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Initiative Update:
California Forward Plan to Prohibit Tax Reductions Qualifies for November Ballot

A measure submitted by California Forward that would effectively ban tax reductions has qualified for the November ballot, the secretary of state announced June 26. The measure has attracted widespread opposition for many different policy reasons.

The initiative would prohibit the Legislature from reducing revenue by more than $25 million, or spending more than $25 million, unless a tax or other type of charge is increased or other program funding is reduced to offset the change. This initiative applies to all legislation, including the state budget. To determine whether a revenue reduction or new expense met the $25 million threshold, state finance officials would use static estimates, which are notoriously flawed.

CalTax opposes this measure because it would effectively prohibit legislation that enacts an overall net tax reduction. CalTax has stated that while there are positive reforms in this proposal, a more thoughtful approach should be considered when making major reforms, but when voters are faced with a mix of good reforms and harmful tax policies that must be considered as a unit, an initiative should be rejected.

In other initiative news:

Democrats Planning to Remove Water Bond From November Ballot. In addition to approving legislation to move Governor Jerry Brown's tax increase initiative above all the other initiatives on the November ballot, Democrats in the Legislature reportedly are planning to next week remove the water bond from the ballot to ensure that the governor's initiative will be the first item that voters see.

The $11 billion water bond was placed on the ballot by the Legislature in 2009 as part of a bipartisan deal. It originally was scheduled to appear on the 2010 ballot, but the Legislature subsequently postponed it until 2012. AB 1503 (Perea) and AB 1422 (Perea) would postpone the election until 2014.

Mark Hedlund, a spokesman for Senate President Pro Tem Darrell Steinberg, said "it would probably be the wisest move" to not put the bond on the ballot this year, and added that the Senate leader's preference "would have been to try to get the parties together to reduce the size of the bond, but those discussions are still ongoing." (Source: Los Angeles Times PolitiCal blog, June 26.)

June 29, 2012
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