An existential threat to cities is on the 2024 ballot

Just what is the deceptively named Taxpayer Protection and Government Accountability Act that’s on the November 2024 ballot? For starters, it’s a huge attack on local decision-making that puts all public services in California at risk.

Don’t let the name fool you. Some of the state’s biggest corporations — under the umbrella of the California Business Roundtable (CBRT) — are sponsoring the measure. The only thing it protects is large corporations trying to avoid paying their fair share.

The CBRT measure would significantly restrict the ability of cities to raise taxes and fees, including retroactively. Taxes or fees passed since Jan. 1, 2022, must abide by the measure’s rules. The measure would also create new opportunities to challenge local revenue measures.

The League of California Cities estimates that approximately $2 billion in existing fees and charges, along with $2 billion in voter-approved measures, will be subject to legal peril if this measure passes.

“If passed, this thoughtless measure will put billions of dollars of vital local government services at risk and cost billions of dollars over many, many years in litigation costs just to determine what it means,” said Michael Coleman, a local government finance expert. “Meanwhile, public services will deteriorate. All of this at the whim and for the benefit of a few big corporations and to the detriment of the public at large.”

How exactly would the measure impact my city?

The rules for increasing fees and taxes have been clear for many years. This measure fundamentally alters those rules. The CBRT measure would define all sources of revenue as either taxes or “exempt charges” (fees). Local governing bodies would not be able to delegate fee adjustments to administrative entities.

Currently, fees for services or products must cover the “reasonable” cost of service. The CBRT initiative would amend the law so that these fees could not exceed the “actual cost” of providing the product or service. It defines “actual cost” as the “minimum amount necessary.” This could mean cities would need to choose cheaper, less optimal projects, goods, and services or subsidize the activity, resulting in race-to-the-bottom service levels and quality.

The measure would also create a new requirement that some fees — including for use of or access to government property — must be “reasonable” to the payor. However, it does not define “reasonable.” At the same time, the measure would allow people to challenge fees by claiming a fee is unreasonable even if it meets the “actual cost” of service. This will result in lawsuits that taxpayers will be forced to fund. 

Any taxes and fees adopted after Jan. 1, 2022, that do not comply with the measure’s rules would become void unless reenacted within a year of the effective date of the measure. Voters in an annexed area would need to approve existing taxes and local voters could no longer pass special taxes qualified by initiative with a simple majority.

Some major examples of affected fees and charges are emergency response fees, document processing and duplication fees, transit fees, tolls, parking fees, facility use charges, garbage disposal tipping fees, and potentially commercial franchise fees.

Why does big business support this measure?

In a word: greed. The measure pretends to protect taxpayers. In reality, the measure protects the wealthiest taxpayers at the expense of local control and vulnerable residents.

Under these new rules, corporations would pay far less than their fair share for the impacts they have on communities. Requiring the rental or sale price of local government property to be “reasonable” rather than “fair market value” would also reduce cities’ negotiating power in favor of corporations.

Voters may also need to approve administratively imposed fines, penalties, and levies for corporations that violate laws unless a new, undefined adjudicatory process is used to impose the fines and penalties.

In short, the measure’s ambiguous language will result in countless lawsuits, reduced government services, and red tape all in favor of big business. 

What can my city do?

This is CBRT’s latest attempt to reverse court decisions favorable to local governments and dodge accountability. In doing so, it will make it even harder for local governments to provide vital services to their residents.

Cal Cities is working with a broad coalition of partners to defeat this measure. But we cannot do it by ourselves. Defeating this measure will take the efforts of city leaders throughout the state acting to stop it.

The first step is to pass a resolution or send a letter to Cal Cities opposing this measure. Send your letter or resolution to ballotmeasures@calcities.org. Participation through CitiPAC, which provides funding for ballot measure battles, is also crucial.

Cal Cities is running a series of stories about how the CBRT measure would impact individual cities. If you would like to tell your city’s story, please email Managing Editor Brian Hendershot.