High and Dry in Pasadena
California cities game fiscal emergencies to raise taxes.
Downtown Pasadena with the city hall and the San Gabriel mountains in California.PHOTO: GETTY IMAGES
By The Editorial Board
July 27, 2018 6:41 p.m. ET
As a rare municipality with a AAA credit rating from S&P Global, Pasadena is an oasis of financial stability in California. Yet the city declared a fiscal emergency earlier this year, and the reason is a sign of the progressive times.
In 1978 and 1996, Californians approved two amendments to the state constitution to limit municipal authority to raise taxes. Among other restrictions, Prop. 13 requires the support of two-thirds of voters to raise taxes for a specific local program or project. Under Prop. 218, new taxes can be proposed only during general elections when the city council is also up for a vote.
But there’s a loophole. “In cases of emergency declared by a unanimous vote of the governing body,” Prop. 218 says, cities can ignore the timing restrictions. And California lets local leaders determine what constitutes a fiscal emergency. Under that flexible definition, cities can propose taxes whenever they want while still following the letter of Prop. 218. Continue reading
Bed tax law suit gets new life
DENVER — Ongoing litigation against the Colorado Department of Health Care Policy & Financing, among others, over a 2009 program that raised taxes via a “hospital provider fee,” has new energy after Cause of Action Institute announced earlier this month it would take on the representation of the plaintiffs in the case.
Cause of Action is a Washington D.C.-based 501(c)(3) organization that according to its website advocates for “economic freedom and individual opportunity advanced by honest, accountable, and limited government.”
Plaintiffs, who were originally represented by Mountain States Legal Foundation, had 60 days to find new counsel after Mountain States withdrew for reasons not related to the case or the plaintiffs.
Lee Steven and James Valvo are the lead attorneys. The Colorado-licensed attorney is Michael Francisco, who while working in the Colorado Attorney General’s office helped to write the defense of Colorado’s Taxpayer’s Bill of Rights (TABOR) in Kerr vs. Hickenlooper, which claimed TABOR was a violation of the U.S. Constitution’s guarantee of a republican form of government. That argument lost.
This case was initially filed in 2015. It asserts the state’s Hospital Provider Fee is actually a tax enacted in violation of the TABOR. Continue reading
High Court decision could send internet sales taxes to Durango
New revenue would help, but not solve, city’s long-term budget deficit
The city of Durango could see some additional tax revenue thanks to a recent U.S. Supreme Court decision on internet sales, but not enough to solve a projected municipal budget shortfall.
The Supreme Court recently ruled in South Dakota v. Wayfair that states and local governments can require remote retailers with no physical presence in a state to pay sales taxes.
“The Supreme Court has recognized that our tax system has changed, our economy has changed and we need to modernize,” said Ali Mickelson, director of legislative and tax policy with the Colorado Fiscal Institute, a nonpartisan organization.
The new sales tax revenues could bring in an additional $168 million to $262 million to the state of Colorado and local governments, according to a U.S. Government Accountability Office report.
But there are unanswered questions associated with the decision, including when new revenue will start to flow and how much local governments might receive.
“I don’t know that any experts are certain about what’s gong to happen,” Mickelson said.
Backers of a measure to raise taxes for education submit petition signatures
DENVER, July 11, 2018 — The backers of a proposed constitutional amendment that boosts income taxes to raise money for education today turned in signatures to the Secretary of State’s office.
The signatures for Initiative 93, as it is now called, are the first to be turned in this election season in an effort to get a measure on the Nov. 6 general election ballot. It is also the first initiative where supporters had to collect signatures in all 35 state Senate districts as required by the 2016 ballot measure “Raise the Bar.”
Initiative 93 involves a complex formula for raising income taxes among the state’s top earners.
Colorado allows citizens to put issues on the ballot after going through a process that includes reviews by staffers with the Secretary of State, the attorney general and Legislative Legal Services. These reviews do not determine the merit of the proposal, only if it meets state standards to attempt to get on the ballot. Continue reading