California Ballot Could See Onslaught of Initiatives

blog | February 2, 2012 - 11:40am | By Stuart Waldman

California’s direct initiative process is often included on the list of practices that receive blame for the state’s massive budget deficit and overall decline. Direct democracy in California has even gained national attention. Last month, the referendum to squash the e-fairness tax (also known as the “Amazon tax”) was featured on “The Daily Show with Jon Stewart.” California’s initiative process (and some state political leaders) was the punch line.

The direct initiative process allows citizens to add, repeal or amend state laws through the use of ballot propositions. Citizens can completely bypass the Legislature if enough valid, voter signatures are collected, with the current threshold set at 504,760 for most initiatives.

On the surface, this appears to be an example of democracy at work. However, the practice has received criticism for creating funding mandates that tie lawmakers’ hands during the budget process. The term “Ballot Box Budgeting” has been coined to describe this phenomenon.

Presidential elections are always popular tickets for direct democracy initiatives due to higher voter turnout rates. This is why the November 2012 ballot is expected to be loaded with tax measures, among other items addressing issues ranging from medical marijuana to equal gender representation in the Legislature.

The best-known tax proposal is being championed by Gov. Jerry Brown. It includes a half-cent sales tax hike and would raise income tax rates for individuals who make $250,000 or more per year. The additional tax revenue is projected to be $7 billion annually.

The California Federation of Teachers is backing another tax measure aimed at high-income individuals. The initiative calls for a 3 percent increase on income over $1 million and a 5 percent bump for income above $2 million. The anticipated $6 billion per year would be used to fund K-12 schools, higher education and local government. Another plan would raise income taxes across the board, but especially for high-income individuals, and the projected $10 billion raised would be dedicated to schools.

In addition to the income tax hikes, other potential ballot items address business taxes. One would require businesses to pay taxes based exclusively on their sales in California. The calculation, known as single sales factor, was supported by the Valley Industry and Commerce Association when it was under consideration by the state Legislature. Another proposal would cut income and corporate tax rates, and instead, establish a new sales tax for services and increase taxes for out-of-state companies. The measures estimate $1.1 billion and $10 billion in revenue gains, respectively.

Some taxes on business continue to be introduced in most election cycles. Two measures historically opposed by VICA that could make an appearance on the November 2012 ballot are oil severance and split roll taxes. The oil severance tax would impose a 15 percent tax on the value of oil and gas extracted in California. Split roll tax essentially removes Proposition 13 protections for businesses.

All of these initiatives are currently in the process of gathering the required number of signatures to make it on the ballot; they are among nearly 50 measures in the circulation phase of the initiative process. Almost 30 other proposals are awaiting the green light from Attorney General Kamala Harris to begin collecting signatures.

This means that voters could easily be overwhelmed in November by more than 70 ballot measures they do not have the time (or the desire) to adequately research and understand. California must rein in its unruly direct initiative process before all budgeting decisions are made at the voting booth.

About the Author

Stuart Waldman

President of the Valley Industry and Commerce Association

Stuart Waldman is president of the Valley Industry and Commerce Association (VICA). VICA is a business advocacy organization that represents employers throughout the Los Angeles County region at the local, state and federal levels of government.

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