Californian voters will decide in November whether it should be more difficult for cities to levy local taxes via ballot measures, similar to Los Angeles's three-year 'Mansion Tax' Measure ULA. State lawmakers on Thursday passed a measure that would propose certain special taxes require the support of two-thirds of voters, rather than a simple majority.
However, the new ballot proposal is narrower than a previous campaign, as it retains already approved taxes that previously passed with a simple majority, including L.A.'s ULA transfer tax on commercial property transactions. The measure would not repeal already approved taxes.
The new provisions represent a compromise between Democratic legislators and tax opponents. The latter include the Howard Jarvis Taxpayers Association, which had supported a more comprehensive statewide measure to roll back local tax powers. Voters in L.A. approved Measure ULA in 2022, and it has developed into one of the country's most watched and controversial tax policies. Although referred to as a 'Mansion Tax', it applies to all real estate transactions, levying a 4 per cent tax on property sales over 5.3 million Dollars and a 5.5 per cent tax on sales of 10.6 million Dollars or more.
Measure ULA has so far generated approximately 1.2 billion Dollars for the construction of affordable housing, rental assistance for tenants, education, and eviction protection – less than half of the 2.7 billion Dollars projected by early 2026. Last month, however, the RAND Corporation reported that ULA has reduced high-volume transactions in the city of L.A. by 31 per cent and decreased the production of large multi-family housing by 30 per cent. The L.A. City Council recently passed a draft measure that exempts newly built multi-family homes sold within 10 years of completion from the tax.
Tax opponents argue that Measure ULA exposed a loophole in state tax law: under Proposition 218, special taxes require a two-thirds majority if put to a vote by a government agency. However, citizen initiatives for tax levies could be passed with a simple majority. The November measure would introduce a two-thirds requirement for certain local tax increases originating from citizen initiatives.
Cities and local governments are expected to oppose the change. They warn that a higher threshold would make funding for housing, transport, schools, infrastructure, and public services more difficult. The measure could reshape future transfer taxes, property taxes, and other local revenue measures, affecting property values, development costs, and transaction activity. Californian voters will also vote on a separate proposal that includes a one-off 5 per cent tax on billionaires to offset cuts in federal healthcare.
