| THE BUZZ: DAY IN COURT — It’s a tax-restricting ballot measure that could forever affect tax or fee proposals that follow in its wake. The California Supreme Court will hear oral arguments today on the November measure, which Gov. Gavin Newsom and top Democratic lawmakers want the court to invalidate, arguing it's unconstitutional. At stake is a core power of the governor, the Legislature and local governments to impose new taxes to pay for public programs. The measure, sponsored by the California Business Roundtable, would require voters to approve taxes passed by the Legislature and would raise the voter-approval threshold for some local taxes to two-thirds. (It would also retroactively apply to dozens of state and local-level taxes that had been passed since 2022.) Playbook chatted with Emily Schultheis, one of our new colleagues dedicated to covering ballot measures (more on that below), to understand the extraordinary nature of this case. PLAYBOOK: This case is being closely watched up and down the state. Why is it so significant? SCHULTHEIS: The ballot proposal has the potential to dramatically reshape the tax and government funding landscape in California, which is part of why groups like the California Business Roundtable and the Howard Jarvis Taxpayers Association are so eagerly backing it — and why it has the governor’s office, the Legislature and major labor groups so nervous. For opponents of the measure, including Newsom and many in the Legislature, it has echoes of Prop 13, the landmark 1978 ballot measure that limited property taxes and, in doing so, fundamentally transformed government funding in California. They worry it will hamstring the government by preventing them from passing tax measures until the next election comes along and voters can have their say. Given the huge sums of money both sides are prepared to spend on the measure, its removal by the Supreme Court would have ripple effects on the rest of the ballot: The various interest groups invested in it would likely shift money and attention to other proposals that remain, altering the dynamics around those fights, too. PLAYBOOK: What are each side’s main legal arguments? SCHULTHEIS: Lawyers for Newsom and the Legislature will argue the measure is unconstitutional because it alters the basic structure of government: Implementing and raising taxes is a core responsibility of the administration and the Legislature, and this measure would mean they can’t do so without voter approval. Proponents, meanwhile, will say it’s firmly within the realm of other tax-related constitutional amendments and measures that have been approved before, including Prop 13. It’s also very rare for the Supreme Court to throw out a proposed ballot measure or constitutional amendment before it goes to the voters, an argument proponents will surely highlight. PLAYBOOK: What does the case say about the role ballot measures play as a tool of direct democracy in California? SCHULTHEIS: It highlights both the steep price of admission for ballot measures in California today and the way they’re used as a policymaking tool with potentially wide-ranging implications — which is what makes California’s ballot measure system both deeply important and sometimes controversial. What was first introduced in 1911 as a way to counter the political influence of the railway companies has very much become a space dominated by wealthy groups and individuals (or those who can get their buy-in). Even qualifying a measure for the ballot costs millions of dollars, let alone the money needed to run a statewide campaign to pass it on Election Day. At the same time, given the Democratic supermajorities in both chambers of the California Legislature, some groups — particularly those that lean conservative — see ballot measures as one of their sole remaining vehicles for affecting policy on the statewide level. That, combined with the fact that measures can be negotiated off the ballot after they qualify, mean the ballot measure system has effectively become a fourth branch of government, more so than in any other U.S. state. PLAYBOOK: What other major ballot measure fights are brewing already? SCHULTHEIS: Today’s case may be one of the biggest on the horizon, but there’s a lot of other movement on the ballot measure front in the coming weeks that will have a huge impact on what ultimately appears (and doesn’t appear) on the ballot this fall. Negotiations between interest groups and the Legislature over a handful of initiatives, including on workers’ rights and retail theft, will intensify ahead of a June 27 deadline to remove qualified measures from the ballot. Others, including a proposal to limit recognition of transgender identity, are likely to fall short in delivering the required signatures by upcoming deadlines. By May’s end, these developments are likely to have shortened and scrambled the statewide issue ballot and given us a clearer sense of what voters will see on the ballot in November. Speaking of ballot measures… POLITICO CALIFORNIA IS GROWING! Today, we’re announcing a new pillar of our California expansion: a team dedicated to covering the state’s lively realm of ballot-measure campaigns the same way we approach the governor or Legislature, with year-in, year-out reporting on the strategies, policy ideas, personalities and the money behind them. Veteran campaign journalist Sasha Issenberg is developing and leading our coverage strategy, and Emily Schultheis and Will McCarthy are our two ballot measure reporters. Email them at eschultheis@politico.com and wmccarthy@politico.com. Please welcome them to the team and send them your tips! GOOD MORNING. Happy Wednesday. Thanks for waking up with Playbook. Meanwhile, you can text us at 916-562-0685 — save it as “CA Playbook” in your contacts. Or drop us a line at lkorte@politico.com and dgardiner@politico.com, or on X — @DustinGardiner and @Lara_Korte. WHERE’S GAVIN? Prepping for his budget presentation ahead of the May 14 deadline. Meanwhile, First Partner Jennifer Siebel Newsom today will make an appearance at a local Los Angeles school alongside U.S. Secretary of Agriculture Tom Vilsack and LAUSD Superintendent Alberto Carvalho to talk about childhood nutrition.
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