Proposition 26: Two-thirds vote for fees
October 22, 2010 by California Forward
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NOTE: California Forward’s work on governance reform may be affected by several of these measures, although we have not taken a position on them – with one exception. CA Fwd opposes Prop 27. Prop 27 would reverse the landmark redistricting reform plan that was enacted by voters in 2008 as Prop 11. California Forward endorsed Prop 11 and has been deeply involved -- with many other groups -- in supporting successful implementation of the reform since enactment. The opportunity to serve California through the new redistricting commission inspired tens of thousands of highly qualified Californians to apply for the job, which we applaud. We look forward to the new, independent commission taking control of state redistricting in 2011.
We all pay a mix of taxes and fees to fund government services, such as schools, roads, libraries, and police and fire services. Proposition 26 seeks to change how we approve certain fees from a simple majority of 50 percent plus one to a two-thirds majority vote.
Fees are funds collected to pay for regulations or specific programs based on use. Taxes, on the other hand, are more general in nature and pay for general public services. For example, the personal income tax goes into the state’s General Fund. It is then used to fund a variety of public services and provide general public benefits, such as K-12 education, higher education, libraries, and prisons. On the other hand, when you pay your water, sewage, or garbage bill, you are paying a fee that goes directly into a special fund used to provide that particular service.
Taxes must currently be approved by a two-thirds majority, while are approved by a simple majority. Proponents of Prop 26 argue that some fees are, in fact, taxes, and they want those fees to also reach the two-thirds threshold for approval.
If Prop 26 passes, fees that would become classified as taxes are those that provide a broad public benefit. These might include alcohol fees used to enforce drunk driving laws, fees on unhealthy foods used to decrease obesity levels, and fees on pesticides used for research on human health impacts.
Prop 26 also requires a two-thirds vote in the Legislature for any tax increase. Currently the Legislature may pass tax increases by a simple majority, if they increase a tax for one group while lowering a tax for another group at the same time, leaving a net increase of zero in overall revenue.
In addition, Prop 26 would repeal any taxes enacted as fees between Jan. 1, 2010 and Nov. 2, 2010, resulting in a $1 billion cost to the state’s General Fund every year, including the current calendar year.
Supporters of the measure say many so-called fees we currently pay are actually taxes and should be subject to a two-thirds vote for approval. They argue that the Legislature disguises the taxes as fees to ensure a lower threshold for approval.
Those against Prop 26 say it was written for the benefit of corporations, who want to be free from some of the regulatory fees they currently pay to the state. They argue that, if Prop 26 is approved, then the taxpayer would be on the hook for environmental cleanup and other harm caused by big business.
NOTE: When California Forward proposed the California Forward 2010 Reform Principles, one of the elements of this plan required that, if a specific tax were repealed and replaced with a new fee, the new fee would be subject to a two-thirds vote. This provision is not included in the measure. California Forward is neutral on Prop 26.