Webegin this issue of the Inland Empire Outlook with an overview of the ten statewide measures on the California ballot this fall. The Rose Institute produced a short background paper and video with non-partisan analysis of each measure. This is a wonderful project for our student researchers, helping them understand direct democracy in California and giving them the opportunity to dig deep to analyze each measure, while producing a valuable public education product.
Our second article examines how cities are responding to the recent Supreme Court decision, Grants Pass, Oregon v. Johnson. In that case, the Court found that city official can enforce anti-camping ordinances, even when the number of homeless individuals exceeds the number of available shelter beds. It overturned a decision from the Ninth Circuit Court of Appeals that decided doing so would constitute cruel and unusual punishment under the Eighth Amendment to the United States Constitution.
Our third article presents a brief history of the growth of the sales tax in California. The state’s first sales tax was 2.5% imposed in 1933. In 1955, California enacted the BradleyBurns Uniform Local Sales and Use Tax which allowed counties to enact sales tax ordinances. All 58 counties in
the state had done so by 1962. The 1969 Transactions and Use Tax Law authorized local governments to adopt local sales tax add-ons for specific uses. This authority really took off in 2003 when Governor Gray Davis signed SB 566 into law. It allowed counties and cities to seek voter approval for sales tax increases and local governments have embraced this authority with enthusiasm. There were 109 ballot measures related to sales taxes on the 2024 ballot.
Finally, we present a brief summary of the “San Bernardino County ‘Fair Share’ Analysis.” The San Bernardino County Board of Supervisors commissioned this study following the passage of a ballot measure in 2022 that asked, “Do the people of San Bernardino County want San Bernardino County elected representatives to study and advocate for all options to obtain the County’s fair share of state funding, up to and including secession from the State of California?” The study concludes that the county does receive a fair share of California resources on many, but not all, measures.
We hope you find this edition of Inland Empire Outlook a useful guide. Please visit our website, www.RoseInstitute. org, for information on more Rose Institute research.
Video Voter Guide p. 2
Grants Pass v. Johnson p. 7
CA Sales Tax Increases p. 13
SB County Fair Share p. 19
Image under license from Adobe Stock.com
California
voters faced ten statewide ballot propositions on the November 2024 ballot. The Rose Institute of State and Local Government’s Video Voter Guide to California’s Ballot Measures was designed to help voters make informed decisions on each of these measures. The non-partisan project explained each ballot measure with an educational video and a written backgrounder. Both made clear what a yes or no vote means, present the main arguments from both proponents and opponents, and identify main supporters and opponents. The Video Voter Guide is available at www.RoseInstitute.org.
In California, measures can be placed on the ballot by referral from the legislature or by the submission of petition signatures. This year the Legislature put five measures on the ballot: two legislative statutes and three legislative constitutional amendments. The remaining five measures before California voters in 2024 were put on the ballot by petition signatures. The number of signatures required is based on the number of votes cast in the most recent gubernatorial election and varies depending on whether the measure is a statute, constitutional amendment, or referendum. Initiative statutes required 546,651 signatures to qualify for the ballot in 2024.
Katherine Jackson and Katherine Lanzalotto, seniors at Claremont McKenna College, led a team of ten undergraduate students to research and produce the ten videos and written analyses. Joseph M. Bessette, a Rose Institute Faculty Fellow and retired member of the Government Department at CMC, directed the project. Rose alumna Jessica Jin ’16 provided the graphic design. Watch the videos and read the backgrounders at www.RoseInstitute.org.
CALIFORNIA
PROP 02
Authorizes $10 billion bond to fund the construction, renovation, and modernization of school facilities.
• Los Angeles Unified School District
• Association of California School Administrators
• California Teachers Association
• California Chamber of Commerce
• Construction associations, such as Coalition for Adequate School Housing (CASH)
• California Labor Federation
• California Federation of Teachers
CALIFORNIA
PROP 03
• Assemblyman Bill Essayli (R)
• Howard Jarvis Taxpayers Association
• Public Advocates
• California Association of Black School Educators
• Some low-income districts, such as Lennox School District, Lynwood Unified School District, and South Whittier Unified School District
Recognizes the constitutional right to marriage regardless of gender.
• Governor Gavin Newsom
• ACLU of Northern California
• Equality California
• Planned Parenthood
CALIFORNIA
PROP 04
• California Familty Council
• Rev. Tanner DiBella, Founder, The American Council of Evangelicals
Funds natural resources and climate programs in California.
• National Wildlife Federation
• Nature Conservancy
• CALFIRE Firefighters
• Clean Water Action
• California Labor Federation
• Environmental Defense Fund
• Natural Resources Defense Council
• Senate Minority Leader Brian W. Jones (R)
• Assemblyman Jim Patterson (R)
• Howard Jarvis Taxpayers Association
Key Supporters
Key Opponents
Key Supporters Key Opponents
Key Supporters
Key Opponents
CALIFORNIA
PROP 05
Key Supporters
Amends the California Constitution to lower the voting threshold for local governments to borrow money for affordable housing and public infrastructure.
• Democratic Party of California
• League of Women Voters of California
• League of California Cities
• California Labor Federation
• California State Association of Counties
• Assembly Majority Leader Cecilia Aguiar-Curry
CALIFORNIA
PROP 06
Key Supporters
Key Opponents
• Republican Party of California
• Howard Jarvis Taxpayers Association
• California Association of Realtors
• National Association of Realtors
• California Chamber of Commerce
Prohibits the forced labor of persons incarcerated in California’s prisons and county jails.
• Assemblywoman Lori D. Wilson (D)
• California Democratic Party
• ACLU California Action
• California Labor Federation
• Abolish Slavery National Network
PROP 32
Key Supporters
Key Opponents
The California Secretary of State listed no opponents to Proposition 6. Only three members of the Legislature voted against ending the forced labor of state inmates:
• California Senator Brian Dahle (R)
• California Senator Roger Niello (R)
• California Senator Kelly Seyarto (R)
Increases California’s minimum wage to $18 per hour and then adjusts it annually for inflation.
• Joe Sanberg, Entrepreneur and co-founder of Aspiration Inc.
• One Fair Wage
• California Democratic Party
Key Opponents
• California Restaurant Association
• California Chamber of Commerce
• California Grocers Association
• National Federation of Independent Business
• California Republican Party
CALIFORNIA
PROP 33
Key Supporters
Prohibits the state from limiting local rent control.
• Justice for Renters (sponsored by AIDS Healthcare Foundation)
• Housing is a Human Right (sponsored by the AIDS Healthcare Foundation)
• Veterans’ Voices
• California Alliance for Retired Americans
• California Nurses Association
Key Opponents
• California Small Business Association
• California Hispanic Chambers of Commerce
• California Apartment Association
• California Business Roundtable
• California Council for Affordable Housing
• California Association of Realtors
CALIFORNIA
PROP 34
Key Supporters
Makes Medi-Cal Rx a permanent part of California law and requires certain healthcare providers that participate in the federal discount drug program to spend at least 98% of their net revenues on direct patient care.
• California Apartment Association
• Evan Low, California State Assemblymember (D)
• ADAP Advocacy Association
• California Chronic Care Coalition
• California Democratic Party
• California Republican Party
• The ALS Association
• California Professional Firefighters
• California Senior Alliance
Key Opponents
• AIDS Healthcare Foundation
• Consumer Watchdog
• Housing is a Human Right
• Coalition for Economic Survival
CALIFORNIA PROP
Key Supporters
Protect Access to Healthcare Act
• California Medical Association
• California Dental Association
• California Hospital Association
• International Association of EMTs and Paramedics
• America’s Physicians Groups
• American Academy of Pediatrics, California
• Planned Parenthood, California
• California Democratic Party
• California Republican Party
Key Opponents
• No groups have formally opposed or raised funds against Proposition 35.
• However, Governor Newsom publicly stated his reservations without formally opposing the measure: “This initiative hamstrings our ability to have the kind of flexibility that’s required at the moment we’re living in. I haven’t come out publicly against it. But I’m implying a point of view. Perhaps you can read between those many, many lines.”
CALIFORNIA
PROP 36
Key Supporters
Amends Proposition 47 (approved in 2014) to allow for felony charges and increased penalties for certain thefts and drug crimes.
• Californians for Safer Communities
• Target, Walmart, Home Depot
• California District Attorneys Association
• San Francisco Mayor London Breed
• San Jose Mayor Matt Mahan
• Republican Party of California
• California State Sheriffs’ Association
• League of California Cities
Key Opponents
• Assembly Speaker Robert Rivas (D)
• Democratic Party of California
• Action for Justice and Safety
• ACLU of Northern California
• Diana Becton, District Attorney, Contra Costa County
• Vera Institute of Justice
• Disability Rights of California
Implementing Grants Pass v. Johnson
by Jemma Nazarali ’25
Whenthe Supreme Court ruled in favor of the City of Grants Pass, Oregon in Grants Pass, Oregon v. Johnson on June 28, 2024, the justices handed down one of the most influential court decisions on homelessness in recent decades. The Court, split 6-3, ruled that civil and criminal penalties for the violation of public camping ordinances did not constitute cruel or unusual punishment under the Eighth Amendment to the U.S. Constitution. The decision overturns the Court of Appeals for the Ninth Circuit’s ruling in Martin v. Boise in 2018 that city officials could not enforce anti-camping ordinances when the number of homeless individuals exceeds the number of shelter beds available.
As the cities across the nation struggle to address homelessness in their streets, the Court’s decision in Grants Pass v. Johnson will inevitably influence homeless policy for years to come. The importance of this decision was amplified by the executive order that California Governor Gavin Newsom issued on July 25, 2024, in which he ordered state agencies and departments to adopt policies that immediately address the state’s many homeless encampments: “This executive order directs state agencies to move urgently to address dangerous encampments
while supporting and assisting the individuals living in them — and provides guidance for cities and counties to do the same. The state has been hard at work in addressing this crisis on our streets. There are simply no more excuses,” said Governor Newsom. In the last several years, Governor Newsom has directed over $24 billion to address the housing crisis, including funding to provide support and services to those living in encampments. In Fiscal Year 2022-2023, these investments helped to lift over 165,000 out of homelessness and into interim or permanent housing, according to Newsom. Still, CalMatters reports that there are approximately 186,000 homeless individuals in California, which represents the largest homeless population of any state in the nation. The issue of homelessness requires far more attention, and will likely take a number of years to address.
Grants Pass v. Johnson was brought to the Supreme Court after a group of homeless individuals sued the city over its public camping ordinances, which prohibited sleeping outside with bedding or shelter. The plaintiffs argued that the ordinances were unconstitutional under the Eighth Amendment’s Cruel and Unusual Punishment Clause. The suit was brought following the Ninth Circuit’s
ruling in Martin v. Boise in 2018, which prohibited the enforcement of anti-camping ordinances when a city’s homeless population exceeded its available shelter beds. While Grants Pass has four temporary shelters, the plaintiffs argued that these were inadequate to house their population of nearly 600 homeless individuals. The plaintiffs declined to include a Christian shelter located in the city in its count of available beds. The plaintiffs argued because there was inadequate shelter in the city, imposing civil and criminal penalties – including fines of up to several hundred dollars and banishment from all public spaces for repeat offenders – criminalized the status of homelessness and were unconstitutional.
While the Eighth Amendment has largely been interpreted as a limitation on how punishment is administered, rather than on the types of behaviors that can be penalized, there is some precedent for the latter interpretation. In 1910, the Court ruled in Weems v. United States that a punishment could be unconstitutionally cruel if it was excessive in severity, and thus disproportional, to the crime committed. The Court cited a statement from Justice Stephen Field in O’Neil v. Vermont, which declared that the Eighth Amendment “was directed not only against punishments which inflict torture, but against all punishments which, by their excessive length or severity, are greatly disproportioned to the offenses charged.” This interpretation of the Eighth Amendment remained largely untouched until 1962, when the Court ruled in Robinson v. California that the Eighth Amendment prohibits the criminalization of being a drug addict. The case concerned a California law that made it a misdemeanor “to be addicted to the use of narcotics.” The petitioner, Robinson, was tried and convicted under this law when he was stopped by a police officer who found tracks on his arm from heroin use. Though Robinson denied being an addict, he was sentenced to 90 days in jail by the Municipal Court of Los Angeles, and his conviction was upheld by the LA County Superior Court. The U. S. Supreme Court, however, overturned Robinson’s conviction by building on the “proportionality” principle established in Weems: the court recognized that addiction was a disease, and found it unconstitutional to punish someone for having a disease. As Justice Potter Stewart wrote, even “one day in prison for the ‘crime’ of having a common cold” would be cruel and unusual. Further, Justice John Harlan and Justice Stewart argued that it is unconstitutional to criminalize behavior in the absence of a guilty act.
Several years later in Powell v. Texas in 1968, the Supreme Court developed this position by ruling that an alcoholic could be punished for public intoxication because the act of public intoxication is distinct from the status of being an alcoholic. However, the Court also noted that Powell
was convicted because he did not successfully tie his act of public intoxication to his alcoholism. So, Powell did not dislodge the precedent of not punishing a status and its associated acts.
In Martin v. Boise in 2018, the Court of Appeals for the Ninth Circuit built upon the precedent established in Robinson. The court ruled that city officials in Boise, Idaho could not enforce anti-camping ordinances when the number of homeless individuals exceeded the number of shelter beds available. Doing so would constitute cruel and unusual punishment under the Eighth Amendment and effectively criminalize the status of homelessness. Martin v. Boise became precedent when the Supreme Court declined to hear an appeal of the case in 2019, until Grants Pass overturned this precedent in 2024. Now, the enforcement of anti-camping ordinances through civil and criminal penalties does not constitute cruel and unusual punishment, even if there are not enough shelter beds available to accommodate a city’s homeless population.
Action in San Francisco
San Francisco has taken some preliminary actions following the ruling in Grants Pass v. Johnson. Most significantly, the Ninth Circuit Court issued an order that allows for the enforcement of some public camping ordinances, as reported by the City Attorney of San Francisco. The order vacates part of an injunction from Coalition on Homelessness v. City and County of San Francisco, a suit launched by the ACLU of Northern California and the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area in 2023. In that case, the plaintiffs alleged that the city’s “decadeslong failure to adequately invest in affordable housing and shelter has left many thousands of its residents unhoused, forcing them to use tents and vehicles as shelter. In the face of this mounting crisis, the City has marshaled significant resources toward unlawful and ineffective punishment rather than affordable housing and shelter.” Following the argument of this case in August 2023, a preliminary injunction was ordered to limit the city’s enforcement of certain public camping ordinances. On July 8, 2024, the Ninth Circuit reversed part of this injunction following the Grants Pass ruling to bring San Francisco policy in line with the Supreme Court’s decision. In other words, city officials are now able to enforce San Francisco’s anti-camping ordinances. However, the ACLU has said that the decision in Grants Pass will not derail its ongoing lawsuit: only one of the thirteen claims in the lawsuit relied on Martin v. Boise, so the overturning of that precedent won’t significantly impede the advancement of the case.
According to Mayor London Breed, San Francisco will continue to offer services to homeless individuals.
However, she says that the Grants Pass ruling will allow the city more flexibility and a greater degree of proactivity.
“The decision by the Supreme Court will help cities like San Francisco manage our public spaces more effectively and efficiently. San Francisco has made significant investments in shelter and housing, and we will continue to lead with offers of services from our hard-working City employees. But too often these offers are rejected, and we need to be able to enforce our laws, especially to prevent long-term encampments. This decision recognizes that cities must have more flexibility to address challenges on our streets.”
Some critics of Grants Pass argue that San Francisco’s policy changes have already led to more aggressive enforcement tactics, which have had “predictably disastrous results.”
According to the ACLU, the city’s increasing criminalization of homelessness is both inhumane and unproductive.
“Even though the city’s shelters are at capacity and the waiting list for a placement is long, police officers and Department of Public Works (DPW) staff swept through neighborhoods rousting unhoused individuals, detaining people, confiscating their belongings, and issuing tickets for illegal lodging. But the tents often returned within days, demonstrating the futility of wasting limited public resources on an endless cycle of displacement rather than investing in stable housing.”
In addition to imposing new civil and criminal penalties for public camping, the city is taking further action to clear homeless individuals from its streets by bussing them out of the city entirely. On August 1, 2024, Mayor Breed issued the Journey Home Executive Order, which required that homeless people being swept off the street be offered a bus ticket out of town before being offered shelter, other services, or being arrested. The Journey Home program is different from the previously offered Homeward Bound program, which required that family members of homeless individuals be called before sending them on a bus to be sure they had a place to stay. Again, critics argue that this tactic won’t solve the problem of homelessness in San Francisco. “Punishing people for sleeping on the street or giving them a one-way ticket out of town won’t end the city’s homelessness crisis. San Francisco leaders must expand affordable housing and do more to prevent people from becoming homeless, like providing rental assistance and passing stronger eviction protection measures,” says a senior attorney in the ACLU’s Racial and Economic Justice Program.
Action in Los Angeles
The response to the decision in Grants Pass v. Johnson has been less notable in Los Angeles. Following the decision, the LA City Attorney released the following statement:
“Today’s decision will significantly impact Los Angeles residents. The primary responsibility of any city is to protect public health and safety and to develop and implement policies and plans that improve conditions for residents, whether housed or unhoused. Today’s decision confirms that the City’s current actions in response to the homelessness emergency are lawful and that the City can continue its focus on balancing the use of public spaces by bringing people indoors while keeping neighborhoods safe. Nothing in this decision changes our City’s commitment to the principle that until every single person experiencing homelessness has a safe place to sleep, housing and supportive services will continue to be the top priority of the City of Los Angeles and should be the top priority for all elected leaders across our state.”
Los Angeles has made some efforts in the last few decades to increase the availability of shelter space in the city. In 2007, the Ninth Circuit ruled in Jones v. City of Los Angeles that an LA anti-camping ordinance was unconstitutional, as the city did not have adequate shelter space. The city was required to build an additional 1,250 units of supportive housing before it could enforce its anti-camping ordinances. In the following years, city officials and local advocates have made strong efforts to increase the availability of affordable housing in the city. In September 2023, a federal court approved Los Angeles County’s settlement with the LA Alliance for Human Rights, which granted an additional $1.24 billion in funding to provide 3,000 shelter beds for people with mental health and substance use disorders. Still, the City Controller’s office estimates that the city can only adequately shelter about one-third of LA’s homeless population.
Action in the Inland Empire
Cities in the Inland Empire have not yet taken much action since the decision in Grants Pass v. Johnson. Several cities have reported that they are in the process of evaluating potential policy changes following the decision and Governor Newsom’s executive order. Earlier this month, the city of Hemet reimposed its unqualified prohibition on camping and the storage of personal property on public property. The newly amended ordinance allows law enforcement officers to enforce the prohibition without first having to verify that there is a shelter bed available and that the individual is choosing not to go. Similarly, the cities of Eastvale, Beaumont, Indio, and Jurupa Valley have adopted anti-camping ordinances in the past few months in response to the Grants Pass ruling. Palm Springs has also adopted an anti-camping ordinance, but has modeled its approach after San Diego by creating two separate categories of public property: one in which public camping and sleeping is always prohibited, and another in which
camping and sleeping is prohibited only when there is adequate shelter available.
The U.S. Department of Housing and Urban Development has estimated the homeless populations in each of California’s Continuums of Care. Figure 1 shows the ten CoCs with the largest homeless populations in California. The number of homeless individuals in California was over 180,000 in 2023, a figure about 7.5% higher than it was in 2022. Populations of unsheltered homeless individuals rose in most CoCs between 2022 and 2023, and estimates indicate that over two-thirds of homeless individuals in California are unsheltered. This represents the highest
share in the country. Notably, LA had about 71,320 homeless individuals in 2023, which represents about 11% of the homeless population in the United States. California CoCs have adopted a variety of measures in an attempt to mitigate the growing number of homeless individuals in the state. For example, San Jose/Santa Clara and San Diego have made efforts to increase the capacity of temporary housing, and Los Angeles has taken similar measures through its Inside Safe and Pathway home programs. However, many cities, including San Diego, are still experiencing a shortage of shelter beds; other areas, such as San Bernardino, continue to be confronted with rising rents.
Figure 1: 10 Largest Homeless Populations in California, by Continuums of Care (2023)
Source: Marisol Cuellar Mejia and Cesar Alesi Perez, “An Update on Homelessness in California.” Public Policy Institute of California (March 21, 2024).
Bibliography
“An Ordinance Of The City Of Eastvale Adding Chapter 8.10 To The Eastvale Municipal Code Prohibiting Camping And Storage Of Personal Property In Public Places.” City Of Eastvale Ordinance No. 24-___.
“An Urgency Ordinance Of The City Of Beaumont, California, Adding Chapter 9.43 “Camping” To The Beaumont Municipal Code And Amending Certain Provisions Of Chapter 10.08 Related To ‘Parking.’” City Of Beaumont Ordinance No. ____
City Attorney of San Francisco. Ninth Circuit vacates part of injunction in homeless encampment lawsuit [Press release]. July 8, 2024. https://www.sfcityattorney.org/2024/07/08/ninth-circuit-vacates-part-of-injunction-in-homelessencampment-lawsuit/
City of Hemet City Council Meeting Staff Report. “An Ordinance of the City Council of the City of Hemet Amending Section 53-1 of the Hemet Municipal Code to Reinstate the Prohibition on Camping and Storage of Personal Property on Public Property Following the United States Supreme Court’s Decision in Johnson v. City of Grants Pass.” July 9, 2024. City of Hemet, California Ordinance No. 2024-[XXX]
City Of Indio City Council Meeting Staff Report. “Ordinance No. 1816, An Ordinance Of The City Council Of The City Of Indio Amending Sections 130.020 And 130.021 Of The Indio Municipal Code Regarding The Prohibition On Camping And Storage Of Personal Property On Public Property Following The United States Supreme Court’s Decision In Johnson V. City Of Grants Pass.” July 17, 2024. City Of Indio Ordinance No. 1816.
City Of Jurupa Valley City Council Meeting Staff Report. “Ordinance Prohibiting Camping On Public Property And Enforcement Of Prohibition Of Camping And Storage.” August 1, 2024. Ordinance No. 2024-19.
City Of Palm Springs City Council Meeting Staff Report. “An Ordinance Of The City Of Palm Springs, California, Amending The Palm Springs Municipal Code, Relating To Regulating Encampments And Sleeping On Public Property, And Determining Such Ordinance To Be Exempt From Further Environmental Review Under The California Environmental Quality Act.” July 9, 2024.
Coalition on Homelessness, et al v. City and County of San Francisco, et al, No. 23-15087 (9th Cir. 2024).
Governor Gavin Newsom. Governor Newsom statement on Supreme Court’s homeless encampments decision [Press release]. June 28, 2024. https://www.gov.ca.gov/2024/06/28/governor-newsom-statement-on-supreme-courts-homelessencampments-decision/
Grants Pass, Oregon v. Johnson, 603 U.S. ___ (2024).
Kendall, Marisa, “Exclusive: California’s homeless population grew again this year, especially in these counties.” California Matters, September 10, 2024. https://calmatters.org/housing/homelessness/2024/09/pit-count-analysis-2024/
Mejia, Marisol Cuellar and Cesar Alesi Perez, “An Update on Homelessness in California.” Public Policy Institute of California. March 21, 2024.
Novak, Whitney K. and Dave S. Sidhu, “The Eighth Amendment and Homelessness: Supreme Court Upholds Camping Ordinances in City of Grants Pass v. Johnson.” Congressional Research Service. July 19, 2024.
Office of the Mayor of San Francisco. Journey Home: Providing Relocation Assistance Services. Executive Directive 2402. August 1, 2024
O’Neil v. Vermont, 144 U.S. 323 (1892).
Powell v. Texas, 392 U.S. 514 (1968).
Robert Martin v. City of Boise, 920 F.3d 584 (9th Cir. 2019).
Robinson v. California, 370 U.S. 660 (1962).
The City of San Francisco. Mayor London N. Breed on the Supreme Court Decision in Grants Pass [Press release]. June 28, 2024. https://www.sf.gov/news/mayor-london-n-breed-supreme-court-decision-grants-pass
Weems v. United States, 217 U.S. 349 (1910).
White, Lisa, “After U.S. Supreme Court Homelessness Decision, San Francisco Cracks Down.” ACLU of Northern California, October 4, 2024. https://www.aclunc.org/blog/after-us-supreme-court-homelessness-decision-san-franciscocracks-down
CA Sales Tax Increases on the 2024 November Ballot
by Noah Swanson ’25
High and widespread local sales taxes are relatively new in California. Prior to the 1955 Bradley-Burns Uniform Local Sales and Use Tax Law, only the state government levied a sales tax (2.5% enacted in 1933). Bradley-Burns allowed counties to enact a sales tax of up to 1%, and by 1962 all California counties had done so. BradleyBurns was amended in 1972 to add 0.25% for county transportation funds. The 1969 Transactions and Use Tax Law authorized local governments to adopt local sales tax add-ons for specific uses, most commonly transportation. The local governments had to seek special legislation to do this.
Following Proposition 13’s restriction on property taxes, however, local governments began to look for different sources of revenue while avoiding the two-thirds voter requirement set out by Prop 13. To the dismay of property owners, local governments turned to special benefit assessment districts. In the eyes of many, what was supposed to be a tool used by governments to pay for projects that would benefit their property value became a de facto property tax. In response, voters put Proposition 218 on the 1996 state ballot. Proposition 218 amended the California Constitution to set voter requirements
Passed in 1978, Proposition 13 dramatically changed the California taxation landscape by enacting several important limitations. Prior to Prop 13, local governments had free reign on setting their property tax rates. Prop 13 introduced three important checks against increasing property taxes. First, property taxes were capped at 1 % of the property’s assessed value statewide. Going forward, taxes were based on the purchase price of a property, and the taxable value could then increase by no more than 2% annually. Finally, any new special tax would face a two-thirds voter requirement. The impact of Proposition 13 was felt immediately, with property tax revenue falling 60% in the first year. While popular with many property owners, especially those who purchased their property decades ago, Prop 13 is controversial. Some argue that it has led to less property turnover, exacerbating the already tight housing supply crisis in California. Additionally, some have argued that it has proved regressive, as the wealthy receive a disproportionately large portion of the tax relief.
on all new local taxes. Additionally, Prop 218 made it significantly easier for voters to reduce or repeal existing taxes. Prop 218 shifted most of the power over taxation from locally elected governing boards to residents and property owners. It is no surprise, then, that the California Senate Office of Research cited Prop 218 in 1999 as one of the most significant California laws of the 20th century.
Local jurisdictions did not gain the power to increase sales taxes themselves until 2003 when Governor Gray Davis signed SB 566 into law. SB 566 allowed counties and cities to seek voter approval of tax increases of .125% or a multiple thereof. Since its enactment, sales tax increases have become more common, with most jurisdictions now having some sales tax above the state minimum. Once on the ballot, the voter requirement depends on the purpose of the tax. If the revenue from a local tax is directed toward the local government’s general fund and is thus meant to pay for standard government services (police, fire department, parks, etc.), the measure requires only a simple majority. However, if the measure is meant to pay for some specific program, such as new housing or environmental cleanup, a two-thirds majority is required.
When a person pays a sales tax in California it is allocated between local and state jurisdictions. Currently, the base local sales tax is 1%, all of which goes to the city or county in which the purchase was made. In addition, there is a 0.25% tax for the “Local Transportation Fund” which is collected
Use taxes are distinct from other sales taxes in that they are reported and collected by the buyer of a good rather than the seller. Generally, these taxes apply to goods used in California but purchased from a business outside of the state, from a merchant over whom the state is not able to exert jurisdiction to require sales tax collection. Like sales taxes, use taxes vary from district to district but are almost always the same rate as the sales tax. States generally do a very poor job of enforcing use tax. In 2013, NPR reported that only 1.6% of liable taxpayers actually paid their use tax.
and used by the county. When combined with the 6% state sales tax, the minimum sales tax in California is 7.25%.
Sales taxes in California, however, can and often do go above the 7.25% minimum. Local jurisdictions, either city or county, can impose an additional district tax. All of the revenue from the district tax goes to the taxing entity. Although districts can impose multiple district taxes, there is currently a cap of 2%, the exception being where voters pass a law to increase taxes above the cap. These district taxes can be used to fund a wide variety of programs. For instance, while most counties such as San Bernardino
How the 7.25% Base Sales Tax Rate is Allocated
0.50%
State General Fund
Local Public Safety Fund to support local criminal justice activities (1993) 0.50%
Local Revenue Fund to support local health and social services programs (1991 Realignment)
Local Revenue Fund 2011
County transportation funds
City or county operations
Source: Detailed Description of Sales and Use Tax, California Department of Tax and Fee Administration, https://www.cdtfa.ca.gov/taxes-andfees/sut-rates-description.htm.
and Riverside have a 0.5% tax to fund transportation commissions, Los Angeles County also has a 0.25% tax to help combat the homelessness crisis.
Unsurprisingly, California’s sales taxes are high compared to those of the rest of the nation. As of July 2024, the Tax Foundation reports that California had the highest base sales tax in the country, 0.25 percentage points higher than Rhode Island, Tennessee, and Mississippi, which are all tied for second. California does edge down in the rankings when one looks at average sales taxes. The Golden State ranks eighth out of the 45 states and the District of Columbia that impose sales taxes. Currently, California has an average sales tax of about 8.8%, about 0.8 percentage points lower than the number one Louisiana. It is, however, significantly higher than the states it most competes with for businesses and residents: 0.6 percentage points higher than Texas and 1.8% higher than Florida.
The Inland Empire tends to have lower sales taxes compared to the rest of the state. As of October 1, 2024, the California Department of Tax and Fee Administration reports that the average sales tax in San Bernardino and Riverside Counties was 8.14% and 8.34% respectively. There is, however, relatively wide variation within each county. While many cities have a “low” 7.75% sales tax, there are some that go much higher. For instance, Montclair, in San Bernardino County, has a sales tax of 9%, 1.14 percentage points above the average. Similarly, Riverside County’s Palm Springs has a sales tax of 9.25%. Both Inland Empire counties, however, have a much lower sales tax than Los Angeles County, which boasts an average sales tax of 9.97%, about 1.2 percentage points above the state average. While there is also some variation across Los Angeles County, the lowest tax rate, shared by many cities, is an eye-watering 9.5%. When combined with housing costs, it is no wonder that so many people choose to live in the Inland Empire and commute to work in Los Angeles County.
2024 has been a popular year for sales tax ballot measures. Voters across the state will vote on 109 ballot measures related to sales taxes, all but one of which either impose a new tax or extend an existing one. Out of these 109 measures, 25 apply to those living in San Bernardino, Los Angeles, or Orange Counties. Five measures to extend or impose new taxes were already voted on in the March 25, 2024 election. Of those five, only one, Measure I in the city of Bell, failed to pass. Interestingly, two of the measures that passed, Pomona’s Measure P and Measure X, were competing. While Measure P extended a 0.75% sales tax to help fund public services such as the police and fire
Selected CA Sales and Use Tax Rates
Source: California Sales and Use Tax Rates by County and City, California Department of Tax and Fee Administration, https://www.cdtfa.ca.gov/formspubs/ cdtfa95.pdf. As of October 1, 2024 (includes state, county, local, and district taxes). Note: Base rate for each county is comprised of the 7.25% statewide rate plus any county-wide additions.
departments, Measure X would have reduced the tax to only 0.5%. Although both passed, Measure P received a larger number of votes and thereby trumped Measure X.
Arguments in favor of ballot measures that impose new sales taxes depend on what the additional revenue is intended to do. For instance, while Pomona’s Measure P directs money to general government services, Los Angeles County’s Measure A is much more targeted. Measure A would repeal a 2017 0.25% tax and replace it with a sales tax of 0.5%, costing taxpayers an estimated additional $1 billion annually. The money collected by the new tax would be directed to fund services for the homeless as well as build new affordable housing units. Those in favor argue that while homelessness has not been solved, it can be with a considerable investment of money and effort. While
they acknowledge that “nobody likes paying higher taxes,” supporters argue it is up to all residents of L.A. County to fix its homeless crisis. Similarly, San Clemente’s Measure BB would establish a 0.5% sales tax to fund ocean cleanup and restoration. However, most sales tax measures take the form of Pomona’s Measure P and are meant to fund general government services. Proponents argue that they fund the fire and police departments, build and maintain public parks, and support other traditional local government services.
While specific arguments for raising taxes may vary depending on the measure, some points remain consistent. Sales tax increases are generally individually small, ranging from 0.25% to 1%, allowing many to argue that they are insignificant. “We’re only talking about half a cent” can be found in many articles in support of tax hikes. This is true even in areas such as L.A. County where the sales tax rate is already remarkably high. The second often repeated point is the desire to have tourists and visitors pay their share. With the notable exception of automobile sales, sales taxes are based on where a purchase is made and not on where the customer lives. Thus, sales taxes would, in theory, have visitors and tourists bear some of a community’s fiscal burden. This is based on the premise that visitors enjoy the
benefits of a nice town – clean streets, nice shops, etc. –and should have to contribute to their upkeep.
The opponents of sales taxes all generally fall into the same camp, regardless of what the money is earmarked for: people don’t want to have more of their money taken by taxes, especially when California taxes are already so high. Opponents to L.A. County’s Measure A, including former sheriff Alex Villanueva, for example, contend that enough money has been spent with little to no noticeable return; pumping more money into the bureaucratic machine will only lead to more taxpayer money being wasted. Similarly, opponents to Yucaipa’s Measure S are concerned about paying higher taxes, especially as an increasing number of residents are on fixed incomes. Similarly, some small business owners have expressed concerns that higher sales taxes will drive customers away from their stores and into neighboring markets.
On this last point specifically, opponents of higher sales taxes are backed by research. Numerous studies have shown that when faced with a higher sales tax, consumers will generally go out of their way to avoid it. Traditionally this has meant traveling to different cities or, in dramatic cases, different states, to purchase goods at a lower price.
Bibliography
Accounting Insights. “Understanding Sales Tax Increases: Factors, Impacts, and Strategies.” 28 September 2024. https:// accountinginsights.org/understanding-sales-tax-increases-factors-impacts-and-strategies/.
Baker, Scott et al. “Effects of Sales Tax Increase on Consumers.” Kellogg School of Management, 2 November 2017. https://insight.kellogg.northwestern.edu/article/effects-of-sales-tax-increase-on-consumers
Bentz, Alex. “Local Governments’ Taxing Authority and Revenue Sources.” California Legislative Analyst’s Office. 23 October 2023. https://lao.ca.gov/LAOEconTax/Article/Detail/793.
CaliforniaCityFinance.com. “City and County Transaction and Use Tax Rates.” February 2017. https://www. californiacityfinance.com/CityTrUseTax1702.pdf
California Department of Tax and Fee Administration. “Active District Tax Rates With Operative and Sunset Dates.” Accessed 14 October 2024. https://www.cdtfa.ca.gov/formspubs/cdtfa823.pdf.
California Department of Tax and Fee Administration. “Current Tax Rates.” Accessed 14 October 2024. https://www. cdtfa.ca.gov/taxes-and-fees/rates.aspx
California Department of Tax and Fee Administration. “Getting Started with Local Jurisdictions and District Taxes.” Accessed 14 October 2024. https://www.cdtfa.ca.gov/industry/local-jurisdictions-and-districts/getting-started. htm.
California Department of Tax and Fee Administration. “Implementing New Local Jurisdictions and District Taxes.” Accessed 14 October 2024. https://www.cdtfa.ca.gov/industry/local-jurisdictions-and-districts/implementingnew-local-jurisdictions-district-taxes.htm#:~:text=District%20taxes%20are%20approved%20by,unless%20 specifically%20authorized%20by%20statute.
California Department of Tax and Fee Administration. “Use Tax Overview.” Accessed 14 October 2024. https://www. cdtfa.ca.gov/taxes-and-fees/use-tax/
California Employment Development Department. “State of California Commute Patterns.” Labor Market Information Division, Accessed 14 October 2024. https://labormarketinfo.edd.ca.gov/file/commute-maps/statecommute.pdf.
California Legislative Analyst’s Office. “Understanding California’s Local Governments.” 19 September 2016. https://lao. ca.gov/publications/report/3497.
California Legislative Analyst’s Office. “Understanding Proposition 218: Property-Related Fees.” December 1996. https://lao.ca.gov/1996/120196_prop_218/understanding_prop218_1296.html#chapter4
California Legislative Analyst’s Office. “Voter Approval for Local Taxes.” 20 March 2014. https://lao.ca.gov/reports/2014/ finance/local-taxes/voter-approval-032014.aspx.
California Senate. “200 Significant Statutes and Constitutional Amendments of the 20th Century.” December 1999. https://sor.senate.ca.gov/sites/sor.senate.ca.gov/files/ctools/Laws%20of%20the%20Century%20200%20 Significant%20Statutes%20and%20Constitutional%20Amendments%20of%20the%2020th%20Century.pdf.
California State Legislature. Revenue and Taxation Code. LegInfo, Accessed 14 October 2024. https://leginfo.legislature. ca.gov/faces/codes_displayText.xhtml?lawCode=RTC&division=2.&title=&part=1.5.&chapter=1.&article=.
Cannon-Tran, Mercedes. “Measure Y in Pomona’s November Election.” San Gabriel Valley Tribune, 11 October 2024. https://www.sgvtribune.com/2024/10/11/what-to-know-about-pomonas-measure-y-in-the-novemberelection/.
California Taxpayers Association. “Local Tax Elections 2024.” Accessed 14 October 2024. https://www.caltax.org/ elections/local-tax-elections/2024-Local-Elections.pdf.
Bibliography
Fox, Joel. “Closing Assessment Loophole in Prop 13.” Los Angeles Times, 20 October 1996. https://www.latimes.com/ archives/la-xpm-1996-10-20-op-55800-story.html.
Fox, Joel. “New Fees Urged to Aid Water Project.” Los Angeles Times, 29 May 1996. https://www.latimes.com/archives/laxpm-1996-05-29-me-9362-story.html.
Hart, Madison. “Yucaipa Officials Warn of Bankruptcy.” San Bernardino Sun, 30 September 2024. https://www.sbsun. com/2024/09/30/yucaipa-officials-warn-of-bankruptcy-as-voters-weigh-sales-tax-increase/
Joffe-Walt, Chana. “Most People Are Supposed to Pay This Tax.” National Public Radio, 16 April 2013. https://www.npr. org/sections/money/2013/04/16/177384487/most-people-are-supposed-to-pay-this-tax.
Lemar, Juliet. “Santa Barbara Business Voices Concern.” KSBY, 4 June 2024. https://www.ksby.com/santa-barbara-southcoast/santa-barbara-business-voices-concern-over-proposed-half-cent-sales-tax-increase.
Los Angeles County Registrar-Recorder/County Clerk. “Measures Appearing on the Ballot.” August 16, 2024. https:// content.lavote.gov/docs/rrcc/documents/measures-appearing-on-the-ballot-08-16-2024-_draft-final-1.pdf.
McMillan, Rob and Grace Manthey. “Are People Leaving California?” ABC 7 News, 15 February 2023. https://abc7. com/are-people-leaving-california-where-should-i-move-to-housing-in-moving/12821380/#:~:text=The%20 biggest%20factor:%20money.,similar%20reasons%20for%20people%20moving.
UC Hastings College of the Law. “Voter Information Guide for 1986, General Election.” Accessed 14 October 2024. https://repository.uclawsf.edu/cgi/viewcontent.cgi?article=1970&context=ca_ballot_props.
Villanueva, Alex. “Measure A Will Raise the Cost of Living in LA.” San Gabriel Valley Tribune, 13 October 2024. https:// www.sgvtribune.com/2024/10/13/alex-villanueva-measure-a-will-raise-the-cost-of-living-in-la-whilerewarding-incompetence-and-graft/
VoteYesonV. “Yes on Measure V.” Accessed 14 October 2024. https://www.voteyesonv.com.
Walczak, Jared. “State and Local Sales Taxes 2024.” Tax Foundation. 6 February 2024. https://taxfoundation.org/data/all/ state/2024-sales-taxes/.
Walczak, Jared. “State and Local Sales Tax Rates, Midyear 2024.” Tax Foundation, 9 July 2024. https://taxfoundation.org/ data/all/state/2024-sales-tax-rates-midyear/
“Yes on Measure A.” Los Angeles Times, 6 October 2024. https://www.latimes.com/opinion/story/2024-10-06/yes-onmeasure-a-los-angeles-homeless-sales-tax.
San Bernardino County Fair Share
by Rutvij Thakkar ’26
OnAugust 20, 2024, the San Bernardino County Board of Supervisors accepted a report on the feasibility and fiscal impacts of possible secession from the state of California submitted by the Blue Sky Consulting Group. The Board had retained Blue Sky one year earlier in response to the passage of a measure on the 2022 ballot that asked: “Do the people of San Bernardino County want San Bernardino County elected representatives to study and advocate for all options to obtain the County’s fair share of state funding, up to and including secession from the State of California?” The consulting firm’s report shows that San Bernardino County residents pay less per capita personal income tax and sales tax than residents in other counties and receive more than the state average from many, but not all, state revenue sources.
The 2022 secession measure was first proposed by Jeff Burum, a prominent real estate developer, with the goal of fostering discussions about state and federal resource allocation. San Bernardino County officials, including Supervisors Kurt Hagman and Dawn Rowe, expressed frustration over perceived disparities in state resource allocation. They argued that, despite being the
fifth most populous county and largest geographically, San Bernardino consistently received less funding per capita than many other counties across California. This dissatisfaction with the allocation of resources was a key motivator for exploring secession as a last resort.
Secession within the United States is legally complex and fraught with challenges. The last successful secession from a state occurred when West Virginia split from Virginia during the Civil War. According to the California State Library, there have been at least 220 attempts to break up California since it became a state in 1850. The first was in 1859 led by Assemblyman Andrés Pico. He introduced a bill in the California Assembly to split the state into two, with the five southernmost counties forming the Territory of Colorado. Governor John B. Weller signed the proposal, but the Civil War put an end to that effort.
There have been three attempts at secession in the last decade. In 2013, a venture capitalist named Tim Draper backed an initiative to amend the California Constitution to split California into six states. The effort gathered more than 1.3 million signatures, but failed to make the ballot
Image under license from Adobe Stock.com
when one-third of them were deemed invalid. Draper tried again in 2017 with a plan to split California into three parts, through an initiative statute. Proponents gathered more than 600,000 signatures (they needed 365,880), but the California Supreme Court removed the measure from the ballot on the grounds that the measure would significantly modify the framework of California governance. Finally, in 2018 a political action committee known as CalExit tried to place a secession measure on the ballot. The effort collapsed after it was attacked as being linked to foreign bots and the Russian government. See the Fall 2022 Inland Empire Outlook for a more complete discussion of the secession attempts in California.
In the most recent case of San Bernardino County, the county’s financial relationship with the state was a central issue driving the secession measure. San Bernardino County, the largest county by area in the contiguous United States, finds itself in a complex financial situation when it comes to state funding and resource allocation.
The “Fair Share” analysis by Blue Sky Consulting Group explains that three of the most important state transfers to local governments are from Realignment, the Mental Health Services Act (MHSA), and Proposition 172 (Prop
172). Realignment refers to state actions in 1991 and 2011 transferring program responsibilities and accompanying funding from the state to counties. Realignment funds are used primarily for health, mental health, and public safety. MHSA funds are distributed to counties for mental health services; they are raised from a 1% income tax surcharge on incomes greater than $1 million. Prop 172 is a $0.05 sales tax dedicated to public safety purposes.
The Blue Sky report shows that San Bernardino County receives more overall state funding per capita than the average California county. Over the past three fiscal years, the county received $829 in state funding per capita, compared to a statewide average of $763 for other California counties - a 9% advantage. These amounts include funding from all state sources, including Realignment, Prop 172, MHSA, and other state transfers to counties, but do not include funding for capital projects and federal projects. Also, the statewide average is a population-weighted average across the 57 counties in California excluding San Bernardino.
The county’s position in realignment funding - a crucial source for health, mental health, and public safety programs - is generally positive. In fiscal year 2021-
Source: “San Bernardino County ‘Fair Share’ Analysis,” Blue Sky Consulting Group, updated June 14, 2024.
California Transfers from State to Counties
State General Fund Per Capita Tax Contributions
San Bernardino vs. Other Counties
Source: Memorandum, Blue Sky Consulting Group, May 14, 2024.
2022, San Bernardino received more total realignment funding ($431 per person) than the statewide average ($406). The county ranked 33rd out of 58 counties in this category. Proposition 172 funding is another bright spot. San Bernardino ranks 19th out of 58 counties in Prop 172 funding over the last three available fiscal years, getting an average of $106 per capita compared to $99 for the statewide average.
Despite the overall positive funding picture, there are areas where San Bernardino falls short. Mental Health Services Act (MHSA) funding is one such area. The county received $64 per person in MHSA funding, slightly below the statewide average of $68, ranking 39th among California counties. Another category in which San Bernardino falls short is in the Homeless Housing, Assistance and Prevention (HHAP) program
allocations. While San Bernardino County accounts for 2.0% of the state’s homeless population, it received only 1.1% of HHAP funds. This discrepancy is partly due to the program’s structure, which allocates 42% of funds to cities with populations over 300,000 - a threshold that no city in San Bernardino County meets. San Bernardino County also ranks low in the number of affordable housing units funded by federal tax credits (awarded by the California Tax Credit Allocation Committee). The Fair Share report details other categories where San Bernardino County does well such as funding for roads and highways, as well those in which it is below the state average, such as capital funding for community colleges.
Advocates for the 2022 secession measure focused their attention on the perception that San Bernardino County wasn’t getting its fair share, that is it was getting less than it should in state funding. Blue Sky addressed a different aspect of this argument in an analysis of how much the county contributes to state coffers. They found that on a per capita basis, San Bernardino County residents contribute less to California’s General Fund in the form of personal
income tax and sales tax than the statewide average. Combining personal income tax and sales tax, the county generated $2,055 per capita for California’s General Fund, compared to $4,112 for the rest of the state’s counties. This gap is largely due to California’s progressive personal income tax, which derives nearly half of its annual revenue from people earning more than $1 million annually. Most of these taxpayers live in counties along California’s coast.
The Blue Sky report concludes, “Secession would also result in financial disruptions for the County. Counties in California receive a significant amount of revenue from the state in the form of transfers and subventions to fund services including health, mental health, and criminal justice. In addition, school districts and community colleges in the County receive significant amounts of revenue from the State of California. Secession would deprive the County of its share of California’s relatively large state budget, which is disproportionately funded by the state’s wealthiest residents – most of whom live outside the County’s borders.”
Bibliography
Blue Sky Consulting Group. Memorandum. May 14, 2024. https://sanbernardino.legistar.com/View.ashx?M=F&ID=1324 1943&GUID=F086A4CE-9702-4AFE-981C-9DE6DFDBA1FE.
Blue Sky Consulting Group. “San Bernardino County ‘Fair Share’ Analysis.” Updated June 14, 2024. https:// sanbernardino.legistar.com/View.ashx?M=F&ID=13242003&GUID=F391EBFE-B07A-4859-A227794126400A3C.
California State Library. “Breaking Up California: A History of Many Attempts.” Accessed October 30, 2024. https:// www.library.ca.gov/collections/online-exhibits/splitting-ca/
San Bernardino County Registrar of Voters. “2022 General Election County Voter Information Guide.” November 8, 2022. https://uploads.rov.sbcounty.gov/rov/Elections/2022/1108/VIG-CMBEN.pdf.
Van Wingerden, Pieter. “San Bernardino County Secession Measure.” Inland Empire Outlook. Fall 2022. https://s10294. pcdn.co/wp-content/uploads/2022/12/IEO-Fall-2022_SB-Secession.pdf.
Yarbrough, Beau. “Secession from California unneeded, San Bernardino County gets ‘fair share,’ report finds.” San Bernardino Sun. August 22, 2024. https://www.sbsun.com/2024/08/19/secession-from-california-unneededsan-bernardino-county-gets-fair-share-report-finds/.
Inland Empire Outlook
EDITORIAL STAFF
Kenneth P. Miller, JD, PhD Director
Bipasa Nadon, JD
Assistant Director
Marionette S. Moore
Administrative Coordinator
STUDENT AUTHORS
Jemma Nazarali ’25
Noah Swanson ’25
Rutvij Thakkar ’26
About the Rose Institute
The Rose Institute of State and Local Government was founded at Claremont McKenna College in 1973. Its mission is to enhance the education of students at CMC, to produce high quality research, and to promote public understanding of issues of state and local government, politics, and policy, with an emphasis on California. The Institute collects demographic, economic, and political and public opinion data and produces objective, non-partisan analyses that inform policymaking throughout the state. It also provides a civil forum for leaders across the political spectrum to discuss and debate public policy issues. The Institute is led by expert faculty and staff who collaborate with a team of approximately 30 students from the Claremont Colleges on all aspects of its research program.
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Photo Credit: Marionette Moore
Noah Swanson ’25, Rutvij Thakkar ’26, and Jemma Nazarali ’25.
