By Kristine Guerrero, senior director of public affairs, and Ben Triffo, legislative advocate
This article was originally published by The League of California Cities

Cal Cities last week sent a letter to key lawmakers warning that a ballot measure sponsored by the California Business Roundtable and the Howard Jarvis Taxpayers Association could result in local service cuts for Californians. The Cal Cities Board of Directors voted to oppose initiative 25-0006A1 — deceptively called the “Local Taxpayer Protection Act to Save Proposition 13” — at its April board meeting.

Cal Cities’ fiscal analysis estimates that the initiative could reduce local government revenues by $2 billion to $3 billion annually, beginning two years after enactment. The Legislative Analyst’s Office similarly projects an annual loss of up to two billion dollars in local government revenues, primarily due to the invalidation of charter city property transfer taxes and certain parcel taxes passed with less than two-thirds voter approval.

What does the initiative do?

Initiative 25-0006A1 raises the voter threshold for certain taxes and limits the types of taxes local governments may impose related to real estate. Specifically, the ballot measure:

• Invalidates certain existing taxes, including decades of locally approved and voter-approved measures that do not comply with its new constitutional requirements.
• Requires all local special taxes to receive two-thirds voter approval.
• Prohibits local governments from imposing most taxes related to real property, such as property transfer taxes.

The impact of the initiative would largely fall on cities. The proportional impact on city general-purpose revenues would vary significantly by jurisdiction, ranging from 1% to over a quarter of general-purpose city revenues. A snapshot of potential revenue losses to cities includes:

• $10 million annually to Sacramento
• $55 million annually to San José
• $1 million annually to Petaluma
• $2.5 million annually to Vallejo

For many charter cities, property transfer taxes are a major, longstanding source of locally controlled revenue that allows them to address local needs. San José has reinvested nearly all its transfer tax revenue into homelessness response and prevention efforts, including transitional and permanent housing. According to city officials, San José accomplished this by combining its transfer tax revenue with state funding, resulting in a one-third decrease in unsheltered homelessness.

Initiative 25-0006A1 also invalidates several voter-approved special taxes adopted by citizen initiative with less than two-thirds voter approval. This includes approximately $300 million in annual losses from parcel taxes across local governments and special districts. These revenues fund fire services, infrastructure maintenance, libraries, child care, schools, and environmental protection.

The road to the November ballot

Initiative 25-0006A could go before voters on the November 2026 ballot. However, state law allows proponents to withdraw their initiative 131 days before the November general election. Cal Cities is working with proponents and others to remove the initiative before the June 25 deadline. Cal Cities is also advocating that any discussions related to the measure include meaningful engagement with impacted cities. If the initiative makes it to the November ballot, Cal Cities will mobilize to defeat the measure.

What can cities do now?

This week, Cal Cities submitted an opposition letter to the Assembly Local Government Committee and Assembly Revenue and Taxation Committee in preparation for a joint hearing on the initiative. While the hearing was postponed, Cal Cities is urging charter cities with property transfer taxes to submit a letter to the committees detailing its potential impact on their community. City officials should also connect with their regional public affairs manager to learn more about the initiative.