Property transfer tax initiative pulled from November ballot

By Cal Cities Staff

Business and anti-tax groups agreed to pull an initiative from the November ballot that could have resulted in local service cuts after striking a last-minute deal with lawmakers. The deceptively named “Local Taxpayer Protection Act to Save Proposition 13” sought to increase the vote threshold for citizen-initiated special taxes and change existing and new property transfer tax rates. Cal Cities opposed the measure.

For many charter cities, property transfer taxes are a major, longstanding source of locally controlled revenue that allows them to address local needs. “When cities’ ability to raise revenue is eroded, the need for services doesn’t go away,” Cities Executive Director and CEO Carolyn Coleman said in a statement last week. “The ultimate losers are California residents who depend on those services every day."

A Cal Cities fiscal analysis found that the initiative could reduce local revenues by $2 billion to $3 billion annually, beginning two years after enactment. Similarly, the Legislative Analyst’s Office projected an annual loss of up to $2 billion in local government revenues.

The ballot measure was sponsored by the California Business Roundtable and the Howard Jarvis Taxpayers Association. In exchange for removing the measure, the Legislature passed ACA 21 and ACA 22. ACA 21 directed the Secretary of State to remove ACA 13, a separate constitutional amendment dealing with voter thresholds, from the ballot.

ACA 22, if approved by voters, would raise the threshold for approval for citizen-initiated special taxes from a simple majority to two-thirds, starting on Jan. 1, 2027. ACA 22 will appear as Proposition 43 on the November ballot.

The compromise preserves local revenues from real estate property transfers in their current form. However, those taxes could face legislative scrutiny next year.

Cal Cities staff will bring ACA 22 to the Cal Cities Board of Directors for consideration at its July meeting. Other notable measures on the ballot include an $11.25 billion affordable housing bond and changes to the state’s environmental review law, commonly known as CEQA — also up for discussion at the July meeting.