CA: Lawmakers Pass Measure that Threatens to Overhaul Decades-Long Property Taxpayer Protections

In the closing hours of California’s 2023 session, lawmakers launched an open attack on Proposition 13, a 1978 constitutional amendment that includes protections against property tax hikes. Late Thursday night, members of the California legislature voted largely along party lines to place Assembly Constitutional Amendment 13 (ACA 13) — a measure overhauling Prop. 13’s voter approval requirements for citizen initiatives — before voters in March 2024. 

This week ICSC members sent over 800 emails of opposition to the legislature and amplified efforts by the California Business Properties Association (CBPA) to oppose ACA 13.

Why are lawmakers doing this now? 

Supporters of ACA 13 are trying to prevent the Taxpayer Protection and Government Accountability Act, a citizen initiative (set to appear before voters in November 2024) from going into effect. The Taxpayer Protection Act, if approved by voters, would restore protections against property tax hikes by requiring that any state tax increase by legislative action would need two-thirds legislative approval plus a simple majority vote at the ballot box. In addition, any local special tax increases proposed through a citizen-initiative measure would need two-thirds approval versus a simple majority which is the current policy. 

If approved by voters, what would ACA 13 do? 

ACA 13 would require any citizen-initiative measure that includes a provision increasing the voter approval threshold to receive the same margin of voter approval mentioned in the measure in question. For example, if a citizen-initiative measure in San Mateo County asks voters whether they favor increasing the voter approval levels for special tax increases to two-thirds, then that measure would need a two-thirds or higher approval rating to pass. 

In other words, ACA 13 would only apply to citizen initiatives that seek to change voter approval requirements on ballot measures. This process change would limit the initiative process by shifting the power to raise the voter threshold for new and higher taxes away from voters and to the Legislature.

What other measures did lawmakers pass that could threaten Proposition 13? 

Lawmakers this week also passed Assembly Constitutional Amendment 1 (ACA 1) that would lower the voter approval threshold for local general obligation bonds and special taxes targeting affordable housing initiatives from a two-thirds voter approval requirement to a 55 percent voter approval requirement. So, if Santa Clara County wanted to impose a sales tax hike to boost affordable housing options for local residents, under ACA 1, only 55% of voters would be required to approve the measure. 

What’s at stake? 

In 1978, voters overwhelmingly approved Proposition 13, which established, among other things, a two-thirds voter approval requirement for enacting all local taxes for special purposes, regardless of whether it’s proposed by a local government or citizen-initiative measure. And for 40 years, California voters have continued to approve new and higher taxes, first through Proposition 218 in 1996 and again through Proposition 26 in 2010.  

The battle between ACA 13 and Taxpayer Protection Act comes at a time when soaring inflation and a higher cost of living are making Californians and businesses question whether it is sustainable to continue living in the state. And while Proposition 13 has other provisions protecting property owners from major tax hikes, ACA 13 would make it easier for local and state lawmakers to increase taxes on the backs of property owners.  

For more information, contact Jim Hill at jhill@icsc.com.