not be affected.
Backers of the proposal include alcohol, tobacco and oil companies -- considered the most likely target of such fees -- as well as a coalition including the state Chamber of Commerce, the California Taxpayers Association and the California Manufacturers and Technology Association.
Local governments are expected to oppose the measure, joined by environmental groups and others.
The Supreme Court case stemmed from a bill passed by the Legislature in 1991 imposing a fee on manufacturers of products containing lead. The money was raised for a program to test children for lead poisoning.
The Sinclair Paint Co. later brought a legal challenge against the program claiming the fees constituted a tax, and therefore required a two-thirds vote of the Legislature under Proposition 13. The matter ended up before the state Supreme Court, which ruled against the company in 1997.
In a unanimous decision, the court said the fees were regulatory in nature -- and therefore not taxes subject to Proposition 13's two-thirds vote requirement -- because they were designed "to mitigate the actual or anticipated adverse effects of the fee payers' operations."
As an example, the court's ruling meant that a city council could impose by a simple majority a fee on liquor licenses to help pay for police protection in high-crime areas around liquor stores, said proponents.
Proponents of the initiative say the ruling subjects businesses to a wide variety of fees that may or may not be related to the regulation of their given industry.
"The language of the decision itself is the most distressing part of the whole threat," Larry McCarthy, president of California Taxpayers Association, said Tuesday. "It is so broad that it would allow governmental agencies at all levels to impose a fee on basically any product."
McCarthy said the coalition behind the initiative supports the idea of screening children for lead poisoning, and other worthy projects, but that such programs should be paid for through taxes, not fees.
"It goes to the whole accountability question," McCarthy said. "If it's a tax, there is an approval mechanism and there is much more focus and more involvement on the part of the greater public.
"When there's a fee, it just slides through the dead of night," he said. "That's not the way we should be underwriting the cost of public services."
However, there has been no widespread use of fees to pay for public services before or since the Supreme Court decision, according to local government officials.
"It's a big solution in search of a problem," said Pat Leary of the California State Association of Counties. Not a single county has imposed the type of fee in question, she said, yet would be subject to the new restrictions.
"From our initial look at this, we raised concerns that the way it was written was so broad that you couldn't charge a higher price for parking in the hourly lot at the airport than parking in the remote lot," she said Tuesday.
Dwight Stenbakken, director of legislation for the League of California Cities, agreed the initiative "really curbs our fee authority."
"There really isn't a problem out there now," he said. "The concern of the business community is what might happen. They see us putting fees on different products and using it for some related or unrelated program."
While that hasn't happened, it may if there is an economic downturn, suggested Gavin McHugh, senior vice president of the California Chamber of Commerce.
"With the economy doing so well, state and local government coffers are flush with funds," he said. "I think if there was a slowdown in the economy, at the time we could least afford it you could see these types of proposals blossom all over the state."
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