SACRAMENTO, Calif. — California voters reliably support the usual crew of progressive Democrats, but when it comes to ballot initiatives, they often take a far more conservative tack. In the November 2024 election, for instance, voters rejected a minimum wage increase, a measure that would have let local governments expand rent controls and approved a tough-on-crime measure — even as they voted for Kamala Harris for president in lopsided numbers.

That helps explain why California’s political establishment, despite its unrivaled power, has reason to worry about two statewide initiatives that are coming down the pike. One would rein in local governments’ power to raise taxes. The other would revamp an environmental law that obstructs the construction of everything. In our initiative-crazy state, many groups push measures with little chance of passage. However, these are coming from prominent business and taxpayer groups with the ability to raise the money needed to win.

These initiative drives represent the continuation of a movement that the California Supreme Court derailed in 2024. At the time, Gov. Gavin Newsom and state legislators were so worried about a business-backed tax-restricting measure that they convinced the court to remove it from the ballot, citing arguable constitutional issues. Democrats knew voters are tired of escalating taxes and that it had the chance of sparking another tax revolt of the sort that led to the passage of 1978’s property-tax-limiting Proposition 13.

The derailed Taxpayer Protection and Government Accountability Act would have, as CalMatters reported, “increased the margin to pass a voter-initiated special tax at the local level, to two-thirds from a simple majority [and] restricted how officials can calculate the cost of fees that fund public services and programs…. Cities, counties and the unions that represent their employees raised alarms that the initiative would blow a hole in their budgets.”

When public employee unions are raising alarms, you know the measure was the real deal. But the state Supreme Court, in a highly unusual move, intervened. It’s rare to remove a measure from the ballot, as challenges usually take place after the fact. The two new initiatives designed for the November 2026 ballot once again will set union alarm bells ringing — and the tax measure is crafted to avoid the specific constitutional problems the high court cited in the 2024 effort.

The first measure, from the Howard Jarvis Taxpayers Association, is called the Local Taxpayer Protection Act. HJTA says it would close two court-created loopholes to Proposition 13, which capped property-tax rates at a time when people were being taxed out of their homes. It also required two-thirds voter approval for local special taxes (such as for parks, transportation, etc.).

The first loophole: Courts have allowed charter cities to dramatically increase real estate transfer taxes from a small 0.11 percent to extraordinary levels — as high as 5.5 percent under Los Angeles’ disastrous “mansion tax” (Measure ULA). 

The second loophole: The state’s high court in the 2017 Upland decision allowed voter initiatives for special taxes to circumvent the supermajority vote requirement provided that citizen groups, rather than elected officials, place them on the ballot. That has incentivized unions and other interest groups to qualify local tax-hike measures, with dozens of them passing in the decision’s wake, per a CalMatters review. The HJTA measure would roll back excessive transfer taxes and restore the two-thirds special-tax vote threshold.

The next major ballot initiative promises a one-two punch, with the California Chamber of Commerce nearly ready to move forward on an effort to revamp the California Environmental Quality Act (CEQA). That “landmark” environmental law, signed by Gov. Reagan in 1970, has evolved into a bureaucratic maze that delays and adds costs for any construction project that requires a local governing body’s discretionary approval.

As the Yale Law & Policy Review summarized, “Increasingly, this landmark legislation is being abused to manipulate the public process, resulting in harmful delays to projects that may be essential to the state’s housing and climate goals.” The law has enabled unions, no-growthers, angry neighbors, and pretty much anybody to slow or stop or exact concessions from proposed construction projects via a long public-review process. It encourages litigation.

As I’ve documented for The American Spectator, Gov. Gavin Newsom and state lawmakers have over the past few years passed several CEQA reforms designed to jump-start housing construction. The laws exempt specific types of projects (high-density housing, in particular) from the CEQA process. But research shows the new laws haven’t broken the logjam mainly because they don’t go far enough. This initiative focuses on speeding up the approval timetables.

Per the Chamber: “The Building an Affordable California initiative would streamline the review of essential projects … . Rather than provide piecemeal exemptions, it would establish reasonable timelines for local and state agencies to review plans and solicit public comment. Timelines would also be established for any necessary judicial review.”

At this point, there’s no simple fix for California’s tax and regulatory ills. But if one had to pick the top three policy areas where reform would make the most impact, these campaigns pick two of them: controlling taxes and streamlining CEQA. The third would address the power of public employee unions, but that’s more complicated and not going to happen anytime soon.

Stay tuned for all the fear-mongering from the usual suspects. As the Louis L’Amour quotation goes, “Throw a rock into a pack of dogs, the one that yelps the loudest is usually the one that got hit.”

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

READ MORE:

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California’s Hypocrisy on Property Rights

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