CC - Item 9A - State Ballot Measures 19 And 26 OppositionROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY C UNCIL
FROM: JEFF ALLRED, CITY MANAGER
DATE: SEPTEMBER 14, 2010
SUBJECT: STATE BALLOT MEASURES 19 AND 26 OPPOSITION
SUMMARY
The League of California Cities (League) has taken a position of opposition on Propositions 19
and 26, which are scheduled to be included in the Novemer 2010 Statewide Election. The
League has also requested its members to adopt resolutions opposing these propositions.
Staff Recommendation
Staff recommends that the City Council approve Resolutions 2010 -58 and 2010 -59 in opposition
to Propositions 19 and 26.
ANALYSIS
Proposition 19
The League of California Cities is opposed to Proposition 19, The Regulate, Control and Tax
Cannabis Act of 2010. This opposition position was taken following review by both the
League's Public Safety and Revenue and Taxation Committees,. and the League Board of
Directors.
Reasons for Opposition: City officials are concerned about the about the potential increase
in crime, the unsatisfactory experience with medical marijuana implementation, and the
measure's breadth and poor drafting. These policy concerns far outweighed the potential for
additional local revenue.
Initiative Summary:
The initiative would:
1) Permit people age 21 or older to personally consume marijuana. The personal
consumption would be confined to a "non- public place," defined as including a residence
or a public establishment licensed for on -site marijuana consumption.
2) Allow a person to (a) possess, process, or transport up to one ounce of marijuana for
personal consumption; (b) cultivate marijuana on private property in an area up to 25 sq.
feet; (c) possess harvested and living marijuana plants cultivated in such an area; (d)
possess any items or equipment associated with these activities.
3) Permit the state or a local government to authorize the possession and cultivation,
including commercial production, of larger amounts of marijuana.
4) Allow local governments to adopt ordinances and regulations regarding the cultivation,
processing, distribution, transportation, sale or possession for sale of marijuana by such
establishments. Local governments would be able to license businesses that could sell
up to one ounce of marijuana (per transaction) to a person 21 years or older, including
ITEM NO.
APPROVED FOR CITY COUNCIL AGENDA:
City Council Meeting
September 14, 2010
Pace 2 of 5
regulation of the location, size, hours of operation, and signs and displays of the
business.
5) Permit local governments to impose general, excise, or transfer taxes, as well as benefit
assessments and fees, on authorized marijuana - related activities in order to raise
revenue or offset any costs associated with marijuana regulation. Requires that licensed
marijuana establishments pay all applicable federal, state, and local taxes and fees
currently imposed on other similar businesses.
6) Allow sales of marijuana in public establishments licensed for marijuana consumption.
7) Permit the transport of marijuana from a licensed marijuana establishment in one locality
to a licensed establishment in another locality. Does not permit interstate or
international transportation of marijuana.
8) Prohibit local law enforcement agencies from seizing or destroying marijuana that was
possessed, used, or sold in accordance with this measure.
9) Prohibit the smoking of marijuana in the presence of minors or the consumption of
marijuana while driving.
10) Ban any individual licensed to engage in authorized marijuana activity who negligently
gives or sells (or offers to do so) marijuana to a person under 21 from owning, operating,
or being employed by a licensed marijuana establishment for a period of one year. Any
person age 21 or older who knowingly gives (or offers) marijuana to a person between
the ages of 18 and 21 could be sent to county jail for up to 6 months and fined up to
$1,000 per offense. Does not change the penalties associated with giving, or offering,
marijuana to minors under the age of 18. Local governments could impose additional
penalties or civil fines on activities that were inconsistent with the terms of the measure.
11) State that no person could be punished, fined, or discriminated against for engaging in
any conduct permitted by the measure.
12) Maintain employers' existing rights to address on- the -job consumption of marijuana that
affects an employee's job performance.
Proposition 26
The League of California Cities is opposed to Proposition 26, Proposed Constitutional
Amendment: State and Local Fees and Charges: Vote Requirements and Limitations. This
opposition position was taken following review by the League's Revenue and Taxation
Committee and the League Board of Directors.
Reasons for Opposition: City officials are concerned about the many potential negative
effects of this measure on local revenue raising authority.
Initiative Summary: Restricts in various ways the ability of the state and local governments to
adopt fees. More specifically, this initiative:
1) States via findings that: (A) Since the enactment of Proposition 13 in 1978, increases in
state taxes require a two - thirds vote in each house of the Legislature; (B) Since the
enactment of Proposition 218 in 1996, local tax increases must be approved by voters;
(C) Despite these limitations rates for state income tax, sales and use tax, and state and
local business taxes continue to escalate; (D) Recently, the Legislature added another
$12 billion in taxes; (E) This escalation in taxation does not account for the recent
phenomenon whereby the Legislature and local governments have disguised new taxes
as "fees" without having to abide by (Prop 13 and Prop. 218) voting requirements; (F)
Fees that are couched as "regulatory" which exceed the reasonable costs of actual
City Council Meeting
September 14, 2010
Page 3 of 5
regulation, or are simply imposed to raise revenue for a new program and are not part of
any licensing or permitting program, are actually taxes and should be subject to the
limitations applicable to the imposition of taxes; and (G) the measure states that it
defines a "tax" for state and local purposes so that neither the Legislature nor local
governments can circumvent these restrictions by simply defining new or expanded
taxes as "fees."
2) Changes applicable to the STATE:
• Amends Section 3 of Article XIII A to delete language that requires a two- thirds vote
of both houses of the Legislature for "any change to state taxes enacted for the
purpose of increasing revenues collected thereto, whether by increased rates or
changes in computation" and instead substitutes a new standard which requires a
two - thirds vote of both houses of the Legislature for "Any change in state statute
which results in any taxpayer paying a higher tax." This changed standard
appears designed to eliminate recent legislative interpretations of the existing phrase
"purpose of increasing revenues" that allow, via majority vote, one tax to be
increased if another tax is lowered by an equivalent amount.
• Creates a definition of a "tax" to include any levy, charge or exaction of any kind
imposed by the state except for:
a. A charge imposed for a specific benefit conferred or privilege granted directly to
the payor that: (1) is not provided to those not charged, and (2) does not exceed
the reasonable costs to the state . of conferring the benefit or granting the
privilege.
b. A charge imposed for a specific governmental service or product provided
directly to the payor that: (1) is not provided to those not charged, and (2) does
not exceed the reasonable costs to the state of providing the product or service.
c. A charge imposed for the reasonable regulatory costs to the state "incident to"
issuing licenses and permits, performing investigations, inspections, and audits,
enforcing agricultural marketing orders, and the administrative enforcement and
adjudication thereof.
d. A charge imposed for entrance or use of state property, or its purchase rental or
lease, except for Article Xl, Section 15 (The Constitutional reference to Vehicle
License Fees VLF). While this reference to the VLF is awkwardly located in this
measure, in a clause that otherwise relates to state property, it presumably
reflects that VLF charges are already considered taxes at the state level).
e. A fine, penalty, or other monetary charge imposed by the judicial branch or the
State as the result of a violation of law.
• Applies the above changes to any state statute tax adopted after January 1, 2010.
Declares any tax adopted prior to the effective date of the Act that is not in
compliance with the above requirements and definitions is void 12 months after the
effective date, unless the tax is reenacted by the Legislature and signed by the
Governor in conformance with its provisions.
3) Changes applicable to Local Governments:
• Amends Section 1 of Article XIII C to add to definitions applicable to local taxation
authority a definition of "tax" that is virtually identical to the definition applicable to the
state outlined above (See Paragraph #2), with the following "additions" (added to the
City Council Meeting
September 14, 2010
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local definition) and "exceptions" (included in the state definition but missing from
the local definition):
a. Additions: There are two additional items -- that are only applicable to local
governments -- that are added to the list of exceptions from the definition of "tax,"
described in paragraph #2, they are: (1) a charge imposed as a condition of
property development, and (2) assessments and property - related fees imposed
in accordance with the provisions of Article XIII D, adopted by Proposition 218 in
1996.
b. Exceptions: While language used in the definition of "tax' applicable to state
and local government is very similar, in several instances the wording in the local
government section is slightly different. The reason to point this out is that these
differences may lead to future different legal interpretations: (1) the term `to the
payor" is dropped from the end of two provisions describing an exception to a tax
applicable to (A) benefits conferred or a privilege granted, and (B) a specific
governmental service or product provided; (2) the term "for" is used in the
language related to licenses and permits applicable to local government, as
opposed to the potentially broader "incident to" in language applicable to the
state; and (3) the exception related to Vehicle License Fees included in the state
definition is missing from the local definition. This omission may or may not be
designed to reflect that in some instances local governments have levied a local
"fee" on VLF registrations, such as in San Mateo which imposes a local vehicle
registration fee (a regulatory fee) for various congestion management relief and
storm water cleanup programs. That said, other provisions of this measure may
capture the San Mateo type 'Yee" as a "tax."
4) Changes applicable to both State and Local Governments:
• Requires both the state and local governments to bear the burden of proof by a
"preponderance of the evidence" that a levy, charge or exaction is: (1) not a tax; (2)
that the amount is no more than necessary to cover reasonable costs of the
governmental activity; and (3) that the manner in which those costs are allocated to a
payor bear a fair and reasonable relationship to the payor's burdens on, or benefits
received from, the governmental activity. (This is currently the standard recognized
by the California Supreme Court.)
5) Includes a "conflicting measures' provision stating that should another measure appear
on the same ballot relating to the legislative or local votes required to enact taxes or fees
that the provision of this measure shall prevail in its entirety should it receive a greater
number of affirmative votes, and the conflicting measure be deemed null and void. The
measure also contains a "severability clause" which permits any provisions that are not
held to be invalid or unconstitutional to remain in effect.
The complete League analysis for both propositions have been included as attachments.
City Council Meeting
September 14, 2010
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PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
w�� r
Matthew E. Hawkesworth
Assistant City Manager
Attachments: A — Resolution 2010 -58
B — Resolution 2010 -59
C — League Analysis of Proposition 19
D — League Analysis of Proposition 26
RESOLUTION: 2010 -58
A RESOLUTION OF THE ROSEMEAD CITY COUNCIL OPPOSING
PROPOSITION 19, THE REGULATE, CONTROL AND TAX CANNABIS ACT
OF 2010
WHEREAS, local autonomy and authority is paramount to a cities' ability to effectively
serve its residents; and
WHEREAS, public safety is a core value and central purpose of city government; and
WHEREAS, marijuana is prohibited by the federal government and the Federal
Controlled Substances Abuse Act provides criminal sanctions for various
activities related to marijuana; and
WHEREAS, the implementation of the statewide legalization of medicinal marijuana
use has serious flaws and should be reexamined for its value; and
WHEREAS, Proposition 19, also known as the "Regulate, Control and Tax Cannabis
Act of 2010" on the November 2, 2010, California state ballot would
expand legal marijuana possession for persons age 21 and over and also
permit the cultivation, transportation, and consumption of marijuana on a
statewide basis; and
WHEREAS, cities and counties would be authorized under Proposition 19 to tax the
sale of marijuana based on locally adopted ordinances; and
WHEREAS, changes to land use policies allowing for marijuana cultivation under Prop
19 could infringe on local governments zoning and regulatory authority;
and
WHEREAS, the language of Proposition 19 is broad and uses vague terminology,
which makes the poorly drafted sections subject to additional litigation and
conflict over interpretation; and
WHEREAS, one such provision of Proposition 19 could prevent private and public
employers from complying with federal drug -free workplace rules,
jeopardizing federal funding eligibility for California -based employers; and
WHEREAS, the public safety risks associated with the proliferation of marijuana
cultivation, possession, and consumption far outweigh any revenue
generating benefit that local governments could realize through taxing the
sale of marijuana; now, therefore, be it
NOW THEREFORE, BE IT FURTHER RESOLVED, that the City of Rosemead on the
14th of September, 2010, opposes Proposition 19 on the November 2,
2010, California state ballot.
PASSED, APPROVED AND ADOPTED this 14th day of September 2010.
ATTEST:
Gloria Molleda
City Clerk
Gary Taylor
Mayor
APPROVE AS TO FORM:
Rachel Richman
City Attorney
RESOLUTION: 2010 -59
A RESOLUTION OF THE ROSEMEAD CITY COUNCIL OPPOSING
PROPOSITION 26, PROPOSED CONSTITUTIONAL AMENDMENT: STATE
AND LOCAL FEES AND CHARGES; VOTE REQUIREMENTS AND
LIMITATIONS.
WHEREAS, cities are the economic engine of California and the vitality of cities and
the state's economic recovery is dependant on their fiscal stability and
local autonomy; and
WHEREAS, the City of Rosemead supports protecting local control and funding for
vital local services; and
WHEREAS, the City of Rosemead has had to cut its recent budget by 11% to ensure
a balanced budget, and that unwarranted fiscal limitations imposed on our
community will lead to additional hardship and reduced services for our
city's residents; and
WHEREAS, all local taxes, assessments, and property- related fees (such as for water
and sewer services) already are required to be subject to local voter
approvals; and
WHEREAS, similar voter approval requirements do not apply to tax increases
proposed by the state legislature.
WHEREAS, local governments have made the necessary cuts and enacted local
balanced budgets on time, which has not been the practice of the state
legislature; and
WHEREAS, the state legislature has repeatedly sought to raid local funding rather that
adopt balanced budgets that reflect the state's resources; and
WHEREAS, Proposition 26 on the November 2, 2010, California state ballot —while
attempting to address the authority of the state legislature to raise revenue
— overreaches and seeks to impose additional and unjustified constraints
on local governments; and
WHEREAS, by arbitrarily imposing a new definition of "taxes" applicable to local
government in the state Constitution, Proposition 26, if approved, will
invite additional litigation and destabilize existing funding for local public
safety, health, transportation, and environmental protection; now,
therefore, be it
NOW THEREFORE, BE IT FURTHER RESOLVED, that the City of Rosemead on the
14th of September, 2010, opposes Proposition 26 on the November 2,
2010, California state ballot.
PASSED, APPROVED AND ADOPTED this 14th day of September 2010.
ATTEST:
Gloria Molleda
City Clerk
Gary Taylor
Mayor
APPROVE AS TO FORM:
Rachel Richman
City Attorney
LEAGUE 1400 K Street, Suite •Sacramento, California
Phone: e: 916.658.8200 Fax: 916.658.8240 .8240
OF CALIFORNIA www.cacities.org
CITIES
Proposition 19
League Position: Oppose. The League of California Cities is OPPOSED to Proposition 19,
The Regulate, Control and Tax Cannabis Act of 2010. This opposition position was taken
following review by both the League's Public Safety and Revenue and Taxation Committees, and
the League Board of Directors.
Reasons for Opposition: City officials are concerned about the about the potential increase in
crime, the unsatisfactory experience with medical marijuana implementation, and the measure's
breadth and poor drafting. These policy, concerns far outweighed the potential for additional
localrevenue.
Text of Measure: http: / /ag.ca.gov /cros attachments /initiatives /pdfs /i821 initiative 09-
0024 amdt 1 -s.pdf
Initiative Summary:
The initiative would:
I ) Permit people age 21 or older to personally consume marijuana. The personal
consumption would be confined to a "non- public place," defined as including a residence
or a public establishment licensed for on -site (onsite ?) marijuana consumption.
2) Allow a person to (a) possess, process, or transport up to one ounce of marijuana for
personal consumption; (b) cultivate marijuana on private property in an area up to 25 sq.
feet; (c) possess harvested and living marijuana plants cultivated in such an area; (d)
possess any items or equipment associated with these activities.
3) Permit the state or a local government to authorize the possession and cultivation,
including commercial production, of larger amounts of marijuana.
4) Allow local governments to adopt ordinances and regulations regarding the cultivation,
processing, distribution, transportation, sale or possession for sale of marijuana by such
establishments. Local governments would be able to license businesses that could sell up
to one ounce of marijuana (per transaction) to a person 21 years or older, including
regulation of the location, size, hours of operation, and signs and displays of the business.
5) Permit local governments to impose general, excise, or transfer taxes, as well as benefit
assessments and fees, on authorized marijuana - related activities in order to raise revenue
or offset any costs associated with marijuana regulation. Requires that licensed
marijuana establishments pay all applicable federal, state, and local taxes and fees
currently imposed on other similar businesses.
6) Allow sales of marijuana in public establishments licensed for marijuana consumption.
7) Permit the transport of marijuana from a licensed marijuana establishment in one locality
to a licensed establishment in another locality. Does not permit interstate or international
transportation of marijuana.
8) Prohibit local law enforcement agencies from seizing or destroying marijuana that was
possessed, used, or sold in accordance with this measure.
9) Prohibit the smoking of marijuana in the presence of minors or the consumption of
marijuana while driving.
10) Ban any individual licensed to engage in authorized marijuana activity who negligently
gives or sells (or offers to do so) marijuana to a person under 21 from owning, operating,
or being employed by a licensed marijuana establishment for a period of one year. Any
person age 21 or older who knowingly gives (or offers) marijuana to a person between
the ages of 18 and 21 could be sent to county jail for up to 6 months and fined up to
$1,000 per offense. Does not change the penalties associated with giving, or offering,
marijuana to minors under the age of 18. Local governments could impose additional
penalties or civil fines on activities that were inconsistent with the terms of the measure.
1 1) State that no person could be punished, fined, or discriminated against for engaging in
any conduct permitted by the measure.
12) Maintain employers' existing rights to address on- the -job consumption of marijuana that
affects an employee's job performance.
Background: ,
California is considered a pioneer in the regulation of marijuana. In 1913, California first
prohibited the sale and possession of marijuana. The possession, use, transportation or cultivation
of marijuana is still generally illegal. Penalties for marijuana- related activities vary depending on
the offense, but may result in a fine, probation, jail, or a prison term.
In 1996, California voters passed Proposition 215 which authorized the limited use of marijuana
for medicinal purposes. The proposition was intended to ensure that "seriously ill" residents have
access to marijuana for medical purposes, and to encourage state and federal governments to take
steps towards ensuring the safe and affordable distribution of the drug to patients in need. The
proposition created an exemption from prosecution for physicians, as well as for patients and
primary caregivers who possess or cultivate marijuana for medicinal purposes with the
recommendation of a physician.
Marijuana is prohibited by the federal government. The Federal Controlled Substances Abuse
Act provides criminal sanctions for various activities related to marijuana that are imposed by
federal law enforcement agencies that may act independently or in conjunction with state and
local law enforcement agencies. Although the federal government announced in March 2009 that
it would no longer prosecute medical marijuana patients and providers whose actions are
consistent with Prop 215, it has continued to enforce its prohibitions on non - medical marijuana
activities.
While it is nearly impossible to know how much marijuana is grown and sold in California, some
estimates suggest that the total marijuana crop in California may be valued at $14 billion dollars
annually.
Committee Recommendations:
Public Safety: Oppose. After hearing from both proponents and opponents, the committee voted
to oppose the measure with only I person dissenting. Beyond one member stating that they were
not concerned with the initiative interfering with the ability of a city, or any other workplace, to
implement policies prohibiting marijuana use in the workplace, there was very little discussion of
the initiative.
Fiscal Impact: While specific dollar amounts are not available, the potential savings and
costs are as follows:
• Potential savings of tens of millions of dollars annually by reducing the number of
marijuana offenders incarcerated in state prisons, in countyjails and on probation and
parole.
Jon Getiman, Ph.D. "Marijuana Production in the United States." Bulletin of Cannabis Reform (December
2006).
• Potential increased costs for publicly- funded drug treatment programs.
• Potential costs and savings from the state's Medical Marijuana Program, a patient registry
that identifies individuals eligible to purchase /consume marijuana for medical purposes.
• Potential major revenues from local governments from transfer and transaction taxes, other
taxes, benefit assessments, and fees on marijuana. The amount of these revenues would
depend on the rate of such levies, level of consumption, and price of marijuana.
• Potential increased revenues for the state from income taxes.
• Potential reductions in revenues from fines for marijuana criminal offenders. Also potential
increased revenues from new civil and criminal fines established by the initiative.
• Loss of significant federal funding due to lack of compliance with the Federal Drug -Free
Workplace Act of 1988.
The Board of Equalization analyzed a previous proposal to legalize marijuana and impose a $50
per ounce levy (AB 390, Ammiano, 2009). They estimated that total revenues raised would be
about $1.38 billion. Specific revenue estimates were (in millions):
Net Excise Revenue Gain $ 990
State (6.00 %)
$ 263
Fiscal Recovery Fund (0.25 %)
11
Local (2.00 %)
88
Special District (0.75 %)
31
Total Sales and Use Tax:
$ 392
Total Revenue: $1,382
(This information is given as a reference point only, as the initiative does not provide for a sales
lax.)
California NORML (National Organization for the Reform of Marijuana Laws) estimates that if
cannabis were taxed similar to cigarettes or alcohol, total revenues of $1.5 to $2.5 billion may be
realized.
Note: All revenue projections assume that the federal government does not enforce existing
federal law.
Existing League Policy:
The League does not have existing policy specific to the legalization or taxation of marijuana.
Comments:
Local Powers and Authority
Local governments have broad regulatory authority. The initiative would give local governments
broad authority to regulate, which contradicts current law on all other controlled substances. This
could result in different regulations in each jurisdiction, and could prove to be difficult to
The Board of Equalization assumed the following:
• Legalization of marijuana would cause its street price to decline by 50 percent.
• This 50 percent decline would lead to additional consumption of 40 percent.
• The imposition of the $50 /ounce tax would then lead to reduced consumption of I I percent.
enforce /regulate while opening the door for' jurisdiction shopping" for the least restrictive local
ordinances.
First Amendment issues. Local governments are given the authority to regulate advertising of
commercial marijuana. Advertising is generally covered by the First Amendment and cannot be
regulated. There are some instances of advertising regulation — cigarettes and adult entertainment
—that have survived First Amendment scrutiny.
Property owner approval may (or may not) be required. The initiative states that "Cultivation on
leased or rented property may be subject to approval from the owner of the property" (emphasis
added). This could be read in at least two ways. It could be read to say that the owner could
prohibit cultivation on his /her property. Or it could be read that it is up to the local government to
decide if owner approval is required. This raises an interesting question about public lands. If a
public agency has an employee residing on public land, or a temporary residence is constructed
on public lands, is the cultivation of marijuana allowed?
Taxation and Revenue
Slate dues limited. While local governments would be allowed to impose fees and taxes on
activities related to marijuana, the state government would be precluded from doing so. The state
could only benefit from general taxes imposed regardless of type of business or product
(example: income taxes).
No sales tax. The initiative allows a "transfer or transaction' tax, which, under some
circumstances, might be considered a sales tax. However, the local sales tax is preempted by the
Bradley -Burns law, and the initiative does not amend Bradley- Burns. Therefore, the tax allowed
by this initiative cannot be a sales or use tax. The legislature would have the authority to amend
the law to further the purposes of the act, so they could amend the Bradley -Burns law. The
likelihood that the legislature would do this is open to question.
Does not change current requirements to raise revenues. This is a statutory initiative: therefore,
any current constitutional requirements related to a local government's authorization to raise
revenues (i.e., majority voter approval for a general tax, supermajority voter approval for a
special tax) still apply.
Controlled Substance Reeulation
DUUPossession on school grounds unchanged Does not amend current law that prohibits
driving under the influence or possessing marijuana on school grounds.
Alcohol regulation versus marijuana regulation. While the initiative states that the purpose is to
"regulate cannabis like alcohol," the only way it does so is to restrict usage to persons age 21 and
older. Alcohol consumption and manufacturing is controlled by the state constitution and by the
Alcohol Beverage and Control Act, under which the state has "the exclusive right and power to
license and regulate" alcohol. Unlike other marijuana legalization proposals, there is no single
regulator of marijuana identified in the initiative.
No provisions similar to the open container lane. The initiative specifically does not permit
marijuana use by the operator of any vehicle, boat or aircraft while it is being operated, or that
impairs the operator. However, it is silent (and therefore permits) use by passengers in a vehicle.
possession v. Cultivation and Harvest. In the initiative, § 11300(a)(1) allows a person to possess,
process, share, or transport one ounce of marijuana as long as it is for personal consumption.
However, § 1 1300(a)(3) allows the cultivation and harvest of marijuana plants in a twenty -five
square foot area, which would result in considerably more than one ounce. The committee may
want to discuss if these two sections conflict.
While anrotn t possessed is limited, amount purchased is not. As mentioned above, the initiative
allows a person to possess, etc. one ounce of marijuana. The initiative also limits the sale of
marijuana to one ounce per transaction. However, there is no limit on the number of transactions
one person can make.
Public Safety Impact
bnpaci on prison /jail capacity_ While there is the potential for significant savings due to the
reduction in marijuana offenders, the California Legislative Analyst's Office has stated that freed
jail /prison beds would quickly be filled with other offenders currently being released due to
limited space.
Shrinks the black market. Supporters argue that the prohibition of marijuana artificially creates
crime and black- market traffic in the same way as alcohol prohibition did in the past and deprives
our economy of legal business and revenues.
Impact ort parole /probation conditions. §1 1304(c) provides that "[n]o person shall be punished,
fined, discriminated against, or be denied any right or privilege for lawfully engaging in any
conduct permitted by this Act...." It is not uncommon for parole /probation conditions to forbid
an individual from consuming alcohol or other drugs. Presumably, this initiative could exclude
marijuana use from such conditions.
Potential Legal Challenges & Areas of Contest
Some provisions lack clarity and invite challenges. There are various sections of the initiative
that are unclear and will invite a legal challenge. For example, § 11300 (a)(ii) states the any
person 21 years of age or older could "[c]ultivate, on private property by the owner, lawful
occupant; or other lawful resident or guest of the private property owner or lawful occupant,
cannabis plants for personal consumption only, in an area of not more than twenty -five square
feet per residence or, in the absence of any residence, the parcel." In preparing this analysis, staff
contacted several attorneys to ask if this meant that a person could cultivate an entire parcel if
there was no residence. Staff received differing legal opinions and no final conclusion on the
affect of this language.
Unknown and confusing terms. There are several terms used in the initiative that are unknown or
unclear. Some examples are "transaction and transfer tax" and "benefit assessments." both of
which would impact the ability of a city to raise revenues.
Other Points for Consideration
Federal.Safe and Drug -Free Workplaces. While the initiative states that an employers right to
address consumption that actually impairs job performance by an employee shall not be affected,
there may be some additional impacts that employers should be aware of. According to initiative
opponents, California employers will no longer be able to:
• Screen job applicants for marijuana use
• Regulate any employee conduct related to use, transportation, or cultivation of marijuana,
unless the employer can provejob impairment;
• Choose to maintain a drug -free workplace as required by federal law.
As the Federal Drug -Free Workplace Act of 1988 requires that all employers who receive
government grants and contracts over $100,000 maintain a drug -free workplace, there may be a
significant loss of federal funding to California, potentially billions. In addition, the U.S.
Department of Transportation requires operators of airplanes, locomotives, trucks and buses be
removed if they test positive for narcotics, including marijuana.
Other attorneys who have reviewed the initiative have found that the initiative would not
necessarily have these impacts because 1) federal law will continue to preempt state law, and 2) a
workplace could be considered a "public place' in which consumption is prohibited without a
specific license.
Amendments can be made by the Legislature under certain conditions. Amendments to the
initiative would be allowed to be made by a future initiative or by the Legislature if the law is to
establish a statewide regulatory system for commercial cannabis or adopts less restrictive
provisions regarding personal possession and use. It also allows the state to impose taxes and
fees in place of local governments.
Support - Opposition: (as of May 28, 2010)
Support:
City of Oakland
The campaign in support of the initiative was Unable (not authorized) to provide a list of
supporters. However, similar legislative proposals have received support from the following
organizations:
A New PATH
AFL -CIO
American Civil Liberties Union
American Federation of State, County and Municipal Employees (AFSCME)
California Communities United Institute
California NORML
California Public Defenders Association
California Tax Reform Association
Courage Campaign
Drug Policy Alliance
Interfaith Drug Policy Initiative
Legal Services for Prisoners with Children
Los Angeles Community Action Network
Northern California Chapters of Pink Pistols
Taxpayers for Improving Public Safety
Opposition:
California Association of Code Enforcement Officers
California Bus Association
California Correctional Supervisors Organization
California District Attorney Investigators' Association
California District Attorneys Association
California Narcotic Officers Association
California Peace Officer's Association (John Standish, President)
California Police Chiefs Association
California State Sheriffs' Association
CALM
CoachAmerica
International Faith Based Coalition
Mothers Against Drunk Driving
North Coastal Prevention Coalition
PRIDE- Omaha, Inc.
Save Our Society from Drugs
LEAGUE 1400 K Street, Suite 400 • Sacramento, California 95814
OF CA LI FORN 1A Phone: 916.658.8200 Fax: 916.658.8240
CITIES
www.cacities.org
Proposition 26
League Position: Oppose. The League of California Cities is OPPOSED to Proposition 26,
Proposed Constitutional Amendment: State and Local Fees and Charges: Vote Requirements and
Limitations. This opposition position was taken following review by the League's Revenue and
Taxation Committee and the League Board of Directors.
Reasons for Opposition: City officials are concerned about the many potential negative effects
of this measure on local revenue raising authority.
Text of Measure: htta: / /ag.ca.Ilov /cros attach men ts /initiatives /ndfsA891 initiative 09-
0093.1)d
Initiative Summary: Restricts in various ways the ability of the state and local governments to
adopt fees. More specifically, this initiative:
1) States via findings that: (A) Since the enactment of Proposition 13 in 1978, increases in
state taxes require a two - thirds vote in each house of the Legislature; (B) Since the
enactment of Proposition 218 in 1996, local tax increases must be approved by voters;
(C) Despite these limitations rates for state income tax, sales and use tax, and state and
local business taxes continue to escalate; (D) Recently, the Legislature added another $12
billion in taxes; (E) This escalation in taxation does not account for the recent
phenomenon whereby the Legislature and local governments have disguised new taxes as
"Fees" without having to abide by (Prop 13 and Prop. 218) voting requirements; (F) Fees
that are couched as "regulatory" which exceed the reasonable costs of actual regulation,
or are simply imposed to raise revenue for a new program and are not part of any
licensing or permitting program, are actually taxes and should be subject to the
limitations applicable to the imposition of taxes; and (G) the measure states that it defines
a "tax' for state and local purposes so that neither the Legislature nor local governments
can circumvent these restrictions by simply defining new or expanded taxes as "fees."
2) Changes applicable to the STATE:
• Amends Section 3 of Article XIII A to delete language that requires a two- thirds vote
of both houses of the Legislature for "any change to state taxes enacted for the
purpose of increasing revenues collected thereto, whether by increased rates or
changes in computation " and instead substitutes a new standard which requires a
two - thirds vote of both houses of the Legislature for "Any change instate statute
which results in any taxpayer paying a higher lax." This changed .standard
appears designed to eliniiraale recent legislative interprelations of the existing phrase
"purpose of increasing revenues " that allow, via majority vote, one tax to be
increased if another lax is lowered by an equivalent amount.
• Creates a definition of a "tax" to include any levy, charge or exaction of any kind
imposed by the state except for:
a. A charge imposed for a specific benefit conferred or privilege granted directly to
the payor that: (1) is not provided to those not charged, and (2) does not exceed
the reasonable costs to the state of conferring the benefit or granting the
privilege.
b. A charge imposed for a specific governmental service or product provided
directly to the payor that: (1) is not provided to those not charged, and (2) does
not exceed the reasonable costs to the state of providing the product or service.
c. A charge imposed for the reasonable regulatory costs to the state "incident to "
issuing licenses and permits, performing investigations, inspections, and audits,
enforcing agricultural marketing orders, and the administrative enforcement and
adjudication thereof.
d. A charge imposed for entrance or use of state property, or its purchase rental or
lease, except for Article XI, Section 15 (The Constitutional reference to Vehicle
License Fees V LF). While this reference to the VLF is awkwardly located in this
measure, in a clause that otherwise relates to state property, it presmnably
reflects that VLF charges are already considered taxes at the state level).
e. A fine, penalty, or other monetary charge imposed by the judicial branch or the
State as the result of a violation of law.
• Applies the above changes to any state statute tax adopted after January 1, 2010.
Declares any tax adopted prior to the effective date of the Act that is not in
compliance with the above requirements and definitions is void 12 months after the
effective date, unless the tax is reenacted by the Legislature and signed by the
Governor in conformance with its provisions.
3) Changes applicable to Local Governments:
• Amends Section I of Article XIII C to add to definitions applicable to local taxation
authority a definition of `tax" that is virtually identical to the definition applicable to
the state outlined above (See Paragraph #2), with the following "additions" (added to
the local definition) and "exceptions" (included in the state definition, but missing
from the local definition):
a. Additions: There are two additional items -- that are only applicable to local
governments -- that are added to the list of exceptions from the definition of
"tax," described in paragraph #2, they are: (I ) a charge imposed as a condition
of property development, and (2) assessments and property - related fees imposed
in accordance with the provisions of Article XIII D, adopted by Proposition 218
in 1996.
b. Exceptions: While language used in the definition of `tax" applicable to state
and local government is very similar, in several instances the wording in the local
government section is slightly different. The reason to point this out is that these
differences may lead to future different legal interpretations: (I ) the term "to the
payor" is dropped from the end of two provisions describing an exception to a
tax applicable to (A) benefits conferred or a privilege granted, and (B) a specific
governmental service or product provided; (2) the term ' for" is used in the
language related to licenses and permits applicable to local government, as
opposed to the potentially broader "incident to" in language applicable to the
state; and (3) the exception related to Vehicle License Fees included in the state
definition is missing from the local definition. This omission may or may not be
designed to reflect that in some instances local governments have levied a local
fee" on VLF registrations, such as in San Mateo which imposes a local vehicle
registration fee (a regulatory fee) for various congestion management relief and
storm water cleanup programs. That said, other provisions of this measure may
cap ure the San Mateo type `fee" as a "tax. "
4) Changes applicable to both State and Local Governments:
• Requires both the state and local governments to bear the burden of proof by a
"preponderance of the evidence" that a levy, charge or exaction is: (1) not a tax; (2)
that the amount is no more than necessary to cover reasonable costs of the
governmental activity; and (3) that the manner in which those costs are allocated to a
payer bear a fair and reasonable relationship to the payors burdens on, or benefits
received from, the governmental activity. ("This is currently the standard recognized
by the California Supreme Court.)
5) Includes a "conflicting measures" provision stating that should another measure appear on
the same ballot relating to the legislative or local votes required to enact taxes or fees that
the provision of this measure shall prevail in its entirety should it receive a greater
number of affirmative votes, and the conflicting measure be deemed null and void. The
measure also contains a "severability clause" which permits any provisions that are not
held to be invalid or unconstitutional to remain in effect.
Background:
This initiative is fueled, in part, by recent legislative budgetary battles where the business
community has become concerned with proposals put forth by Legislative Democrats which
include the following:
A budget package sent to the Governor in December of 2008 which proposed to repeal all
taxes on gasoline and replace it with an equivalent fee.
A legal interpretation proffered by Legislative Democrats, and supported by Legislative
Counsel, that the Prop 13 two- thirds legislative vote requirements do not apply to a
measure which decreases a state tax then enacts a replacement tax by an equivalent
amount because it is not a "change to state taxes enacted for the purpose of increasing
revenues. " The recent "gas tax swap" is an example of this concept. Earlier versions of
the gas tax swap, which were not adopted, also included a proposal to allow regions to
levy their own "fees" on gas to pay for transit and other services.
A concern that legislators are seeking to save General Fund dollars whenever possible by
enacting new fees.
Other features of this initiative (through the narrow and precise exceptions to the new definition
of "tar') seek to address longstanding concerns in the business community with the decision in
Sinclair Paint v. State Board of Equalization (1997). In the Sinclair Paint case, the Court upheld
a fee imposed exclusively on paint manufacturers that had used lead in the production of paint to
mitigate health effects of lead on children. The fee supported a program that provided evaluation,
screening, and medically necessary follow -up services for children who were potential victims of
lead poisoning. In upholding the fee, the Court found that the fee was a mechanism to require
manufacturers and other persons whose products have exposed children to lead contamination to
bear a fair share of the cost of mitigating the adverse health effects their products created in the
community. [21
I'-1 The Court referred to the following valid regulatory fees: regulatory fee imposed on A.B.C. licensees to
support pilot project to abate nuisances associated with sale of alcoholic beverages; landfill fee based on
land use to reduce illegal waste disposal; waste disposal surcharge imposed on waste haulers; fee to
support emissions -based formula for recovering direct and indirect costs of pollution emission permit
programs.
Under current law, a "regulatory fee," may not exceed the reasonable cost of providing services
necessary to the activity for which the fee is charged and may not be levied for unrelated revenue
purposes. To demonstrate that a regulatory fee is not a special tax, the government must prove
( I ) the estimated costs of the service or regulatory activity; and (2) the basis for determining the
manner in which the costs are apportioned, so that charges allocated to a payor bear a fair or
reasonable relationship to the payer's burdens on or benefits from the regulatory activity.
Whether the fees collected exceed the cost of the regulatory program need not be proved on an
individual basis. Rather, the agency is allowed to employ a flexible assessment of proportionality
within a broad range of reasonableness in setting fees.
Recently another regulatory fee was upheld in a case called California Building Industry
Association v. San Joaquin Valley Air District (2009) 178 Cal.App.41n 120. The CBIA challenged
the District's indirect source review (ISR) rules which are intended to encourage developers to
reduce indirect pollution (mobile source emissions, caused by new development projects).
Under the ISR, the developer can reduce emissions by incorporating pollution- reducing features
in the project, or paying a fee to fund off -site projects that will reduce emissions, or a
combination of the two. The Court upheld the ISR (fee) as a valid regulatory fee which may be
charged to cover the reasonable cost of a service or program connected to a particular activity;
which may not exceed the amount required to carry out the purposes and provisions of the
regulation; and which bear a reasonable relationship to the fee payor's burdens on or benefits
from the regulatory system.
Fiscal Impact:
The analysis by the Legislative Analyst and Director of Finance finds "Potentially major decrease
in state and local revenues and spending, depending upon future actions of the Legislature, local
governing bodies, and local voters."
Existing League Policy:
As an initial reference point, the League adopted an Oppose position to both Proposition 13 in
1978, and Proposition 218 in 1996, due to their significant limitations on local revenue raising
authority. Based upon the stated findings, this initiative measure is designed to "ensure the
effectiveness of these constitutional limitations. "
The League also opposed a similar measure, Proposition 37 of 2000. Prop. 37 required a two -
thirds vote of State Legislature, or either majority or two- thirds of local electorate, to impose on
any activity tees used to pay for monitoring, studying, or mitigating the environmental, societal or
economic effects of that activity when the fees impose no regulatory obligation upon the payor.
The measure also sought to redefine various fees as taxes, and contained exclusions for certain
real property related fees, assessments and development fees, and damages, penalties, or expenses
recoverable from a specific event. It also contained a provision that stated it did not apply to fees
enacted before July I, 1999, or increased fees due to inflation or greater workload, as specified.
Prop. 37 failed with a narrow 48% Yes, and 52% "No" vote at the November, 2000, election.
While there are no adopted League policies that encompass all aspects of this measure, here are
three related policy reference points:
League's 2010 Strategic Goals. One of the three strategic priorities adopted by the
League Board and leadership for 2010 is to: "Protect Local Control and Funding for
Vital Local Services. Use statewide ballot measure and legislative and legal advocacy to
achieve reforms that protect local control and abolish the power of the state to borrow,
divert or impose restrictions on the use of all local revenue sources, including locally
imposed or levied taxes, the local shares of all transportation tax revenues (including
public transit funding), the redevelopment tax increment, and any other local revenue
source used to fund vital local services."
The most applicable League' Revenue and Taxation policy is under the subject of
"Additional Revenue" and reads: "Additional revenue is required in the state /local
revenue structure. There is not enough money generated by the current system or
allocated to the local level by the current system to meet the requirements of a growing
population and deteriorating services and facilities. (Note: the underlined wording above
was added to League policy at the Committee's previous meeting)
League policy from the Housing, Community and Economic Development Committee
reads: "The League supports providing local discretion in the assessment, collection and
usage of development fees. The state should provide infrastructure funding to help local
communities meet California's growth demands and to increase housing affordability.
The League opposes limiting the ability of cities to levy fees to provide for infrastructure
or services."
Comments:
1) Sponsor's Intent: The "Stop Hidden Taxes" initiative is sponsored by the California
Chamber of Commerce and California Taxpayers' Association, with coalition of taxpayers,
employers and small businesses. In their view, passing this measure would restrict what they
describe as "loopholes in the law," which allow taxes to be raised on products and services
because they are called "fees." Another objective of this coalition is to oppose initiative #09-
0057, the "On Time Budget Act of 2010," an initiative proposal which would allow legislative
budgets to be adopted with a majority vote, and is a potential target of the "conflicting
measures" clause included in this initiative.
2) Definition of "Tax ": The word "tax' is not now defined either in the Constitution or in the
state statutes.111 This initiative defines a tax to include "any levy, charge, or exaction of any
kind" with certain enumerated exceptions. Included within the list of exceptions for local
government are:
• User fees or charges for a specific government service or product.
• Charge for entrance to or use of government property (e.g. park).
• A fine, penalty or other charge imposed for violating the law.
• Charge imposed for a specific benefit conferred or privilege granted.
• Charge imposed for reasonable regulatory costs incident to issuing licenses and permits,
performing investigations, inspections, and audits, enforcing agricultural marketing
orders
• A charge imposed as a condition of property development.
• Assessments and property— related fees imposed in accordance with Proposition 218.
If this measure is approved by the voters, the true interpretation of how it will apply will likely
take years of litigation. Local agencies will need to individually examine local fees charged to
I'l The Courts have said that "tax" has "no fixed meaning;' that it is a legal issue for the courts to decide
based upon an independent review of the facts. Government Code section 50076 defines what is not a
tax ( "a fee that exceeds the reasonable costs of providing a service') but does not define what a tax is.
determine how the specific definitions used in this measure may affect an existing fee. As an
example, the following are examples of fees that appear to be excluded from the list of exceptions
and, therefore, would be "taxes" under the new definition:
• A fee imposed to mitigate the significant environmental impacts of a project.
• An assessment to abate a nuisance.
• A charge for a specific government service or product which is not paid by all persons
receiving the service or product (e.g. could not give a senior or low- income exception).
• A charge imposed for a regulatory program designed to mitigate the social or economic
burdens created by the operations of the fee payers. This means that, for example, the
following two fees would be taxes: the ARB's fee imposed on sources of greenhouse gas
emissions to pay for implementation of the AB 32 program; and the proposed
"transportation fee" that was originally included in the Democrats' gas tax swap
proposal.
• A charge imposed by Fish & Game to review Environmental Impact Reports.
3) Burden of Proof: Under existing law, the government has the burden of proving that a fee or
charge is not a tax; that the amount is no more than is necessary to cover the reasonable costs
of the governmental activity; and that the manner in which the costs are allocated to a payor
are proportional to the payer's burdens on, or benefits received from the governmental
activity. The initiative incorporates this rule into the Constitution. City attorney's report that
there are three basic legal tests of the burden of proof: preponderance of evidence (lowest);
clear and convincing evidence (mid - range); and beyond reasonable doubt (highest).
4) Application to Existing Fees: It is unclear how this measure will be construed to apply to
existing fees that have been adopted by state or local governments. The section that applies to
the state would void non conforming statutes enacted between January 1, 2010, and before the
effective date of the Act. No specific date is mentioned for the provisions that apply to local
government. Both state and local existing fees could become subject to challenge that they are
"unconstitutional."
NOTE: The "Stop Hidden Taxes" coalition produced a list of the following (verbatim) examples of
fees that presumably could be viewed as "taxes" if the measure passes. While this list does not
represent a legal conclusion on any of these "fees, "it provides some context for the types of fees
the sponsors desire to capture. Also, depending on the specific circumstances, changes could be
made to narrow the scope, use or application of a fee to fit the exceptions provided in the
measure.
SPECIFIC INDUSTRY EXAMPLES
Restaurants
• Fees on alcohol to litigate public nuisance associated with sale or consumption
• Fees on canned beverages to mitigate waste /recycling
• Fees on soda to mitigate obesity and other negative health effects
• Fees on unhealthy foods, fats, sugar to mitigute negative health effects
• Health inspection/ntonitoringfees
• Traffic c impact fL'es
• Parking impact fees
• Air quality impact fees
• Water qualiy+ impact fees
• Fees on waste production
• Energy use surcharges and f es
• Fees on snackfood
• Fees on food packaging for takeout orders
• Public safety cost mitigation fees
Public Utilities
• Trenching fees for dimintaian in durability or longevity of roads, traffic congestion
mitigation, mitigate potential damage to existing infrastructure
• Alternativeenergyfees
• Fossil fuel consunnptio n fees
• Eco- impairment fees for hydro facilities
Alcohol
• Mitigation fees to address public nuisances associated with sale or consumption
• Mitigation fees to pay for health services provided by government (mental and
physical) for alcoholics or those injured or otherwise affected by alcoholics
• Fees to fund public programs to prevent illegal consumption by minors or discourage
abuse by adults through education, research into causes and possible cures for alcoholism
Oil
• Carbon consumption fees for pollution mitigation (injuries related to effects ofpollution)
• Eco- Impairnnent fees (effects of drilling, storage, or consumption on habitat or parks
and recreation a'ecis)
• Carbon consumption fees to discourage consumption and encourage use of alternative
fuel source.. Additionally, fiiel consumption as a means for measuring "road damage fees"
• Oil severance fee to mitigate oil spill clean -up, and build larger response and enjorcentem
capabilities
• Hazardous waste fees to support general hazardous waste /substances programs.
• An Air District might impose a refinery gate fee to mitigate harm from diesel exhaust
emissions. A city or county might impose pipeline fee to enhance public safety to respond to
pipeline accidents
• A state or local agency may impose gasoline fee at the pump for cleanup and mitigation
of MTBE contamination at service stations or in lakes and groundwater.
• A local or regional agency might impose a gasoline fee at the pump for mass transit.
(Note: fees could still be assessed if connected to a specific regulation, problem or
liability identifiable to the fee payer)
Tobacco
• Mitigation fees: Fees for mitigating the adverse health effects of tobacco products
(including evaluation, screening, and necessary follow -up services who are deemed
potential victims of tobacco related injuries)
• Deterrence fees: Fees to discourage consumption (by increasing cost of product)
and /or to educate the general public on the consequences of tobacco consumption. Fees
to prevent illegal consumption by minors
Telecommunications
Cellular: Fees to reduce the impacts of DWTs (Driving While Talking), burdens on the
911 syr[enrq polenticrl futw e effects of close proximity radio frequency exposure
Trenching fees for diminution in durability of roads, traffic congestion mitigation
mitigate potential damage to existing infrasructure
Technology Companies
• Fees to mitigate the Digital Divide
• Ergonomic and repetitive motion h jury mitigation
• Site location fees for traffic mitigation and growth impacts
• Youth and video game violence prevention fee
• Hardware disposal fees
• Toxic/Waste fees
Agriculture
• Chemical /gene /hormone and other "altered food "products fees (a perceived threat for
"altered food" could result in fees being levied for research, screening, testing and
treatment should adverse consequences materialize or simply as a means of discouraging
their use out of perceived negative externalities)
• Spoiled /infected food mitigation fees
• Insecticide abatement fees
Food (Relailers /Grocers /Malls)
Traffic impact fees (malls and Big Box retailers)
Public safety impact fees (added security necessary because of increase concentration of
people)
Fast Food
• Traffic impact fees (where traffic backs -up at the drive- through)
• Litter abatement fees
• Fees to fund education, outreach, screening and treatment for obesity (fast,foods
having high concentrations of fat) or similar programs to discover, measure and treat
the adverse health consequences of high cholesterol or caffeine
TAXES
Entertainment
• Arenas /promoters /sports teams: Trek impact fees. Public safety cost mitigation fees
• Television /movies: Location mitigation fees (relating to traffic impacts, clean -up,
public safety and emergency services). Fees on television and movie programming
to mitigate effects of violence on youth or similar anti - social consequences linked to
programming
Non - Indian Gaming
• Public .safety mitigation fees (for expenses associated with a perceived increase in a
criminal element associated with activity- including increase police presence,
specialized investigation units)
• Fees to mitigate effects on compulsive gamblers or other associated addictive
consequences including screening, education, and treatment
Pharmaceuticals
• Mitigation for subsequently discovered health risks potentially associated with a particular
drug product
• Fees to fund drug education
• Fees related to health research
• Fees to fund health treatment
• F_mergencv care fees
• Fees covering the cost of the uninsured or underinsured
• Pharmaceutical cost fees to cover the poor and /or elderly
• Fees related to covering inununizations for children
Railroads
Generally protected by the federal "4 -R Act" enacted by Congress to protect railroads from
discriminatory local taxes. However, the 4 -R Act applies to 'taxes" and not fees or
assessments. So long as the exaction does not contribute to the general fund of the
government, it may not be considered a "tax" under the 4 -R Act. See Wheeling & Lake Erie
Railway Co. v. Public Utility Commission, et. al., Nos. 96 -3703, 3704 (1998)
• Consequently, fees to mitigate railroad- crossing accidents are potential
• F,co- impairineta fees for effects of train traffic on ecosystems or potential effects of rail
accidents
• Pollution abatement fees (whether for emissions or sound)
• Carbon consumption fees
Airlines
• Pollution abatement fees
• Noise abatement fees (also affected by any carbon consmnption fees)
• Crash mitigation fees (reimbursing local governments for costs of search and rescue,
recovery or salvage and investigation)
• Runway maintenance fees
• Ground traffic congestion /mitigation fees
Truckers
• Road damage fees to mitigate damage to streets and highways caused by heavy truck
traffic/spills
• Fees to mitigate the adverse effects of long haul trucking and or fund programs to
research evaluate and reduce potential of trucking accidents. Fees to mitigate health
costs related to injuries of truck drivers or increased risk of traffic fatalities due to size
of trucks used (SUV plus mitigation fee). Could be affected by carbon fuel consumption fees
or pollution mitigation fees
Auto Manufacturing
• Carbon,fitel consmnption fees. Road damage fees based on size of vehicle
• Accident fees (for costs of responding to and treating victims) based on size /safety rating of
vehicle.
• A deterrence fee based on fuel efficiency to fiord mass transit
• Tire disposal fees to mitigate costs and hazards of fire disposal
• Off -road mitigation fee on 4 -wheel drive and all - terrain vehicles to offset eco- daunage of off
road automobile use
Chemicals
• Most closely related to Sinclair paint circumstance where a product is deemed
hazardous, its use discontinued, and then after the fact businesses are pursued for
mitigation fees
• Miligation fees to offset adverse health effects of a chemical or chemical by- product
• Accident /hazard mitigation fees (educating public on proper usage, storage and
disposal of household chemicals; offset health costs in responding to accidents
relating to household chemical accidents)
General Business
• Fees on businesses to fund indoor air quality maintenance and investigation programs
• Hazardous waste fees to support general hazardous waste /substances programs
Insurance
• Fees on properly casualty iinsu•ers for firefighting, earthquake and flood
mitigation /preparation, uninsured drivers and auto case court costs, among many others
• Fees on health insurers for such things as premium assistance for lower income
consumers and those who lack coverage, cover costs of certain medical procedures and
tests and fees for consumer protectiotn /intervention services against insurers "
Support:
"Slop Hidden Taxes" is a coalition of taxpayers, employers and small businesses and is sponsored
by the California Chamber of Commerce and California Taxpayers' Association
American Rental Association
Americans for Prosperity
Americans for Tax Reform
Anaheim Chamber of Commerce
Association of California Life and Health Insurance Companies
California Automotive Wholesalers' Association
California Beer & Beverage Distributors
California Black Chamber of Commerce
California Business Alliance
California Business Properties Association
California Cotton Ginners and Growers Association
California Distributors Association
California Forestry Association
California Grocers Association
California Hispanic Chambers of Commerce
California Hotel & Lodging Association
California Landscape Contractors Association
California League of Food Processors
California Manufacturers & Technology Association
California Metals Coalition
California Retailers Association
California Small Brewers Association
California Taxpayer Protection Committee
Chemical Industry Council of California
Chino Valley Chamber of Commerce
Citizens for California Reform
Coalition of Labor, Agriculture & Business of Santa Barbara County
Contra Costa Taxpayers Association
Dana Point Chamber of Commerce
Family Winemakers of California
Howard Jarvis Taxpayers Association
Industrial Environmental Association
Latin Business Association
Milpitas Chamber of Commerce
National Federation of Independent Business — California
National Taxpayers Union
Newport Beach Chamber of Commerce
Nisei Farmers League
North Valley Hispanic Chamber of Commerce
Orange County Taxpayers Association
Oxnard Chamber of Commerce
Pleasant Hill Taxpayers Association
Pomona Chamber of Commerce
Redlands Chamber of Commerce
Sacramento Hispanic Chamber of Commerce
San Diego Tax Fighters
Small Business Action Committee
Temecula Valley Winegrowers Association
The Wine Group
Valley Industry & Commerce Association
Valley Taxpayer's Coalition
Ventura County Taxpayers Association
Western Agricultural Processors Association
Western Home Furnishings Association
All Star Rents
Ampelos Cellars
Anders -Lane Artisan Wines, LP
A -V Equipment Rentals, Inc.
Award Painting Co.
Barney's Beanery
Bart Enterprises, Inc.
BMP Consulting Services, LLC
Bray Vineyards
Brochelle Vineyards
Bryant Family Vineyard
Cal -West Rentals
Cantata Cellars
Cedar Mountain Winery
Cedar Roof Care
Celebrations Party Rentals & Tents
Chandelle of Sonoma
Chase Family Cellars
Cheer EDU
Clos Saron
Cloverdale Saw & Mower Center
Consilience Wines
Cooper - Garrod Estate Vineyards
Cottonwood Canyon Vineyard
Diageo
Drew Family Cellars
Duckhorn Wine Company
Duralast Construction, Inc.
E -Marc Engineering, Inc.
Fallbrook Winery
Fong Enterprise
Fosters Wine Estates Americas
Four Brix Winery
Gandrud Financial Services Corporation
Heidrun Meadery
Heringer Estates, LLC
Honig Vineyard & Winery
Hopper Creek Winery
ISU Insurance Services — ARMAC Agency
Jada Vineyard & Winery
Joe's Buggy Hans, Inc.
John Christopher Cellars
Korbel
Lafond Winery and Vineyard
La Honda Winery
Lamborn Family Wine
Lancaster Estate
Liquid Bamboo, Inc.
Lost Coast Vineyards, Inc.
M.A.C. Wines, LLC dba Three Wine Company
Marine Mechanical Repair, Inc.
McGrail Vineyards & Winery
M idsummer Cellars
Mokelumne Glen Vineyards
Napa Barrel Care
The Nipomo Wine Group — Phantom Rivers Winery
Paraiso Vineyards
PBG Capital, Inc.
Pedrizzetti Winery
Per Bacco Cellars
Performance Design & Landscape
Pilot Peak Vineyard and Winery
Pleasant Valley Vineyards, Inc.
Pleasanton Rentals, Inc.
Prof rave I International
Rhodes Landscape Design, Inc.
Rocca Family Vineyards
Rochioli Winery
Rodney Strong Vineyards
Sausal Winery
Sawyer Cellars
Scheid Vineyards
Schmidt Family Properties
Schug Carneros Estate Winery
Scott Valley Chiropractic
Seghesio Family Vineyard
Shadow Mountain Vineyards & Winery. Inc.
Silver Mountain
SkyDance Skydiving
Solune Winegrowers
Steltzner Vineyards
Stiles Truck Body & Equipment, Inc.
Still Waters Vineyards
Summit Lake Vineyards & Winery L.L.C.
Terravant Wine Company
Terry Hoage Vineyards
Tolosa Winery
Tre Anelli '
Trinchero Family Estates
V.Santoni & Co.
Vie -Del Company
Weibel Family Vineyards and Winery
Westbrook Wine Farm
William Knuttel Winery
Windsor Oaks Vineyards & Winery
Opposition:
California Tax Reform Association
(A coalition is forming to oppose this measure titled "Taxpayers Against Protecting Polluters."
While opponents have yet to officially register, the opposition is expected to mirror the opponents
of Prop. 37, which included environmentalists, labor, health issue groups and others.)