LOS ANGELES—California voters may be faced with up to four initiatives in the 2016 election that would create, extend or increase taxes to generate revenues for the state.
Among options being examined include the extension of Proposition 30, an initiative passed in 2012 that raised tax rates on high-income earners and increased sales tax throughout a four-year period.
“Proposition 30 stopped the bleeding but didn’t restore all the cuts made, even given that the economy is better,” Anthony Thigpenn, president of California Calls, a coalition based in Los Angeles comprising 37 community organizations throughout the state, told the Los Angeles Times. “It was only the beginning of the discussion.”
Business lobbies, however, view the extension as a measure that would make California even more expensive than it already is and stunt job creation.
Other possible initiatives involve a crude oil extraction tax, a $2 tax increase per pack of cigarettes and a change in the treatment of commercial property under Proposition 13, which has been in place in the state for 36 years.
San Francisco billionaire hedge fund manager Tom Steyer, who is leading the team for the crude oil extraction tax initiative, said California could be earning $2 billion, but remains the only major oil-producing state that does not impose taxes on each barrel of crude oil extracted.
For the cigarette tax, health advocates say higher taxes are needed to make up for the $1 billion lost in revenues as fewer people are smoking. Imposing levies on e-cigarettes is also another possibility.
Tobacco companies, however, say increased levies would be an added expense to retailers and result in cigarette smuggling. In 2012, they spent $50 million to win the battle against a $1 per pack increase initiative.
Of initiative talks so far, the fight for a change in Proposition 13 could be the most difficult one, Rex Hime, president of the California Business Properties Assn., said.
Proposition 13 currently limits property tax to 1 percent of its assessed value, and limits the increase of the assessed value to 2 percent per year, unless a change of property ownership occurs.
Real estate is reassessed only when a 50 percent change in ownership occurs, and corporations have managed to avoid Proposition 13 provisions through group ownership to ensure no single party owns half.
“It will be Armageddon,” he told the Los Angeles Times. “It will be a huge, huge battle.”
Since the enactment of Proposition 30, the $26-billion deficit Gov. Jerry Brown acquired when he took office has been cleared. The state treasury has also gained a surplus that is expected to hit $4.2 billion at the end of the 2015-16 fiscal year.
Despite talks of tax initiatives, California Tax Reform Assn. President Lenny Goldberg said that what will end up on the 2016 ballot remains unknown and unpredictable.
(With reports from Los Angeles Times)
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(LA Weekend November 29 – December 2, 2014 Sec. D pg.1)
