What's so wrong about voter approval to raise taxes?

Contact: Ron Roach (916) 441-0490

INSIDE TAXES COMMENTARY -- October 1, 1996

What's so wrong about voter approval to raise taxes?

By Larry McCarthy

Too many taxes are masquerading as fees, escaping the ballot box scrutiny of California citizens who are paying them.

State and local fees and assessments are the fastest growing component of California's tax burden, increasing by $1.7 billion in 1992-93 alone.

Now voters have an opportunity to weigh in on the issue: Proposition 218 on the November 5 general election ballot.

This initiative deserves support, and here is why:

Equal treatment of all taxpayers. Perhaps the most important provision of 218 is that it grants all taxpayers, including those who live in charter cities, the right to vote on new or increased taxes.

Proposition 62, a voter-approved initiative reinstated by the state Supreme Court last year, attempts to treat residents of charter and general law cities alike, but this was a statutory initiative and there is a legal debate over whether its vote requirements apply to charter cities. Proposition 218 is a constitutional amendment, which would cut through mounds of litigation.

Growth in benefit assessments. Since Proposition 13 reduced property taxes in 1978, benefit assessments have grown dramatically. City-levied assessments rose almost ten-fold as of 1992-93. Non-enterprise special districts have increased assessments over 4,000% -- more than 40 times the level before Proposition 13.

Assessments are a de facto split roll, whereby one class of taxpayer is assessed a higher tax than another. Many benefit assessments levy disproportionate burdens on business taxpayers, presumably to entice more support from local homeowners.

Assessments are being overused. Traditionally, benefit assessments were used to pay for physical improvements that enhance property value, such as roads, sewers, sidewalks and street lights. These kinds of assessments should be allowed. However, in recent times, assessment laws have broadened to allow financing of services that appear to have no direct benefit to property.

In some cases, the whole philosophy of benefit assessments has been turned on its head, and assessments are now used for such general government services as emergency services, flood control, parks, habitat for endangered species, open space acquisition, school landscaping and beach cleanup. Including emergency police and fire response, these are general government services and are appropriately financed by taxes, not benefit assessments.

Proposition 218, which is called "The Right to Vote on Taxes Act" by its sponsors, will provide taxpayers clear protections, reiterating existing law in ways intended to erase all doubt about how far a government can reach into taxpayers' pockets. It will apply needed brakes to the end-run practice of disguising taxes as fees to avoid existing requirements for voter approval.

Taxes disguised as fees have mushroomed all over California in the wake of Proposition 13, the 1978 initiative that reduced property taxes and restricted their growth.

In the final analysis, voters should ask themselves: What's wrong with voters deciding whether to raise taxes?

What's wrong with requiring policymakers to justify their budget decisions and convince the electorate to dig deeper for more tax dollars?

The hunch here is those who budget existing revenues wisely will have less difficulty winning voter approval for the taxes they need to operate their cities and counties.