California ballot measure limiting local taxes is failing

A California ballot measure defeated in Tuesday night’s election prevented a change which could’ve made it more difficult for local governments and agencies to receive funding by raising the approval threshold.

Proposition 43 looks to be failing with 55.4% of statewide voters voting no and 44.1% voting yes. If passed, it would require a two-thirds majority vote for citizen initiatives pertaining to sale taxes — such as real estate, utilities and transit — which under current law only requires a simple majority. Local government and transit leaders are celebrating its failure, as the measure would have impacted funding avenues amid already strained budgets.

“We opposed the measure,” Leah Toeniskoetter, president and CEO of the San Jose Silicon Valley Chamber of Commerce, told San José Spotlight. “The Regional Transit Measure shows why we need to preserve local voters’ ability to invest in essential infrastructure when the state falls short. At the same time, the lower tax approval thresholds demand greater accountability and careful consideration of the cumulative impact on businesses, particularly small businesses.”

Prior to the possible two-thirds requirement making it on the ballot, local governments in the region passed tax measures that could have faced steeper climbs to voter approval. Facing a $50 million deficit, San Jose placed a 2% hotel tax increase before voters in the June primary election that was approved with a simple majority. City leaders said the expected $10 million in annual revenue will be critical to avoiding cuts in core services like public safety and libraries.

“Proposition 43 would have let one-third of voters overrule the majority,” Mayor Matt Mahan told San José Spotlight. “When residents come together and decide to invest in affordable homes, or in getting people off our streets and into shelter, that choice will remain theirs. Cities are on the front lines of the housing and homelessness crisis, and we need every tool to solve it, not new barriers.”

In addition, 2025’s Measure A, a countywide five-eighth cent sales tax increase approved by voters last November, received criticism at the time for being placed on the ballot as a general tax instead of a special tax, which would have required two-thirds approval as Proposition 43 aims to do. That measure will bring about $330 million in annual revenue, which county officials have said will be used for hospitals and healthcare — and will help avoid hospital closures. 

If Proposition 43 had been in effect, it would have impacted Senate Bill 63, a regional 0.5% sales tax increase on the Nov. 3 ballot that will raise $1 billion annually for public transit across five Bay Area counties. SB 63, also known as the Regional Transit Measure, is polling at 54.1%, as of Thursday, far from the 66.7% supermajority requirement that Proposition 43 would impose. It only needs a simple majority to pass and is seen as a possible way to fund transit agencies in the region, such as VTA — which will receive about $264 million until the tax sunsets after 14 years.

VTA Board Chair and Campbell Councilmember Sergio Lopez opposed Proposition 43, as he felt it empowered a super minority with veto power over the will of the majority.

“The results are a win for democracy,” he told San José Spotlight. “I look forward to working to improve our transit system along with continuing to build transparency and accountability into our decisions.”

The majority of VTA’s funding comes from previous sales taxes that will have to be renewed in the coming decade, he previously said.

But Proposition 43 is not without its supporters, which includes the Howard Jarvis Taxpayers Association, California Taxpayers Association, Family Business Association of California and the California Hispanic Chambers of Commerce. State groups who oppose it include California Professional Firefighters, California Federation of Teachers and Nurse Alliance of SEIU CA.

Mark Hinkle, president of the Silicon Valley Taxpayers Association, is baffled by the proposition’s outcome.

“The cost of living is a major concern of the voters. So, why did they vote to increase the cost of living here in California?” Hinkle told San José Spotlight.

Hinkle said the rejection of this proposition, as well as others, is a rejection of the status quo.

“Voters are unhappy with the GOP and Trump,” he said. “If voters are not happy, the incumbent party pays the price. Propositions 1, 2, 3, 37, 38, 43, 44 and 45 all benefited from the anti-incumbent voters. Only Prop. 40 escaped the wrath of the voters because of hundreds of millions of dollars spent to defeat it.”

Santa Clara County Executive James Williams, a legal expert in revenue and taxation, counts the defeat of Proposition 43 as a win.

“As we saw in the election returns across the country, our democracy is built on the foundational principle of majority rule,” he told San José Spotlight. “By voting down Proposition 43, voters in Santa Clara County and across California sent a message that they want a real voice in deciding the issues that affect their communities and the will of the voters should guide those decisions.”

Contact Lorraine Gabbert at [email protected].