(The Center Square) – Two tax measures on the Nov. 3 ballot, Propositions 41 and 43, will be decided by California voters. Both are designed to curb new taxes.
According to the Voter Information Guide, published by the California Secretary of State's Office, Prop. 41 would nullify state taxes that take effect on or after Jan. 1, 2026 that have their revenues exempted from state spending limits. In California, that voter-approved state spending limit is called the Gann Limit and was voted into law by voters with Proposition 4 in 1979. That limit applies to the state government and most local governments in California, according to the Legislative Analyst’s Office.
The Gann Limit was imposed to keep per-person government spending under 1978-79 levels, according to the Legislative Analyst’s Office. It requires state and local governments to carry out complex calculations to compare appropriations to the spending limits set by the 1979 measure. If the Legislature or local governments have excess revenues two years in a row that they can’t spend because of the Gann limit, that money has to be split between taxpayer rebates and a state measure that guarantees funding for California’s K-12 public schools and community colleges.
“This commonsense, long overdue reform will finally instill some transparency and accountability in state spending – ensuring Californians get better government services for the taxes we pay,” Pat Fong Kushida, president and CEO of the CalAsian Chamber of Commerce, said in comments supporting the measure. “It provides an independent, public report card for government spending, so government programs work better for everyone.”
Prop. 41 would also require pre-election audits of the programs that would be the recipients of new special taxes, which would also have to be audited periodically after new taxes take effect. While the measure is supported by several organizations, including the California Taxpayers Association, the California Society of Certified Public Accountants and the CalAsian Chamber of Commerce, opponents of the measure said Prop. 41 does not accomplish anything useful and could further strangle California’s already-difficult fiscal system.
“Prop. 41 imposes unnecessary and inflexible audit requirements that voters must pay for,” Megan Finegan, senior executive vice president of 617Media Group, which represents opponents of the measure, wrote to The Center Square in an email this week. “California already has extensive systems for auditing, oversight and accountability. The State Auditor independently investigates waste, fraud, abuse and mismanagement, and state agencies and programs are subject to regular audits and legislative oversight.”
Prop. 43 increases the votes needed to pass ballot measures that establish local special taxes from the current 50% to two-thirds. If the measure passes, it would apply to all local special taxes set to take effect on or after Jan. 1, 2027, according to the Voter Information Guide.
The ballot measure was introduced to close a loophole in the state’s current tax regulations, according to Susan Shelley, vice president of communications at the Howard Jarvis Taxpayers Association.
“The courts decided there’s a loophole if citizens put it on the ballot with signatures,” Shelley said. “So what you’re seeing is government hiding behind citizen groups to raise taxes with this loophole. So we’re closing the loophole, making it harder to raise taxes. Proposition 43 protects taxpayers.”
Prop. 43, which was backed by the Howard Jarvis Taxpayers Association and supported by the California Hispanic Chambers of Commerce, the California Taxpayers Association and other groups, aims to bring the state back in line with Proposition 13, which was approved by California voters in 1978 and limited property taxes to 1% of the property’s assessed value. That 1978 measure also limited property tax increases to 2% a year, according to the National Bureau of Economic Research.
“People were getting thrown out of their homes because they couldn’t afford the property taxes,” Robert Rivinius, president of the Family Business Association of California, told The Center Square on Friday. “Reassessments were going up, particularly in Southern California, very, very fast. Some of the tax rates were up to 3%.”
After Prop. 13 passed, it started eroding with the addition of new laws and regulations, Rivinius said.
“It basically just returns us back to what Prop. 13 had,” Rivinius said. “It takes a two-thirds vote to add any fees or charges at the local level. We want people to vote yes on this so we can go back to the tenets of Prop. 13.”
Opponents of Prop. 43 did not respond to The Center Square for this story. However, in arguments in the Voter Information Guide, groups opposing the measure said passage of Prop. 43 would limit the public’s ability to fund essential local services, make it harder to fund police and fire departments, and make it more difficult to fix roads, fund schools and pay for healthcare.
