Could a few words buried within a recent court ruling make it easier for the state to raise money from Californians?
Those words—contained within a decision affirming the constitutionality of California’s policy of charging polluters—are causing a stir among some state budget experts, who wonder if the ruling could be used to could pry loose constitutional constraints that have long restricted lawmakers’ ability to increase taxes.
In its 2-to-1 ruling, California’s 3rd District Court of Appeal declared that the state’s cap-and-trade climate program is neither a tax nor a fee—the two categories into which state jurists have traditionally slotted all revenue raisers—but falls into a mysterious none of the above category.
Such semantic distinctions matter in California because the state constitution puts tight restrictions on lawmakers’ ability to raise money from taxpayers. Voters in 1978 passed the most famous of these restrictions, property-tax-cutting Proposition 13, which also lifted the legislative threshold for new state and local tax hikes from a simple majority to a two-thirds “supermajority.”
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