Ballot Initiatives Influence State Budget and Policy, Budget Trailer Bill Bans Local Soda Taxes
The ability for local governments to impose taxes and fees on sodas and sugar-sweetened beverages was highly debated in the California State Legislature this week. Two trailer bills, SB 872 and AB 1838 were introduced to ban the ability for local jurisdictions to impose new taxes on groceries, which by definition includes sugar-sweetened beverages/sodas, until 2031. Taxes or fees on groceries in place prior to January 1, 2018, are grandfathered in and may be reauthorized.
The trailer bills were the result of a deal negotiated by labor and the California Business Roundtable to stop the “Tax Fairness, Transparency and Accountability Act of 2018” initiative. The initiative, if passed, would require two-thirds voter approval for a local tax or fee increase and a two-thirds vote by a local electorate to place a tax on the ballot. The passage of this initiative would inhibit the ability for local governments to impose taxes or fees given the two-thirds threshold and could have a significant impact on local revenues, both existing and new.
According to the high-level analysis from the Legislative Analyst’s Office, roughly half of the majority-vote taxes enacted since 2012 did not receive the two-thirds vote of the electorate as the initiative would require and could result in substantial local revenue reductions in the future. Given these considerations, CHEAC took a ‘concerns’ position on the trailer bills and highlighted our concerns with stifling the growing momentum behind sugar-sweetened beverage taxes before the budget committees of both houses.
During discussion in the budget committees and the floor, several members denounced the decision before them, recognizing the choice between public health and protecting local governments. Several members condemned the antics of Big Soda and their hostile approach of using the initiative process to push their agenda. Legislators implored their colleagues to take state-level action around soda taxes and warned that the soda industry may have won the battle, but they will not win the war.
The Legislature passed AB 1838 on Thursday sending it immediately to the Governor. Governor Brown signed AB 1838 and proponents subsequently withdrew the initiative just before the Secretary of State deadline for initiatives to qualify for the November ballot.
SB 872 was amended on Wednesday to remove the original language that bans local governments from imposing taxes or fees on groceries. The bill instead further clarifies the definition of cannabis, which continues to be excluded from the definition of groceries. The trailer bill is expected to be taken up by the Legislature on Monday.
Two other ballot initiatives were with withdrawn as the result of intense negotiations:
Lead-Paint Manufacturers. The Legislature announced a deal that results in lead-paint manufacturers withdrawing their initiative that would have eliminated their liability to clean up lead paint in old houses and instead require tax payers to bear the financial burden. In exchange, three Assembly members will be holding their bills this legislative session that seek to address lead-paint – AB 2073 (Chiu), AB 2803 (Limon) and AB 2136 (Bloom).
Consumer Privacy Rights. AB 375 (Chau) was passed and signed by Governor Brown on Thursday just before the ballot initiative deadline. A Bay Area real estate developer had initially proposed an expansive data privacy measure that would have qualified for the November ballot, but negotiations between proponents and technology industry representatives resulted in a withdrawn initiative. AB 375, now law, allows consumers the right to know what data companies possess about them and to stop the sharing and selling of their data. Consumers will also be able to sue over data breaches if the companies are inadequate in their efforts to protect data. The new law takes effect in 2020.