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 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: www.yesonprop37.org/covered.html.
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
www.cbp.org. 
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