LEAGUE OF WOMEN
VOTERS OF CALIFORNIA
EDUCATION FUND |
Nonpartisan Pros
& Cons of
PROPOSITION
37
FEES. VOTE REQUIREMENTS. TAXES.
|
| Initiative
Constitutional Amendment |
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THE QUESTION
Should the California Constitution be changed to redefine as taxes any compulsory regulatory fees enacted by state or local government on a product or activity that has or can cause environmental or health damages?
THE SITUATION
State and local governments currently can impose a variety of fees and taxes on residents and businesses. In general, taxes (such as income, property and sales) are used to pay for general public services such as transportation, education, and the courts. Fees usually pay for a specific service or program that benefits individuals or businesses. User fees (such as park entrance charges) pay for the cost of the service; whereas regulatory fees (such as land development, smog check, restaurant health inspection) pay for programs which place rules upon the activity performed.
The process for creating new taxes is more stringent than that for creating new fees. State or local governments can create or increase a fee by a majority vote of the governing body. In contrast, creating or increasing a tax usually requires a two-thirds vote of either the people or the state legislature.
THE PROPOSAL
Proposition 37 redefines certain compulsory fees as taxes. It would:
- Require a two-thirds vote of the state legislature to impose state fees used to pay for monitoring, studying or mitigating environmental, economic or societal damages of an activity when the fees impose no regulatory obligation upon the payor
- require, at the local level, a two-thirds vote of the people to pass a fee if the proposed charge is for a specific purpose, or a simple majority vote if for a general purpose
- redefine such regulatory fees as taxes, beginning with fees enacted after July 1, 1999 and into the future.
The proposal excludes certain property-related fees, assessments and development
fees, and excludes damages, penalties or expenses recoverable from a specific
event. It also does not apply to fees that are increased due to inflation or greater
workload.
FISCAL EFFECT
Many charges that are presently considered fees would be considered taxes in the future. Governments would need to meet more stringent standards to impose new regulatory fees on businesses and individuals to cover the costs of new programs. According to the Legislative Analyst, "To the extent that a newly defined tax does not obtain … approval required for a tax, government would have less revenue." However, the net amount of future revenue loss cannot be determined, as it depends on future voting results.
SUPPORTERS SAY
- Proposition 37 will limit the growth of government, bureaucratic waste and higher prices for consumers.
- This measure makes certain that taxpayers know what they're paying for.
OPPONENTS SAY
- Proposition 37 makes taxpayers, rather than the responsible corporations, pay for environmental and health damages caused by their products.
- It would overturn the unanimous decision of the California Supreme Court to make for-profit companies pay mitigation fees on damages caused by manufactured products.
For further information:
Supporters: (916) 448-4266, www.yesonprop37.org
Opponents: (510) 444-4793, www.polluterprotection.com
Analysis prepared by the League of Women Voters of California Education Fund
for the November 7, 2000 Election.
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Last updated: October 20, 2000
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