California Supreme Court removes anti-tax initiative from ballot

In a rare move, a unanimous state Supreme Court on Thursday ordered a major anti-tax initiative removed from the November ballot after the court concluded it was a revision of the state Constitution.

"The changes proposed by the [Taxpayer Protection and Government Accountability Act] are within the electorate's prerogative to enact, but because those changes would substantially alter our basic plan of government, the proposal cannot be enacted by initiative," Justice Goodwin H. Liu, an appointee of Gov. Jerry Brown, wrote for the court. "It is instead governed by the procedures for revising our Constitution."

Such a revision can only be placed on the ballot by the Legislature itself or by a constitutional convention, he added.

The initiative, known as TPA, would have mandated voter approval of state proposals that raise taxes and fees and required two-thirds voter approval for local measures applying to any hikes going back to the beginning of 2022.

The ruling is an unusual, though not unprecedented, example of the state Supreme Court removing an initiative from the ballot before voters can weigh in, and the unanimous decision is a major win for Gov. Gavin Newsom, the state Legislature and the League of California Cities. Legislature of the State of California v. Weber, S281977 (Cal. S. Ct., filed Sept. 26, 2023).

The first time the state Supreme Court struck an initiative from the ballot before a vote was more than 75 years ago, when justices removed a measure that would have made sweeping changes in the operation of California government. McFadden v. Jordan, 32 Cal.2d 330 (Cal. 1948).

In 1999, the court removed an initiative from the ballot that would have transferred the power to reapportion state legislative, congressional, and Board of Equalization districts from the Legislature to the state Supreme Court. Senate of the State of California v. Jones, 21 Cal.4th 1142 (1999).

In 1990, the court ruled that the Crime Victims Justice Reform Act was a revision and struck it down after voters approved it. Chief Justice Malcolm M. Lewis struck down a provision of the initiative because it "not only unduly restricts judicial power, but does so in a way which severely limits the independent force and effect of the California Constitution." Raven v. Deukmejian, 52 Cal.3d. 336 (1990).

"No amount of funding from wealthy corporations will change the fact that the California Supreme Court decided the Taxpayer Deception Act is unconstitutional," wrote League of California Cities executive director and CEO Carolyn Coleman. "It's great news for cities and their residents that this dangerous initiative will not move forward this year, and local officials can now keep their focus on delivering vital local services."

The initiative's supporters and Republicans reacted with fury at what they said was a partisan court for preemptively striking down an initiative that attracted more than 1.4 million signatures. Six of the court's seven justices were appointed by Democratic governors.

At a press conference Rob Lapsley, a co-chair of the campaign, lashed out at the court - which usually avoids sharp attacks - for telling the initiative's supporters "that direct democracy is no longer alive and well in the state of California. ... There is no recourse for us."

"Clearly, the state Supreme Court has sent a signal that they are part of the progressive agenda," he added.

But Lapsley said he had no plans to seek a constitutional convention, which last occurred in 1879.

"Today's ruling is a slap in the face to California citizens as these partisan justices are not only interfering in the initiative process put in place to protect the people's right to be heard in our democracy, but they're doing it at the request of the very people who want to raise our taxes time and time again," state Sen. Brian Dahle, R-Bieber, wrote in a statement.

In his ruling, Liu wrote that the initiative was constitutional revision that changes the structure of California's government.

"We express no view on what process achieves the optimal balance among efficiency, accountability, transparency, and other interests," he continued. "We observe only that requiring any new or higher tax levy to undergo voter approval would significantly alter the existing constitutional balance between direct democracy and representative democracy, with reverberations throughout the framework of our government."

The decision is a defeat for the Howard Jarvis Taxpayers Association and business groups behind the initiative, who argued it was comparable and less sweeping than Proposition 13, which limited property tax increases by initiative in 1978.

During oral arguments last month, justices expressed doubts about whether the initiative was constitutional but also questioned whether they should rule before voters have a say.

Margaret R. Prinzing - an attorney with Olson Remcho LLP who represents Newsom and the Legislature - told justices the initiative was an unconstitutional revision and should be removed from the ballot. "It is a comprehensive measure that is intended to fundamentally restructure the way government power is exercised to raise revenue under the Constitution," she said.

But Thomas W. Hiltachk, a partner with Bell, McAndrews & Hiltachk LLP who represents the taxpayer and business groups behind the initiative, said the impacts of the initiative were all speculative and should be evaluated by the court after the election if votes approved it.

"What TPA restores is the people's power to have a role in the process," he told the court, adding that a pre-election decision to remove the initiative from the ballot would be a "political judgment" the justices should not make.

On Tuesday, Newsom, the California Labor Federation and business groups struck a deal to make changes in the Private Attorney Generals Act that heads off a November ballot initiative to repeal the 20-year-old labor law in exchange for changes sought by the Chamber of Commerce and its allies. The bill must pass the Legislature and be signed by Newsom by Monday for the agreement to stay intact.

The state Supreme Court's decision to remove the anti-tax initiative removes another high-profile initiative that could have had major repercussions. Advocates on both sides will have money to spend on other November ballot initiatives that would have gone into those costly campaigns, and Lapsley emphasized that more of a focus would be placed on those measures.

David C. Goodwin, a Covington & Burling LLP senior counsel who represented former Gov. Jerry Brown in an amicus brief arguing that the court should remove the initiative from the ballot, said in an interview that the justices were "attuned ... to what the initiative would do to the state as a whole. ... It would really make state government dysfunctional."