Californians Reject Proposal To Repeal Fuel Tax Hike

UPDATED: 11:43 a.m., Nov. 12, 2018

Californians passed up two chances to lower taxes, voting to keep higher gasoline taxes and reject a proposed tax break for older homeowners in moves that experts said could highlight a greater tolerance for taxes even as many state residents bemoan the high cost of living.

Voters on Tuesday rejected Proposition 6, a Republican-backed proposal to repeal increases in fuel taxes and vehicle fees that are funding $52 billion in road fixes and transit upgrades over a decade.

A separate measure, Proposition 5, to expand a property tax break for older homeowners who move also failed at the polls.

"We are more willing to tax ourselves than 30 or 40 years ago," said Wesley Hussey, political science professor at California State University, Sacramento. "The state has become more Democratic, but it is still a very cautious state when it comes to taxation."

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In a major pushback against taxation four decades ago, California passed Proposition 13, dramatically limiting property tax increases. Since then, the state's demographics and politics have changed, and some experts said that may have made taxes more palatable to voters.

Democrats now hold nearly all statewide offices and are aiming for a two-thirds majority in the state Legislature. About 44 percent of registered voters are Democrats and only one in four are registered Republicans. Both parties have seen their share of registered voters decline since 1978 amid a surge in independents.

Gov. Jerry Brown, a Democrat, persuaded voters to support raising income taxes on the wealthy six years ago to cope with a state budget crisis. Brown was re-elected two years later, and voters approved a ballot measure extending the increases two years after that.

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"Of course it was controversial, and people still argued maybe it was the wrong thing to do, but if we look at the politics of it, I think it was widely seen to solve a problem," said Joseph Bankman, a professor at Stanford Law School who researches tax law.

With nearly 8 million ballots counted Wednesday, Proposition 5 was behind with 42 percent of the vote. Proposition 6 garnered about 45 percent of votes counted.

Jeffrey Cummins, a political science professor at California State University, Fresno, said while the two measures faced different challenges, both tapped a growing willingness among Californians to consider higher taxes.

"It's pretty clear over the last several elections that California voters are much more open to considering tax increases and they don't have a knee-jerk reaction to tax increases, like maybe they did in the 2000s," Cummins said.

The gas tax repeal encountered opposition that was well-financed and included conservative stalwarts, like the California Chamber of Commerce, Cummins said. The ballot's title — "Eliminates Certain Road Repair and Transportation Funding" — likely turned off Californians who widely recognize the state's roads are in poor shape.

The measure to expand property tax breaks for older homeowners who move may have suffered from confusion about what it would do, which typically causes people to vote no, Cummins said. Its main sponsor, the California Association of Realtors, also didn't do any television or radio advertising or direct mailers, despite having a significant fundraising advantage.

Carl DeMaio, a San Diego talk radio host and former councilman who led the push to lower fuel taxes, said he believes that measure failed because the ballot title crafted by the Democratic state attorney general didn't immediately tell voters it was a tax repeal. He said he'll continue to pursue tax reforms via ballot.

The association said it would be back with a revised measure in 2020 and try to work with the state Legislature to achieve its goals, a strategy that has previously failed.

Bruce Cain, a political science professor at Stanford University, said he doesn't believe Californians have a big appetite for taxes though perhaps more so than during the 1970s — and that may be because Democrats haven't been as quick to ramp up spending as before Proposition 13.

He noted that Proposition 5 supporters had to contend with growing resentment among young people facing rising home prices, and Proposition 6 was marketed to Republicans to spur GOP turnout in contested congressional and state races.

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Voters have also been willing to pay for some services more than others.

Scott Soykin, a Sacramento voter who considers himself independent, said he voted against the gas tax repeal.

"I'm more than willing to pay more for gasoline if it means that we're going to drive on safer roads," he said.

The degree to which Californians are willing to tax themselves could face another test in two years. Property tax growth was limited after Proposition 13 passed in 1978, and as a result, a home in California is typically taxed at 1.1 percent of the purchase price and increases no more than 2 percent a year.

A proposal to change that by scaling back Proposition 13 protections for commercial and industrial properties is eligible for the 2020 ballot.