How does Proposition 26 affect your community? For many, who have not yet tried to pass new or impose fees on residents, its affects may be mysterious. But as councils seek increased revenues or more effective ways to offset expenses, the new restrictions imposed by this voter-approved legislation could prove a daunting obstacle.

The people at Colantuono & Levin, PC offer their November 13th bulletin as a summary analysis of the new rules.

Specifically, it walks through the seven exceptions to the new proposition. These are the enumerated powers, and outside of these instances, the power to raise revenues has been greatly curtailed.

From Colantuono & Levin, PC:

On November 2, 2010, by a relatively narrow 53% margin, California voters approved Prop. 26 to convert some local fees to taxes requiring voter approval. Although, like most initiatives, the measure raises many questions, some initial guidance is possible.

Background. In 1997 the California Supreme Court decided Sinclair Paint Co. v. State Board of Equalization, upholding a fee imposed on businesses that make products containing lead to fund health services to children and to otherwise mitigate the social and environmental consequences of lead contamination. The Court ruled that the use of the proceeds of a fee need not benefit those charged to avoid making the fee a tax as long as the fee bears a reasonable relationship to the burden imposed by those charged. Similar fees have been proposed, such as fees on sweetened beverages to fund anti-obesity programs and fees on alcohol vendors to fund police services and public education efforts to address the adverse consequences of alcohol consumption. In addition, a number of proposals in the Legislature sought to avoid the two-thirds approval required for taxes, such as a proposed surcharge on vehicle license fees to fund state parks; and a 2010 action to reduce state taxes on gasoline, but to increase fees on gasoline to fund public transportation and other programs.

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