California Voters to Decide If Local Taxes Should Be Harder to Approve

California voters will decide in November if the state will make it more difficult for cities to raise local taxes similar to Los Angeles’ 3-year-old Measure ULA “mansion tax” via the ballot box.

State lawmakers on Thursday advanced a measure that would require some special taxes to receive support from two-thirds of voters, rather than a simple majority, Bloomberg reported. However, the new ballot measure is slimmer than an earlier campaign because it keeps in place approved taxes that previously passed with a simple majority, including L.A.’s ULA transfer tax on commercial real estate deals.

The new stipulations are a compromise between Democratic lawmakers and anti-tax advocates, including the Howard Jarvis Taxpayers Association, which had been backing a more sweeping statewide measure to roll back local tax authority.

L.A. voters approved Measure ULA in 2022, and it has become one of the most closely watched and controversial tax policies in the country. Though branded as a “mansion tax,” it applies to all real estate deals a 4 percent tax to property sales above $5.3 million and a 5.5 percent tax to sales of $10.6 million or more. 

Measure ULA has so far raised about $1.2 billion — less than half of the $2.7 billion projected by early 2026 — for affordable housing production, tenant rental assistance, education and eviction defense. However, last month, the RAND Corporation reported that ULA has cut high-value deals in the city of L.A. by 31 percent, and it has reduced production of large multifamily developments by 30 percent. (The L.A. City Council recently advanced a plan to exempt newly built multifamily buildings that are sold within 10 years of construction.)

Anti-tax advocates argue Measure ULA exposed a loophole in the state’s tax law: Under Proposition 218, special taxes require two-thirds approval when placed on the ballot by a government agency, but citizen-led tax initiatives have been allowed to pass with a simple majority. The November measure would impose a two-thirds requirement for certain local tax hikes that come from citizen initiatives.

Cities and local governments are expected to oppose the change, warning that a higher threshold would make it harder to fund housing, transportation, schools, infrastructure and public services. The measure could reshape future transfer taxes, parcel taxes and other local revenue measures that affect property values, development costs and transaction activity. 

California voters will also decide on a separate proposal to impose a one-time 5 percent tax on billionaires to offset federal health care cuts.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.