Businesses want to make it harder to raise California taxes. Democrats are pushing back

A tussle over tax hikes in California is intensifying. California Democrats have answered a tax-reform push by business groups with their own proposal to undercut it.

The escalating dispute over voters’ roles in approving or rejecting tax increases is a reflection of ballot initiatives’ outsize role in Sacramento and the game of cat and mouse that often plays out between opposing interests.

First, a business coalition qualified a measure for the 2024 ballot that would significantly raise the threshold for passing new state and local taxes by requiring voters to approve any increase passed by the Legislature. It would also impose a two-thirds vote requirement on local taxes — a change local governments and organized labor have condemned, warning it would starve cities and counties of vital revenue.

Now, a newly rewritten constitutional amendment backed by Democratic leaders would give the business coalition a taste of its own medicine. Under CA ACA13, any ballot measure that changes voter thresholds — such as the business group’s initiative — would need to pass by that same margin, which in this case would be a two-thirds vote.

The campaign issued a statement on Friday assailing the Democrats’ proposed constitutional amendment as a “cynical manipulation to protect the status quo and silence voters.”

“This is a direct attack on the power of the people and enshrines into the constitution the deceptive bait-and-switch tactics that have created the crisis we’re in today,” the statement said.

Business interests hoping to block the late-emerging measure will be contending with organized labor. SEIU California Executive Director Tia Orr, whose union vehemently opposes the tax initiative, offered vocal support Friday for the Democrats’ constitutional amendment.

“Measures to increase voter thresholds in California are inseparable from anti-democratic efforts nationwide to take away our freedoms such as abortion access and to prevent progress,” Orr said in a statement. “We urge California’s legislators to join workers in supporting ACA 13 and to protect the democratic principle of ‘one person, one vote.’”

The amendment could also be a heavy lift. Putting it on the ballot would require two-thirds votes in the Legislature, and voters would then need to approve it next year by a simple majority.

But Assembly Speaker Robert Rivas (D-Hollister) has signed on as a co-author — a sign the proposal could be a priority for legislative Democrats in the final weeks of the legislative session. Neither Rivas’ office nor Assemblymember Chris Ward, a San Diego Democrat who is carrying the measure, had any comment on Friday.

This wouldn’t be the first time a bid to block taxes spurred deal-making in Sacramento. Business groups qualified a similar measure in 2018 and then used it as leverage to win a ban on local soda taxes, withdrawing the initiative after Democrats reluctantly agreed to the beverage industry’s demands.

Frustrations with business groups exploiting direct democracy has spurred efforts to change California’s system. After affected industries last year qualified referendums to overturn major environmental and labor laws, a prominent labor union has responded with legislation to overhaul the referendum process. The bill has been substantially slimmed down amid a business counteroffensive.