2020’s Big Tax Increases Might Not Be the Sure Bet Some Thought They Were

2020’s Big Tax Increases Might Not Be the Sure Bet Some Thought They Were

Earlier this year, I wrote about the #Build2020 plan put forward by Assembly Democrats to make it easier to raise taxes at the local level for special taxes and general obligation bonds to pay for things like libraries, hospitals, parks, and other politically-appealing infrastructure projects.

This week, the measure was taken up for a vote on the Assembly floor.  Surely, with 61 Democrats out of 80 in the Assembly, ACA 1 should have had no problem securing the two-thirds vote needed to move it out of the lower house.  Think again.

In fact, ACA 1 received just 44 votes in Monday’s vote – 10 shy of the 54 votes required for passage.  Indeed, virtually every Democrat facing a potentially tough re-election campaign in 2020 failed to support ACA 1.  Several “moderate” Democrats joined them to sink the proposal.

What explains the unexpected negative vote for ACA 1?  Perhaps some Democrats are rethinking their push for higher taxes amidst growing talk of a recession and the push for billions collectively in new taxes on the 2020 ballot.

Some at the Capitol and outside interests have been pushing ACA 1 and a host of other tax increase measures thinking that the prospect of higher-liberal voter turnout in the March presidential primary and November general election will propel these tax measures long sought by liberals to victory.

How else does one explain backers of a proposal to gut Proposition 13 and impose a split-roll property tax system, which has already qualified for the ballot, announcing plans to abandon their original proposal in favor of an amended measure.

Why are they going to the trouble of collecting more than 1 million signatures a second time for another ballot measure?  Unsure of the passage of the original measure, they amended it to remove politically problematic provisions or add new “sweeteners” to try and gain more electoral support or neutralize opposition.

Even ACA 1’s author, Assemblywoman Cecilia Aguiar-Curry, D-Winters, took pains to frame the debate as not being a tax increase.  During the floor debate, she said, “to be clear, nothing in this bill increases anyone’s taxes.  Nothing in this bill requires a local government to propose a funding measure to its voters.”

Surprisingly, Assemblyman Ken Cooley, D-Rancho Cordova, chair of the powerful Assembly Rules Committee, openly spoke out against ACA 1 during the debate.  Recounting his experiences as a young legislative staffer in the 1970’s when Prop. 13 was first enacted, he said that, “I remember the fear of people of the cost of taxation going through the roof and impeding my ability to buy a home.”

Speaking of today’s housing crisis, he noted that, “in the current time, I know young couples, outstanding couples, self-employed couples with good jobs, worried about buying a home in California.”

Cooley and other moderates know that lack of significant action to increase home building and lower housing costs, coupled with crushing property tax increases that could put homebuying out of reach for many working class Californians, might not be a recipe for electoral success – even in liberal California.

Of course, no bill is “dead” at the State Capitol until session adjourns for the year on September 13.  It’s likely that ACA 1 will come back for another vote sometime soon.  But Monday’s vote is the first sign that 2020’s big tax push may not be the slam dunk that some in Sacramento thought it would be.

Tim Anaya is the Pacific Research Institute’s communications director.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.