Next month, California voters will decide whether to require a two-thirds vote for voter-initiated local special taxes, or taxes dedicated to a specific purpose.
Proposition 43 would reverse a series of court decisions that have allowed these measures to pass with a simple majority, raising their approval threshold to the same one that local lawmakers face to enact these taxes. If passed, it would apply to measures placed on ballots on or after January 1, 2027.
While cities, counties, and special districts provide essential services, including fire protection, roads, parks, and libraries, their ability to raise taxes is governed by a complicated set of statewide rules. Proposition 43 could further constrain local governments’ ability to raise revenue, even for services supported by a majority of voters.
California’s fiscal history and comparisons with other states offer some perspective on what the change could mean for local governments and the communities they serve.
California's fiscal rules are nearly 50 years in the making
Proposition 43 joins a lineage of statewide measures that reshaped local public finances starting in the late 1970s. A few notable examples:
Proposition 13 (1978) capped property tax rates and required two-thirds voter approval for local special taxes, which later came to be defined as taxes dedicated to special purposes.
Proposition 218 (1996) added restrictions on local governments' ability to raise revenue, including new simple majority voter-approval requirements for new general taxes and property-related fees.
Proposition 39 (2000) lowered the voter threshold for qualifying school facility bonds from two-thirds to 55 percent, moving in the opposite direction.
Proposition 26 (2010) broadened the definition of taxes subject to voter approval.
The result is a complicated set of institutional rules where revenue changes face different voter-approval requirements depending on their type, how revenue will be used, and whether voters or legislators placed the proposal on the ballot.
California is not the only state revisiting supermajority requirements in November. Voters in South Dakota and Utah will consider measures that would require higher approval thresholds for certain tax or constitutional changes. But California's debate is different: It centers on voter-initiated local tax measures rather than statewide tax initiatives or statewide constitutional amendments.
The California Budget and Policy Center identifies several recent voter-initiated special taxes that passed with a simple majority vote. Examples include San Francisco’s tax on commercial landlords to raise funds for child care and early education, and Fresno’s increase of its local sales tax rate to fund community parks.
What the revenue patterns reveal
According to TPC’s analysis of the 2024 Census Annual Survey of State and Local Government Finances, California ranked 37th among states on the share of local general revenue coming from own-source revenues, like taxes, fees, or charges, rather than federal or state government transfers (Figure 1).
Since 1977, just before Proposition 13 began reshaping California's local finances, growth in local own-source revenue has trailed growth in state own-source revenue, although some of this reflects different tax bases at each government level, including the state's reliance on income taxes and local governments' heavier reliance on property taxes and fees (Figure 2).
Together, these figures suggest that California's local governments remain somewhat reliant on state decisions and intergovernmental funding streams. However, local governments continue to deliver many public services. This disconnect can weaken efficiency and accountability, as noted by the state's Legislative Analyst’s Office (LAO).
And, if Proposition 43 makes it more challenging for local governments to raise revenues, local lawmakers may need to increase general taxes, reduce government spending, or look to state lawmakers to help foot their bills. Unlike special taxes, general taxes are not earmarked to be spent for a particular purpose. Voters who support a tax that specifically pays for child care or community parks may be less willing to support a general tax that goes into a government's general fund and could be spent across a wide range of activities.
Further, localities within California differ substantially in wealth, economic opportunity, and fiscal capacity. Jurisdictions with stronger property tax bases and local economies can often generate more revenue from the same available tax policy than communities with fewer resources. If dedicated local revenues from special taxes are harder to secure, those disparities in fiscal capacity and maintenance of services between poorer and wealthy jurisdictions could widen, raising potential equity concerns.
California has seen before how voting rules affect tax measures
Prior research found that voter approval rates vary considerably by type of revenue measure, with transportation, fire protection, and education-related measures receiving the most support.
And after Proposition 39 lowered the approval threshold for school facility bond measures in 2000, passage rates increased by nearly 30 percent, according to the LAO, even though average share of voters supporting the measures remained roughly flat.
California’s voting rules create a contradiction
Voters often prefer taxes dedicated to a specific purpose, yet California generally requires higher approval thresholds for those taxes than for general taxes.
Proposition 43 would extend the two-thirds approval requirement, which currently applies to local lawmakers, to voters who propose local special taxes. Supporters could argue that requiring broader agreement protects taxpayers from increases that lack widespread support. But the higher threshold would also make it harder to pass tax measures that a majority of voters do support.
California’s history suggests that voter-approval thresholds matter. The question facing voters in November is whether requiring broader support for local special taxes is worth potentially limiting communities’ ability to raise revenue for public services.
