Proposition 37 could change who pays for product impacts

provided by Land Use Lines

roposition 37, a statewide initiative on the November ballot, reclassifies certain types of fees as taxes and subjects them to approval by two-thirds, rather than a majority, vote of the Legislature at the state level; and voter approval, rather than approval by the governing body, at the local level.

Prop 37 affects fees imposed for the primary purpose of addressing health, environmental or other "societal or economic concerns." The proposition states that charges imposed for these purposes are taxes, unless government also imposes significant responsibilities on the fee-payer related to addressing the public problem.

Proponents of Proposition 37 maintain that their primary goal is to overturn a unanimous decision of the California Supreme Court in Sinclair Paint Company v. State Board of Equalization. The Childhood Lead Poisoning Prevention Act of 1991, passed by a majority of the Legislature and signed by then-Governor Pete Wilson, imposed a fee on manufacturers of lead-containing gasoline and paint products, with the monies raised funding a lead poisoning prevention and treatment program administered by the Department of Health Services. The Sinclair Paint company sued, arguing that the fee was actually a tax, and so was unconstitutional because it was only passed by a majority and not two-thirds vote of the Legislature. In a 7-0 decision, the Supreme Court ruled that lead paint fees should properly be considered a "regulatory fee," rather than a "tax," and thus could lawfully be enacted by majority vote of the Legislature.

Proposition 37's reclassification of certain fees as taxes would limit the ability of state and local governments to impose or increase certain types of fees. According to the Legislative Analyst, the result would be revenue losses from minor to significant, depending on litigation and subsequent elections. The proposition could invalidate fees enacted since July 1, 1999; however, it is unclear whether any fees fitting the mea-sure's definition have been enacted. The measure's proponents and opponents disagree on the scope of fees that would be affected by Proposition 37. These differences would likely be resolved through litigation over the scope and precise meaning of "monitor, study or mitigate the societal or economic effects of an activity" and whether a fee imposes a "significant regulatory obligation."

The sponsors of Proposition 37 are the California Chamber of Commerce, California Taxpayers Association, and California Manufacturers and Technology Association. Proponents of Prop 37 argue that a YES vote would stop hidden taxes on food, gasoline, utilities and other necessities, and make politicians accountable to taxpayers by requiring a vote of the people or a 2/3 vote of the Legislature to enact these hidden taxes. Yes on 37 website:

Opponents of Prop 37 say that a YES vote would protect polluters and shift their costs to taxpayers. Opponents argue that the oil and tobacco lobbies who have paid for Prop 37 want taxpayers to pay for the pollution and health effects their products cause. No on 37 website www.polluterprotection .com.

The California Budget Project's "Taxes vs. Fees: What Will Proposition 37 Mean for California," can be viewed at the CBP website

LAND USE LINES is a publication of the California Futures Network (CFN) and occasionally includes contributions from other organizations. CFN is a statewide coalition dedicated to economically, socially equitable, and environmentally sound land use in California.