Palo Alto is gearing up for a battle towards a 2024 poll initiative that may make it more durable for the state and native municipalities to lift taxes and charges and that might successfully overturn the 2 income measures that metropolis voters accredited simply final November.
Often called the Taxpayer Protection and Government Accountability Act, the measure is being spearheaded by the California Enterprise Roundtable, a enterprise advocacy group. If accredited by voters in November 2024, it could increase the bar for passage of recent taxes at each the state and native ranges and broaden the definition of taxes to incorporate revenues which can be at the moment categorised as charges and, as such, should not topic to legislative or voter approval.
State lawmakers trying to go a brand new tax would wish to get two-thirds approval in every home of the Laws and a majority vote from the statewide citizens. Proposals to enact taxes would equally have to get a council supermajority adopted by a vote from the citizens.
Advocates for the brand new measure argue that it could add transparency to guard Californians from rising cost-of-living prices. The textual content of the measure states that the proposed regulation intends to reassert the voter’s intention that “all charges and different costs are handed or rejected by the voters themselves or a authorities physique elected by voters and never unelected and unaccountable bureaucrats.”
The measure additionally goals to “be certain that taxpayers have the fitting and skill to successfully steadiness new or elevated taxes and different costs with the quickly rising prices Californians are already paying for housing, meals, childcare, gasoline, vitality, well being care, schooling and different primary prices of dwelling.”
However for native and state officers, the proposal from the enterprise group threatens fiscal uncertainty. At a May 5 public hearing on the proposed metropolis price range, Palo Alto Metropolis Supervisor Ed Shikada advised the Metropolis Council’s Finance Committee that the poll measure might have a “important affect on our funds, ought to it proceed.”
That is as a result of the measure applies retroactively to all income measures handed after Jan. 1, 2022. It might thus embrace the two measures that Palo Alto voters approved last November: Measure Okay, which established a enterprise tax, and Measure L, which reaffirmed the town’s historic apply of transferring funds from the fuel utility to the final fund to pay for primary companies.
The measure states that any tax adopted after January 2022 and that fails to satisfy the necessities of the initiative could be deemed void 12 months after the act’s efficient date until the tax is reenacted in compliance with the brand new measure. These embrace a clearly acknowledged length for the tax and an announcement for the way the revenues could be used.
The measure would retain the present system through which particular taxes (these which can be directed for a selected goal) require two-thirds vote and normal taxes (those who give lawmakers broad discretion on how you can spend the revenues) want a easy majority. Nevertheless, those who fall within the latter camp would now want to incorporate a phrase stating that the revenues are for “normal authorities use.”
Palo Alto’s new enterprise tax, whereas a normal tax, included guidelines directing that the cash could be spent on public security, reasonably priced housing and security at rail crossings. These tips, nonetheless, are advisory and never legally binding. If the poll initiative passes, Measure Okay would turn into legally doubtful as a result of the 2024 measure would, amongst different issues, explicitly prohibit advisory measures that point out that “the income from the final tax will, might, or must be used for a selected goal.”
In a report back to the council final month, employees from the Administrative Companies Division wrote that they imagine the 2 measures adjust to the necessities of the initiative. But when the measure passes, Measures Okay and L, “like many different native tax measures throughout the State, are topic to extra, surprising scrutiny regardless of voter-approval.”
Assistant Metropolis Supervisor Kiely Nostril indicated throughout the Might 5 assembly of the Finance Committee that the measure would name into query not simply the 2 current measures however the metropolis’s whole course of for setting charges and repair costs.
“It might affect probably every part from neighborhood companies, growth heart costs for permits to affect charges and our two new revenues which can be crucial to sustaining the present stability,” Nostril mentioned.
The council formally adopted its place on the measure final month, when it voted 6-1, with Council member Greg Tanaka dissenting, to approve a decision committing itself to opposition. The measure, in accordance with the decision, “places billions of {dollars} throughout the state at the moment devoted to native companies in danger and will power cuts to fireplace and emergency response, regulation enforcement, public well being, parks, libraries, reasonably priced housing, companies to assist homeless residents, psychological well being companies, and extra.” The decision additionally states that the measure would considerably “limit the Metropolis’s flexibility to get well value for particular companies and lift income for Metropolis companies, initiatives and recognized unfunded wants.”
Palo Alto is hardly alone in elevating alarms in regards to the looming measure. Final yr, because the measure was choosing up signatures, a coalition of unions and authorities organizations, together with the League of California Cities, California Skilled Firefighters, SEIU California, California Alliance for Jobs, AFSCME California and the California Particular Districts Affiliation introduced their sturdy opposition to the measure. Dozens of cities, together with San Jose and Sunnyvale, have additionally taken formal positions towards the measure.
“This far-reaching measure would considerably jeopardize cities’ capability to supply companies and significant infrastructure to native residents,” Carolyn Coleman, government director and CEO of League of California Cities, mentioned in an announcement. “It might impose undemocratic restrictions on native voters and native governments that might power important cuts to important companies like fireplace and emergency response, infrastructure, libraries, parks, sanitation, and extra.”
An analysis by the state Legislative Analyst’s Workplace concluded that by increasing the definition of a tax and rising vote necessities for approving taxes, the measure would make it more durable for state lawmakers to extend practically all kinds of state revenues. And the brand new requirement for legislative approval of recent charges, a few of that are at the moment accredited via an administrative course of, might end in decrease price revenues.
“That decrease income could possibly be partially notable for some state applications largely funded by charges,” legislative analyst Gabriel Petek wrote in his assessment.
He additionally concluded that the measure might result in decrease tax and price revenues for native governments, which face higher restrictions than the state with regards to elevating revenues.
“By increasing the definition of taxes and proscribing administrative adjustments to charges, the measure would make it considerably more durable for native governments to lift income,” Petek wrote. “Consequently, future native tax and price income could possibly be decrease than they might be in any other case.”
Council member Pat Burt, who chairs the Finance Committee, mentioned throughout the Might 5 price range dialogue that as a result of the impacts on native companies could be pretty common to all California cities, he has “modest religion” that voters will point out that they care about preserving these companies.
“That is the factor they’re most attuned to, however no one is aware of what would be the end result,” Burt mentioned.
Tanaka, who had persistently opposed the enterprise tax, was the one council member who declined to take a place on the proposed measure. Throughout the April dialogue, he echoed the place of the California Enterprise Roundtable that the measure would supply safety to voters at a time when prices of dwelling are on the rise.
“With the price of dwelling skyrocketing, I believe voters deserve the fitting to vote on all new taxes … particularly in today of excessive inflation,” Tanaka mentioned.
