Looking at the proposed arena deal from the principle, established by law, that it takes a 2/3 majority to approve a tax for a specific purpose, really clarifies the issue. Even though the companion bill attempts to find a way around that requirement, the 2/3 threshold is a sound principle helping to ensure the public isn’t persuaded into approving something not really in their interest, even though pressure from public leadership and private business interests seeks their acquiescence.
An excerpt.
Dan Walters: Even if approved, Kings deal may run afoul of state tax vote law
By Dan Walters -- Bee Columnist Published 12:01 am PDT Wednesday, July 26, 2006
Looking beyond the hype, the deal between Sacramento-area politicians and the Kings basketball team on building a new downtown arena is looking more and more like a giveaway to the team's very wealthy owners, the Maloof family.
Bee columnist Dan Weintraub donned his green eyeshade, examined the deal -- centering on a countywide sales tax -- on how it stacks up in purely economic terms, and figured out that the Maloofs' real contribution to the project is only a fraction of its purported level.
As announced, the team owners would put up more than a quarter of the arena's cost but Weintraub, applying principles that any informed and sophisticated investor in a development project would use, found that counting the team's rent payments as a share of the cost overstates its share by 100 percent. In all likelihood, the Maloofs' share would be closer to 10 percent as they leased the stadium for $4 million a year, less than what they're paying just one front-line player. And for that relatively paltry sum, the Kings would be entitled to retain all revenues the arena might generate.
The deal's legal underpinning may be just as shaky as its financial basis because it would rely on a tricky, two-pronged vote of local voters that may violate the state constitution. Even if successful at the polls -- and that's dubious, according to recent polls in the Sacramento area -- the Kings deal would be challenged in court as violating a 1996 constitutional amendment aimed at making it more difficult to pass single-purpose tax increases.
Proposition 13, enacted in 1978, required that while local taxes for general government purposes could be approved by simple-majority margins of voters, any "special taxes" would require two-thirds votes. Local government officials tested ways of getting around the higher threshold for single-purpose levies and hit upon a two-measure strategy, asking voters to approve a general tax in one and in a companion measure to declare how the tax proceeds would be used.
A two-part tax proposal passed in 1996 by Santa Clara County voters, aimed at increasing spending on local transportation projects, became the test case of the strategy. In 1998, a state appellate court declared that the measures were legal under Proposition 13 -- a decision that was left untouched by the state Supreme Court.
Backers of the Kings deal are citing the 1998 decision as validating their plan to place two measures on the November ballot, one a quarter-cent increase in the sales tax in Sacramento County and the other a measure to direct that about half of the tax be used to underwrite the Kings arena.
The problem with that contention, however, is that in the same 1996 election in which the Santa Clara package was approved, California voters endorsed a statewide measure, Proposition 218, that, among other things, tightened up the requirement for two-thirds votes on special taxes, and that law could thwart the Kings deal.
