The measure states that Californians have the power to repeal or reduce any local tax, assessment, or fee through the initiative process.
Thus, the specific maximum signature requirement under Proposition 218 is five percent (5%) of the votes cast for all candidates for Governor at the last gubernatorial election[13] within the territory of the local government.
[16] Significant controversy has also occurred from use of the local initiative power under Proposition 218 to reduce or repeal public agency domestic water rates and charges.
The local initiative power under Proposition 218 can also be used as an alternative to litigation (such as when cost, time delay, or legal risk issues might not make litigation an attractive option), and has also been successfully used as a legislative remedy to reduce or repeal a local levy following the defeat of a lawsuit challenging the validity of the levy under Proposition 218.
Often, a more specifically targeted levy reduction will have a significantly better chance of being approved by local voters and withstanding a legal challenge.
[22] Yet another application could target local utility user tax “modernization” measures that have been approved by voters over the past few years.
Furthermore, if state statutes or other laws require local utility rates to be set at specified service levels, those issues must also be taken into consideration and satisfactorily addressed in drafting an initiative.
This includes any attempt by a local government relying on SB 231 (2017)[26] to evade the constitutional election requirement for stormwater fees and charges under Proposition 218.
A Mello-Roos tax or other charge levied to finance a service is generally subject to reduction or repeal using the local initiative power under Proposition 218.
A Mello-Roos tax or other charge levied to repay bonds is a legally more complex situation because federal contract impairment issues may preclude the exercise of the local initiative power.
Following the controversial 2017 California Supreme Court decision in California Cannabis Coalition v. City of Upland,[29] local tax increase initiatives have appeared on the ballot that seek to evade the constitutional two-thirds voter approval requirement for special taxes under Proposition 13[30] and Proposition 218.
Because significant federal contract impairment issues are typically present which may preclude the exercise of the local initiative power with respect to such bond taxes, advice from legal counsel is almost always needed.
A compensatory initiative would target an alternative revenue source for reduction or repeal to compensate for the desired relief not otherwise available due to federal legal constraints.
In some instances, it may not be legally possible to target a particular utility service fee or charge for reduction or repeal because of California statutory or case law restrictions affecting the exercise of the local initiative power.
A compensatory initiative could target an alternative revenue source for reduction or repeal, such as a related utility users tax, to the extent any such legal restrictions exist.
[34] An example illustrating the foregoing involves the transfer of “profit” fees and charges by a local government in connection with the provision of electric service.
Matching contributions typically come from either other government sources or from the private sector in the form of voluntary payments such as from the local business community.
Such initiatives provide for the reduction or repeal of a local tax, assessment, fee or charge, and generally contain no other substantive provisions.
The Howard Jarvis Taxpayers Association has released a general publication to assist voters in repealing or reducing existing city taxes using the local initiative power under Proposition 218.
[37] Extensive findings and declarations language, with supporting foundations in the official record, are also generally necessary for certain reduction or repeal initiatives involving local government utility fees and charges, especially in situations where California laws may require the local governing body to levy utility fees and charges in sufficient amounts to maintain specified service levels to the community.
[38] If a local initiative measure under Proposition 218 includes extensive findings and declarations relating to the reduction or repeal of a utility fee or charge subject to specified service levels mandated by California law, and if the local initiative measure is subsequently approved by the voters, then the findings and declarations of the people as set forth in the initiative measure should generally control for purposes of determining compliance with legal mandates related to specified utility service levels.
Thus, voters contemplating a local initiative measure under Proposition 218 in such instances generally need to include their documentation in the official record of the utility fee adoption proceedings to counter any documentation included in the official record by the governing body of the local government.
Such lawsuits have the practical effect of prohibiting the initiative proponents from gathering signatures to place their measure on the ballot which effectively precludes the proponents from exercising the local initiative power under Proposition 218 until at least such time as the local government lawsuit concerning the ballot title and summary has either been resolved by the courts or by the parties.
Exercise of the local initiative power under Proposition 218 was generally confirmed and upheld by the California Supreme Court in Bighorn-Desert View Water Agency v. Verjil, 39 Cal.
[44] The referendum power issue becomes more significant for local levies that do not require a mandatory election under Proposition 218 prior to their imposition.
[46] In reversing the Court of Appeal which held that the exercise of the local referendum power was legally permissible,[47] the California Supreme Court broadly construed the "tax levies" exception to the referendum power to include water utility rates even though these same rates are not considered "taxes" for purposes of the voter approval requirements under Propositions 218.
Rather, the holding is limited to utility rates on which local governments depend to provide essential services to their residents.
This occurs with the approval of local government property-related fees and charges for domestic water, sanitary sewer, or refuse collection services.
[58] In some instances, there exists reasonable uncertainty whether a replacement revenue source constitutes an amendment of a successful reduction or repeal initiative under Proposition 218.
Campaign reporting requirements under the California Political Reform Act of 1974[65] usually apply to local initiatives under Proposition 218.