The interminable, hyper-partisan battle over California’s budget is seeping out from under the Capitol dome onto the November ballot. Two initiatives, one backed by Democrats to make it easier to pass a state budget through a simple-majority vote, the other supported by corporate interests to make it harder to impose fees, are poised to qualify and face voters.
“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,” said Susan Shafer, a spokeswoman for the Stop Hidden Taxes campaign.
But the debate is shaping up far beyond the state’s finances. For one thing, fee-financed environmental protections and oil-spill mitigation are taking a central role, kept on the front burner by the public’s attention to the Deepwater Horizon spill in the gulf. Environmentalists scuttled a similar measure in 2000.
The simple-majority proposal is backed by teachers, organized labor and public-employee groups, among others, who see the two-thirds budget-vote rule as crippling the state. A number of government reformers also have urged a simple-majority vote for the budget.
Ultimately, the fate of the fee-linked initiative may depend on environmental protections as much as fiscal concerns. Backers of the initiative say it would not disturb fees currently in place and note that it is not retroactive before 2010, but environmentalists remain deeply suspicious.
“That’s because it would make it virtually impossible to make polluters pay to clean up the damage they do,” said Bill Magavern of Sierra Club California. “The effort to avoid responsibility – that’s what’s really behind this initiative.”
Both initiatives could dramatically affect the pocketbooks of average Californians. Both have collected signatures and are waiting for verification from the secretary of state’s office. So far, both are on track to make the ballot. The deadline to qualify is June 24.
The business-backed proposal, similar to Proposition 37 that California voters rejected in 2000, would redefine a number of fees as taxes, thus requiring a two-thirds vote. Critics and supporters alike agree that it could have a profound impact – just how much is unclear – on the amount of money that state and local governments collect.
Proposition 37 arose from a challenge by Sinclair Paints to a law signed by former Republican Gov. Pete Wilson that authorized collection of fees from lead-bearing products for the Childhood Lead Poisoning Prevention Program. The state Supreme Court later unanimously upheld the fee.
“Given the scope of levies that would be subject to the higher approval thresholds, the effect of the measure’s provisions probably would be major,” the Legislative Analyst’s Office said, referring to the latest proposed initiative. Ultimately, “the measure would make it more difficult for state and local governments to enact a broad range of measures that generate revenues,” the LAO added.
There are literally dozens of fees currently in effect or that have been proposed — many are described on the campaign website — that proponents say offer justification of the need for their initiative. Few however, would be affected by the proposed initiative, proponents say, because they were in effect before 2010.
Those include traffic-impact fees paid by developers, emergency care fees, pollution-abatement fees, fees for noise abatement and runway maintenance, road-damage fees, accident fees, chemical hazard fees, health-impact mitigation fees, genetic disease testing fees, cellular telephone service fees, Fish and Game license fees, vehicle-theft program fees, beverage container redemption fees, insecticide abatement fees, hazardous spill fees, fees on alcohol retailers, water-quality impact fees, oil recycling fees, paint-maker fees and many, many more.
Fees are monies paid into funds to help protect the public or provide or expedite public services. Fees may be paid into an oil-spill mitigation fund, for example, to provide money for cleanup in case of a spill. The fee is different than a fine, which may be imposed after the fact by a regulator because of disputed conduct. Fees typically are levied before the fact.
As long as there is a direct, legitimate connection between the fee and a benefit to the entity paying it, the fee would not be disturbed by the proposed initiative, proponents contend.
At the state level, regulatory, license, service or user charges and fees generally can be approved by a simple majority vote of the Legislature. Taxes enacted to increase revenues require a two-thirds vote, under Proposition 13.
The debate over fees-versus-taxes has roiled the Capitol for years. To corporate interests, the fees are “hidden taxes,” and supporters of the November initiative include the Chamber’s political action committee – which has pumped $1.2 million into the campaign. The PAC’s financial backers include brewers, energy companies, Philip Morris, PG&E, Chevron, State Farm, Anheuser-Busch, wineries and others.
“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,” Teresa Casazza, president of the California Taxpayers’ Association, notes on the campaign website.
But the term “hidden taxes,” contend critics of the initiative, is like the Chamber’s use of the term “job killers” to describe legislation – mostly by Democrats – that the Chamber opposes. They also contend that the detailed listing of the fees on the campaign website ironically offers ample ammunition to opponents.
“It’s unbelievable,” said Lenny Goldberg of the California Tax Reform Association. “We used to have a responsible business community, but this one is just trying to wreck the state. It’s saying, ‘Look how much damage you can do without having to pay for it.’”
Goldberg has lobbied for years against corporate tax breaks, and 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.
The second initiative, pushed by Democratic leaders of the Legislature and a number of government reformers, would allow legislative passage of the state budget with a simple majority vote. Passage of taxes would remain at two-thirds.
“It’s ironic that you are going to have those two initiatives on the ballot at the same time,” noted recycling advocate Mark Murray of Californians Against Waste, which opposes the fee-linked initiative sponsored by the Chamber.
Since the Great Depression, California state budgets have required a two-thirds vote for approval. Currently, both houses of the Legislature are controlled by Democrats, who have simple majorities but lack the two-thirds majorities need for budget passage – two shy in the 40-member Senate and four shy in the 80-member Assembly.
The two-thirds rule requires Democrats to woo Republican votes – and vice versa – in order to push through budgets, but the process has been marked more by paralysis in recent years than by negotiation.
Republicans, sensing a further erosion of their legislative power, have long opposed a simple-majority threshold for the budget, but Democrats believe it is long overdue.
“Political party leaders refuse to compromise to solve the state’s budget problem and used the two-thirds requirement to hold up the budget problem,” Democrats said in an official ballot statement, “and have used the two-thirds vote requirement to hold up the budget or leverage special-interest concessions…”