In the Aug. 12 issue of Capitol Weekly, Bill Magavern rained down brimstone on Proposition 26, the November ballot measure that would bring to a halt the trend of politicians disguising taxes as “fees” to avoid voter-mandated legislative approval rules.
Mr. Magavern asked a perfectly reasonable question – who pays to clean up pollution? Trouble is, since Proposition 26 does not change the answer to that question, he needed to conjure up phantoms to spook readers with fears of toothless regulators and polluters run amok.
The facts of Proposition 26 are not complicated:
- No existing environmental regulatory law is changed by this measure. Every fee, fine, penalty, program, and mandate currently in the law is left unhindered.
- Fees to support oil spill response and clean-up programs would remain in place, as would fee-supported programs to regulate hazardous waste disposal, air pollution programs and water quality enforcement. Fees could be increased along with the growth of the regulated industries.
- Enforcement of professional standards and consumer protection like policing doctors, building contractors and lawyers would likewise remain unmolested.
- Cities and counties would be free to charge builders mitigation fees to ensure that schools, fire stations and parks would be developed along with needed housing and commercial projects.
The principle behind Proposition 26 is quite simple: a fee or charge for a legitimate regulatory purpose or government-provided benefit can and should be approved by a majority vote of the state or local legislative body. But a tax masquerading as a fee should be unmasked and required to meet the vote threshold for a tax: a two-thirds vote of the Legislature or voter approval for a local tax.
What makes a fee a hidden tax? When the fee payer subsidizes a general governmental purpose that is disconnected from its product or activity. For example, a fee on liquor stores to help pay for enforcement of its license, such as drinking age violations, is appropriate. A fee on liquor stores to pay for general health care or law enforcement services – under the theory that some of these services respond to incidents or conditions caused by alcohol abuse – is utterly inappropriate because no direct connection can be made between that store’s products and the government-provided general services. Without this direct connection, the charge is not a fee – it is a tax, and requires the appropriate legislative or voter approval.
The same analysis applies to environmental regulation. It is altogether appropriate and necessary to assess fees to help finance regulatory and enforcement programs that enforce pollution laws. But it is cheating these businesses to make them pay for government programs that provide environmental benefits that are disconnected from the facilities or products regulated, such as charging a small factory in El Monte a “pollution fee” to help subsidize the purchase of a hybrid vehicle for a Santa Monica film producer. Or charging a farmer a fee on his or her chemicals and fertilizers to pay for “integrated pest management programs” at schools.
If these new environmental and health programs are important enough for the general good of the state, then the Legislature should pay for them with general revenues, and not burden individual businesses or farmers because they are easy targets because Mr. Magavern and his allies have demonized them.