California Supreme Court Blocks Sweeping Measure to Limit State and Local Authority to Implement Taxes

The California Supreme Court has blocked Initiative 1935—the so-called “Taxpayer Protection and Government Accountability Act”— from appearing on the November 2024 ballot. The court ruled unanimously that the “measure exceeds the scope of the power to amend the Constitution via citizen initiative.” Legislature of the State of California v. Weber, No. S281977 (S.Ct. Cal. June 20, 2024) at 51.

Initiative 1935 would have proposed sweeping changes to the state’s and local agencies’ ability to generate revenues by, among other things:

• Broadening the definition of what constitutes a tax.
• Increasing voter and government approval thresholds in some cases.
• Adding procedural election requirements.

Initiative 1935 would have purported to apply to taxes, fees and charges created, increased or extended after January 1, 2022.

This ruling means that taxing agencies will not need to reassess existing taxes, nor implement new procedures for future taxes.

Though courts typically avoid reviewing initiatives prior to an election, the California Supreme Court said it did so here because the case challenged the measure’s eligibility as a citizen’s initiative. The Court concluded that Initiative 1935 would:

• Substantially transform the process for enacting new statewide tax legislation.
• Significantly change the mechanism for the state government to raise revenue by making nearly every revenue-raising measure subject to voter approval or referendum.
• Significantly alter the ability of state and local governments to delegate fee-setting authority to executive or administrative officers and ensure the provision of essential services.

Taken together, the Court held that Initiative 1935’s voter approval requirements, nondelegation rules and expansion of the referendum power to governmental charges “fundamentally rework the underpinnings of our government at every level” and would have amounted to a revision of the Constitution. Because revisions to the Constitution may not be made by citizen initiative, the Court held that Initiative 1935 was not eligible for voter approval.  

Please contact a member of Orrick’s Public Finance team if you have questions about Initiative 1935.