California voters lose a shot at checking state and local tax hikes at the polls

SACRAMENTO, Calif. (AP) — The California Supreme Court on Thursday took the rare step of removing a measure from the November ballot that would have made it harder to raise taxes, siding with Gov. Gavin Newsom by ruling the change would have upended the way government works.

More than 1 million people signed a petition to put a measure on the ballot this November that would have required voters to approve any tax increase passed by the state Legislature. It also would have required all local tax increases to be approved by two-thirds of voters instead of a simple majority vote.

The biggest impact, however, would have been that the measure threatened to retroactively reverse most tax increases approved since Jan. 1, 2022. Local governments warned they would have lost billions of dollars in revenue that had previously approved by voters. And it would have threatened recent statewide tax increases, including one on guns and ammunition set to take effect July 1.

That prospect alarmed Newsom and legislative leaders so much that they took the unusual step of asking the state Supreme Court to remove the measure from the ballot before voters had a chance to decide it.

California voters are allowed to bypass the governor and the state Legislature to amend the state Constitution at the ballot box, something they do frequently. Voters have amended the Constitution to protect abortion rights, declare marriage is between a man and a woman and dock legislators' pay if they fail to pass a budget on time.

But the court has recognized a distinction between amending the Constitution — adding something new — and revising it by altering the way government works. Voters can amend the constitution by a ballot measure, but they cannot revise it.

In this case, the court ruled the ballot measure is a revision because it would take away the Legislature's power to raise taxes — a shift the justices said would “fundamentally rework the fiscal underpinnings of our government at every level.” The only way to add these rules to the Constitution, the court ruled, would be for the Legislature and voters to approve a call for a new constitutional convention.

Matthew Hargrove, president and CEO of the California Business Properties Association, called the ruling “a gut punch to direct democracy in California.” Rob Lapsley, president of the California Business Roundtable, accused the court signaled its willingness “to back the progressive agenda at every turn moving forward.”

“There is no independent judiciary in California anymore,” Lapsley said. “Be scared. Because it’s only going to get worse.”

Newsom declined to speak to reporters after the ruling, but he issued a written statement — attributed to an aide — that said he supports the ballot initiative process but noted it “does not allow for an illegal constitutional revision.”

The issue is tricky for Newsom, a Democrat now in his second term who is a potential candidate for president. Newsom has tried to counter California's reputation for high taxes by publicly opposing many new tax proposals, including campaigning publicly against a new tax on the rich.

But he has been willing to temporarily raise taxes on some businesses to balance the budget, something he is proposing to do again this year. And he signed a tax increase last year on guns and ammunition that is likely to be challenged in court once it takes effect on July 1.

Republicans on Thursday were quick to portray Newsom as “greedy,” arguing his successful attempt to block the measure will continue to make things more expensive in California, whose taxes on incomes, sales and gasoline are among the highest in the country.

“The California Democrat machine’s love affair with new taxes to pay for their ludicrous policies keep costing Californians their hard-earned money, and Newsom just made it that much easier to take even more,” said Jessica Millan Patterson, chairwoman of the California Republican Party.

Removing a measure from the ballot before an election is rare, but not unprecedented in California. In 1999, the court threw out one that would have cut lawmakers’ salaries and removed their authority to set boundaries for legislative districts. The court removed that measure from the ballot because it included more than one subject.

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Associated Press writer Tran Nguyen contributed to this report.