California Proposition 26, Supermajority Vote to Pass New Taxes and Fees (2010)
Proposition 26 requires a two-thirds supermajority vote in the California State Legislature to pass many fees, levies, charges and tax revenue allocations that under the state's previous rules could be enacted by a simple majority vote. Supporters of Proposition 26 called it the Stop Hidden Taxes initiative, saying that fees, levies, and so on imposed by the California government amount to taxes, and should therefore require the same supermajority vote required to enact income or sales tax increases.
According to Allan Zaremberg, president of the California Chamber of Commerce, "The Stop Hidden Taxes initiative will prohibit politicians from using a loophole to raise even more taxes by disguising them as fees. Right now, elected officials at the state and local level pass higher taxes by labeling taxes as “fees” so they can pass or increase them with a 50% vote instead of the two-thirds required by law – and in the case of many local taxes, enact them without a public vote. We need the Stop Hidden Taxes initiative to close this loophole. Higher taxes and fees make it more difficult for businesses to stay in California – the very businesses that employ Californians, create jobs and generate revenue for our state. Increasing employment and growing the economy are crucial to California’s recovery."
Proposition 26 is somewhat similar to Proposition 37 (2000), which was narrowly defeated.
- See also: 2010 ballot measure election results
|Proposition 26 (Supermajority Vote for Taxes and Fees)|
- These are the final results for this election as per the California Secretary of State's statement of election results.
Impact on AB 32
In the aftermath of the victory of Proposition 26, supporters of AB 32, the "Global Warming Solutions Act of 2006" expressed concern that even though Proposition 23, an attempt to suspend implementation of AB 32 was defeated on November 2, the fact that Proposition 26 was enacted may spell trouble for the state's ability to impose environmental fees.
According to a story in the New York Times on December 2:
- "Many environmental groups fear Prop 26, once it kicks in next year, will be used to attack all manner of environmental fees, including those to be implemented under the state's climate change law (A.B. 32) that limits greenhouse gas emissions starting in 2012."
Seismic Safety Commission
The California Legislative Analyst's Office determined in early 2012 that a method proposed by Jerry Brown for funding the state's Seismic Safely Commission is unconstitutional under the provisions of Proposition 26.
The Seismic Safety Commission was created in 1975 and has an annual budget of about $1.3 million. It has been funded by a fee charged to insurance companies. That fee expired on July 1, 2012. Brown proposed to extend it. However, the LAO said that under the provisions of Proposition 26, that fee would be considered a tax and would have to be approved by a 2/3rds supermajority vote of the California State Legislature. Furthermore, according to the LAO's analysis, a separate provision in the California Constitution says that any taxes levied on insurance companies in the state must be rolled together into one special insurance tax and cannot be assessed on a piecemeal basis, even if the state legislature does have the votes to pass a new tax on insurance companies.
Ballot title and summary
- Requires that certain state fees be approved by two-thirds vote of Legislature and certain local fees be approved by two-thirds of voters.
- Increases legislative vote requirement to two-thirds for certain tax measures, including those that do not result in a net increase in revenue, currently subject to majority vote.
Estimated fiscal impact:
- Decreased state and local government revenues and spending due to the higher approval requirements for new revenues. The amount of the decrease would depend on future decisions by governing bodies and voters, but over time could total up to billions of dollars annually.
- Additional state fiscal effects from repealing recent fee and tax laws: (1) increased transportation program spending and increased General Fund costs of $1 billion annually, and (2) unknown potential decrease in state revenues.
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Proposition 26 amended these parts of the state's constitution:
Other notable supporters include:
- Americans for Tax Reform
- California Taxpayers Association
- Howard Jarvis Taxpayers Association
- The Wine Institute
Arguments were submitted to the official California Voter Guide on behalf of a "yes" vote on Proposition 26, as were rebuttals to the arguments provided by Prop 26 opponents. The signers of these arguments were:
- Teresa Casazza, president, California Taxpayers' Association
- Allan Zaremberg, president, California Chamber of Commerce
- Joel Fox, president, Small Business Action Committee
- John Dunlap, former chairman, California Air Resources Board
- Manuel Cunha, Jr., president, Nisei Farmers League
- Julian Canete, chairman, California Hispanic Chamber of Commerce
Arguments in favor
Some of the arguments that have been made for a "yes" vote on Proposition 26 include:
- Susan Shafer, a spokeswoman for the "Stop Hidden Taxes" campaign, says, "Legislators have been using the loophole of only needing 50 percent to pass a fee, but what we’re saying is that they should have a two-thirds vote, because what they are really passing are taxes, not fees."
- Teresa Casazza, president of the California Taxpayers Association, says, "Instead of using gimmicks to pass or increase hidden taxes on products and services that Californians use every day, legislators will need a two-thirds vote as required by our state Constitution."
- In order to get around the requirement in the California Constitution that new taxes can't be approved without a supermajority vote, politicians use the loophole of calling the new taxes "fees", which they then pass with a simple majority vote. This loophole should be closed. If it isn't, politicians will use this loophole to impose as much as $10 billion in new taxes.
- Some of the items that politicians are preparing to impose fees (or hidden taxes) on include food, gas, toys, water, cell phones, electricity, insurance, beverages, emergency services and entertainment.
- Main article: Donations to California's 2010 ballot propositions
The main committee opposing Proposition 25 was called "Stop Hidden Taxes -- No on 25 / Yes on 26, a Coalition of Taxpayers, Employers, Small Businesses, Environmental Experts, Good Government Groups, Minorities, Farmers and Vineyards." Because the main "No on 25" campaign committee was simultaneously the main "Yes on 26" committee, it is not possible to say how much of this campaign committee's finances were directed at urging a "no" vote on Prop 25 versus urging a "Yes" vote on Prop 26.
According to a Maplight analysis, a total of $17,753,067, including large and small donations, was given to "Stop Hidden Taxes" through November 5, 2010.
|California Chamber of Commerce||$3,395,000|
|American Beverage Association||$2,450,000|
|Small Business Action Committee||$1,430,000|
|Howard Jarvis Taxpayers Association||$431,948|
|California Association of Realtors||$200,000|
|New Majority California||$200,000|
|California Beer & Beverage Distributors||$100,000|
Sources: Election Track
Political consultants who provided paid services to the "Yes on 26" campaign included:
- Apex Strategies: $67,500
- Goddard Clausen Strategic Advocacy: $158,750
- Lombardo Consulting: $55,000
- Meredian Pacific: $75,000
- National Petition Management: $2,341,023
- Nielsen, Merksamer, Parrinello, Mueller & Naylor: $343,025
- Voter/Consumer Research: $115,100
- Wendy Warfield & Associates: $55,500
The California Tax Reform Association is one of "an array of good-government and environmental groups, who see the latest proposal as simply a vast corporate loophole. They angrily contend that companies cloak themselves as the defenders of jobs and fairness, when in fact they are gaming the system to maximize profits."
Health Access California opposes Proposition 26, saying, "The worst measure on the ballot is Proposition 26, which protects polluters and other corporations from having to pay for the health, environmental, and other damage they cause."
The arguments against Proposition 26 in the state's official Voter Guide, and the rebuttal to the arguments by Proposition 26 supporters, were written by:
- Janis R. Hirohama, president, League of Women Voters of California
- Jane Warner, president, American Lung Association in California
- Bill Magavern, director, Sierra Club California
- Ron Cottingham, president, Peace Officers Research Association of California
- Warner Chabot, Chief Executive Officer, California League of Conservation Voters
- Patty Velez, president, California Association of Professional Scientists
Others who are opposed to the Proposition include:
- American Cancer Society
- American Lung Association in California
- California Association of Professional Scientists
- California Center for Public Health Advocacy,
- California Nurses Association,
- Dr. Richard Jackson, Professor at UCLA School of Public
- Get The Lead Out Coalition,
- Marin Institute,
- Physicians for Social Responsibility,
- Prevention Institute,
- Public Health Institute,
- Public Health Law and Policy,
- Regional Asthma Management and Prevention,
- Union of Concerned Scientists,
- Asian Pacific Environmental Network
- Bay Localize
- California League of Conservation Voters
- Californians Against Waste
- California Coast Keeper Alliance
- California Conference of Directors of Environmental Health
- Center for Environmental Health
- Central Valley Air Quality (CVAQ)
- Communities for a Better Environment
- Defenders of Wildlife
- Endangered Habitats League
- Environmental Defense Fund
- Forests Forever
- League to Save Lake Tahoe
- Natural Resources Defense Council
- Planning and Conservation League
- Sierra Club California
- Water Replenishment District of Southern California
- Alliance of Californians for Community Empowerment (ACCE)
- California Alliance of Retired Americans
- California Common Cause
- California Council of Churches IMPACT
- California Democratic Party
- California Green Party
- California Interfaith Power & Light
- California NOW
- California Young Democrats
- Coalition on Regional Equity
- Ella Baker Center for Human Rights
- Equality California
- Friends Committee on Legislation of California
- Greenlining Institute
- Latino Voters League
- League of Women Voters of California
- Los Angeles County Democratic Party
- Peace and Freedom Party
- San Francisco Human Services Network
- California Association of Highway Patrolmen
- California Professional Firefighters
- California Statewide Law Enforcement Association
- CDF Firefighters
- Peace Officers Research Association of California
- California Labor Federation, AFL-CIO
- California State Council SEIU
- Professional Engineers in California Government
- State Building & Construction Trades Council of California
- California Faculty Association
- California Federation of Teachers
- California School Employees Association
- California State-Los Angeles Federal Credit Union
- California Teacher Association
- Faculty Association of California Community Colleges
- Consumer Federation of California
- Consumers for Auto Reliability and Safety
- TURN-The Utility Reform Network
- Alameda County Public Health Commission
- California Special Districts Association
- City of San Rafael
- California League of Cities
- California Coastal Commission, which has produced a discussion paper on Proposition 26
- California State Association of Counties
- County of Yolo
- Madera County Board of Supervisors
- Marin County Board of Supervisors
- Regional Council of Rural Counties
- Sacramento County Board of Supervisors
- San Francisco County Board of Supervisors
- South Bay Cities Council of Governments
Some of the arguments that have been made for a "no" vote on Proposition 26 include:
- Proposition 26 should be called the "Polluter Protection Act" because it will make it harder to impose fees on corporations that cause environmental or public health problems. For example, it would be harder to impose so-called "pollution fees" on polluting corporations because it will take a higher vote to pass such fees than is currently needed.
- If local governments are required to hold an election every time they want to impose a new fee, Proposition 26 will end up "harm[ing] local public safety and health, by requiring expensive litigation and endless elections."
By the time the November 2 election was over, 9 different campaign committees had filed in opposition to Proposition 26. Of the 9, only 3 were exclusively devoted to campaigning against Proposition 26. The other 6 campaign committees all mentioned Proposition 23 in the list of propositions they were opposed to. Due to the nature of these combined committees, it is impossible to say with exactitude how much of the money that is contributed to a combination committee was spent on a specific proposition. Proposition 23 attracted very significant opposition donations and it is likely that a majority of the money contributed to combined committees registered against both 23 and 26 was spent fighting Proposition 23, rather than Proposition 26, although this cannot be established with precision.
The names of the 9 campaign committees registered in opposition to Proposition 26 were:
- Taxpayers Against Protecting Polluters No on Proposition 26
- Marin Institute Charge for Harm No on Prop 26 Committee
- No on 26, Teachers, Police Officers and Other Public and Private Employee Groups Protecting Taxpayers
- California Alliance Action Fund; A Committee Sponsored by Social Justice Organizations for Proposition 24, 25 and Against Propositions 23, 26
- Communities Against Proposition 23 and 26, Sponsored by Ella Baker Center for Human Rights
- Ballot Initiative Strategy Center - CA Opposed to Prop 23 and Prop 26
- Environmental Defense Action Fund Say No to Prop 23 and 26 Committee
- Californians for Clean Air and Clean Energy Jobs, No on 23, No on 26, A Project of California League of Conservation Voters
- Clean Energy and Good Jobs Mobilization Committee - No on 23 and 26
Through November 30, 2010, these donations of $75,000 or over went to any of the 9 campaign committees registered against Proposition 26. Adding the total of these figures results in a higher total campaign contribution figure than was actually received by the total of the 9 committees because several of the committees made contributions to the other committees.
After adjusting for committees donating to other committees, Maplight records the total spent against Proposition 26 as of November 5, 2010 as $6,593,639.
|League of Conservation Voters||$1,655,000|
|Californians for Clean Energy||$1,450,000|
|Democratic State Central Committee||$1,345,056|
|Californians for Clean Air, No on Prop 23||$900,000|
|No on 23, Stop the Dirty Energy Proposition||$625,000|
|California Teachers Association||$504,240|
|L. John Doerr||$500,000|
|Clean Energy and Good Jobs||$446,000|
|Natural Resources Defense Council||$390,000|
|SCOPE State Alliance||$325,000|
|Ballot Initiative Strategy Center||$302,000|
|America and California Federations of Teachers||$255,000|
|Brook and Shawn Byers||$200,000|
|California Public Securities Association||$150,000|
|State Building and Construction Trades Council||$150,000|
|Taxpayers Against Protecting Polluters||$150,000|
|Environmental Defense Action Fund||$150,000|
|California School Employees Association||$80,000|
|National Education Association||$75,000|
Political consultants who provided paid services to the "No on 26" campaign included:
- David Binder Research: $60,700
- Lenny Goldberg: $30,000
- Grassroots LAB: $15,000
- Next Generation: $22,500
- Olson, Hagel & Fishburn: $6,240
|Taxes on the ballot in 2010|
"Yes on 26"
- Orange County Register: "This proposition accomplishes needed reforms to restrain tax-grabbing politicians who want taxpayers to bail them out for poorly managed budgets and long histories of overspending."
- Long Beach Press-Telegram: "Owners of small businesses know what it's like to get saddled with "fees" that are no more than gimmicks to funnel money into political purposes, at the expense of businesses, consumers and taxpayers. Henceforth, those "fees" would take a two-thirds majority vote by the Legislature or, at the local level, by public vote."
"No on 26"
- Bakersfield Californian: "the prospect of requiring a two-thirds vote to approve even the most routine and reasonable fees -- quite possibly in an endless parade of special elections -- is burdensome and stifling. Proposition 26 would set off a bureaucratic nightmare and bring local governments to their knees."
- Contra Costa Times: "Many of the fees and charges that would become taxes under Proposition 26 are those imposed to deal with health, environmental or other societal concerns. For example, the state imposes a regulatory fee on oil manufacturers to pay for local oil-collection programs, recycling and inspections of used-oil recycling facilities. Proposition 26 goes too far in fiscally handcuffing local and state governments." 
- Fresno Bee: "passage of Proposition 26 could result in a two-thirds vote requirement for fees that benefit the public broadly. Examples include hazardous material fees that go to clean up toxic waste sites or promote pollution prevention, and municipal fees on alcohol retailers that go to code enforcement."
- Lompoc Record: "Proponents insist passage of Proposition 26 would keep politicians from enacting hidden taxes, but what it really does is shift the burden of paying for environmental degradation from big business to individual taxpayers."
- Los Angeles Daily News: "In theory, it's a fabulous idea: If fees are as difficult to pass as taxes maybe city and county and state officials would stop raising every fee known to man. In practicality, it will stop the legitimate fees such as those charged of private companies when they impact city services - services individual Angelenos must pay for. Is it right that our property taxes alone pay for the public safety response to Staples Center events? Yes, we know that governments have abused and misused fees. We know that government has gotten especially creative with new revenue-raising schemes to back-fill their general funds. We expect this will not stop them from dreaming up new ways to get around Proposition 26."
- Los Angeles Times: "Proposition 26 goes much too far, making it extremely difficult to charge businesses for the damage they cause and instead sending the bill to everybody else."
- Modesto Bee: "this initiative, like Proposition 25, is not a product of deliberation involving multiple stakeholders. It is a partisan power play." 
- Sacramento Bee: "If Proposition 26 were to pass, it would be harder to assess certain industries for the costs they pass onto society through pollution, public inebriation and other harmful side effects. Not surprisingly, Proposition 26 is supported by industries that sell alcohol or produce pollution and want to limit their exposure to new fees."
- San Bernardino Sun: "Proposition 26 would only worsen the gridlock in Sacramento."
- San Diego Union-Tribune: "...with a $19 billion budget deficit, now is not the time for voters to stand on principle and pass a proposition that is likely to cut billions in revenue."
- San Gabriel Valley Tribune: "We don't want to see liquor, tobacco and oil companies get a break, not when taxpayers are suffering under an already heavy tax burden. That's why Proposition 26 should be defeated. The measure should be called the gang-up-on-the-taxpayers initiative."
- San Jose Mercury News: "Companies that deal with hazardous waste, for instance, pay a fee that helps fund the cleanup of toxic sites. Under Proposition 26, the introduction of new programs or the expansion of existing ones like this would face an impossible hurdle in a two-thirds vote."
- Santa Rosa Press Democrat: "So what would be worse than a $19 billion state budget deficit? A $20 billion budget deficit. Pardon the sophomoric humor, but an extra $1 billion in red ink is among the consequences if voters approve Proposition 26 on the Nov. 2 ballot."
- Ventura County Star: "the initiative affects fees paid by chemical companies to help cover the costs for public agencies to respond to chemical accidents.Some industries chafe at such fees, which they claim are actually taxes. Proposition 26 would officially define them as taxes, not fees, and would demand a two-thirds legislative vote to impose them instead of the simple majority vote now required. However, that argument has had its day in court, and lost. In 1997, the California Supreme Court ruled — in a case involving a maker of lead-based paint — that such majority-vote fees are permissible, and aren’t taxes, because they raise revenue to deal with the effects of a particular industry."
Path to the ballot
- See also: California signature requirements
Supporters of the proposal turned in 1.1 million signatures to election officials on May 7, 2010. Election officials had until June 24 to inspect the signatures and announce a decision about whether the measure qualified for the state's November 2 ballot. The initiative was the 8th initiative intended for the November ballot to have signatures filed on its behalf.
Seven versions of the proposal were filed, but signatures were only collected on one version, 09-0093.
- On December 7, 2009, Thomas W. Hiltachk filed a request with the Office of the California Attorney General for an official ballot title on an act that he is calling the ""Taxpayer Protection Act of 2010."
- An earlier version was filed by Jon Coupal on behalf of the Howard Jarvis Taxpayers Association on November 20, 2009.
- Josiah Keene filed version 09-0092 on November 23, 2009 and version 09-0100 on December 21, 2009.
- Allan Zaremberg filed version 09-0093 on November 23, 2009.
- Official voter guide for Proposition 26
- Letter to Attorney General requesting ballot title (09-0093)
- Text of proposed law
- Ballot title, summary and analysis in the California Voter Guide
- Arguments and rebuttals in the California Voter Guide
- League of Women Voters overview of Proposition 26
- California Voter Foundation guide to Proposition 26
- Institute of Governmental Studies overview of Proposition 26
- See also: 2010 ballot measure campaign websites
- No More Hidden Taxes
- Stop Hidden Taxes on Facebook
- Stop Hidden Taxes on Twitter
- Campaign finance reports for Californians Against Higher Taxes, Yes on 26
- Campaign finance reports for "Stop Hidden Taxes, No on 25, Yes on 26
- See also: 2010 ballot measure campaign websites
- No on Proposition 26
- Stop Prop 26 on Twitter
- Campaign finance reports for Taxpayers Against Protecting Polluters, No on Proposition 26
- Legislative Analyst Says Prop 26 Increases Budget Deficit By $1 Billion
- Ballot Watch: Propositions 25 and 26
- ↑ Associated Press, "Anti-tax initiative qualifies for November ballot", June 24, 2010
- ↑ 2.0 2.1 San Francisco Chronicle, "Chamber of Commerce pushes anti-tax initiative", April 15, 2010
- ↑ No More Hidden Taxes, "Stop Hidden Taxes Turns in More than 1.1 Million Signatures to Qualify Ballot Initiative for November 2010 Election", May 7, 2010
- ↑ 4.0 4.1 New York Times, "Is It a Water-Rights Fee or a Backdoor Tax? Calif.'s High Court Will Decide", December 2, 2010
- ↑ 5.0 5.1 Huffington Post, "California Seismic Safety Commission May Lose Funding", April 7, 2012
- ↑ List of organizations endorsing the "Stop Hidden Taxes" initiative
- ↑ 7.0 7.1 7.2 7.3 7.4 7.5 Arguments for and against Proposition 26 in the California Voter Guide
- ↑ 8.0 8.1 Capitol Weekly, "Fight of the majorities: simple vs. two-thirds", June 3, 2010
- ↑ Donations of $5,000 or more to the "No on 25" campaign committee
- ↑ Maplight, "California Proposition Contribution Totals", November 5, 2010
- ↑ 11.0 11.1 Capitol Weekly, Fight of the majorities: simple vs. two-thirds By John Howard | 06/03/10 12:00 AM PST
- ↑ California Progress Report, "Backing Ballot Measures On The Budget", July 20, 2010
- ↑ Maplight, "California Proposition 26 - Campaign Contributions - Nov. 2010", November 4, 2010
- ↑ Orange County Register, "Calling fees what they are: Taxes", September 22, 2010
- ↑ Long Beach Press-Telegram, "Yes on Proposition 26", October 11, 2010
- ↑ The Bakersfield Californian, "Make Legislature fix it: No on Props. 25, 26", October 4, 2010
- ↑ The Contra Costa Times, "No on proposition 26: Measure would make it too difficult for governments to raise revenues", September 13, 2010
- ↑ The Fresno Bee, "Vote no on Props 25 and 26", October 1, 2010
- ↑ Lompoc Record, "Confronting the need for majority rule", October 5, 2010
- ↑ Los Angeles Daily News, "Power plays: Propositions 25 and 26 - they're both bad policy dressed up as reform", September 26, 2010
- ↑ Los Angeles Times, "Yes, and no", September 30, 2010
- ↑ The Modesto Bee, "Vote no on Props 25 and 26", September 30, 2010
- ↑ Sacramento Bee, "No on Props. 26 and 26 - partisan power plays", September 27, 2010
- ↑ San Bernardino Sun, "Bad policies posing as reform", October 14, 2010
- ↑ San Diego Union-Tribune, "Pragmatism dictates rejecting Props. 22, 26", September 22, 2010
- ↑ San Gabriel Valley Tribune, "Our View: No on Proposition 26; keep polluters accountable", October 7, 2010
- ↑ San Jose Mercury News,"One more time, vote no on Proposition 26", October 29, 2010
- ↑ The Santa Rosa Press Democrat, "No on 26: After losing in court, businesses ask voters for shield against fees", September 23rd, 2010
- ↑ The Ventura County Star, "Prop 26 deserves a no vote", September 15, 2010
- ↑ Sacramento Bee, "Measure requiring two-thirds vote to OK fees turns in signatures", May 7, 2010
- ↑ "Yes on Prop 26" campaign expenditures