In gearing up for the November 2022 General Election cycle, advocates are beginning their process to gather signatures for 38 ballot initiatives that could significantly change state laws. From taxes to housing, and economic development, these ballot initiatives could prove consequential for years to come.

Below are just a handful of the 38 ballot initiatives that we believe could impact the commercial real estate industry in some meaningful way. Though they have yet to receive the required number of signatures to be eligible for the 2022 ballot, they should still certainly be on the lookout moving forward.

We will update this list as ballot initiatives become eligible or fail to meet their respective deadlines.

Taxes

Initiative No. 21-0042 - Limits Ability of Voters and State and Local Governments to Raise Revenues for Government Services

Initiative Summary: New or increased state taxes currently enacted by a two-thirds vote of the Legislature, also requires statewide election and majority voter approval. Limits voters’ ability to pass voter-proposed local special taxes by raising the vote requirement to two-thirds. Eliminates voters’ ability to advise how to spend revenues from the proposed general tax on the same ballot as the proposed tax. Expands the definition of “taxes” to include certain regulatory fees, broadening the application of tax approval requirements. Requires Legislature or local governing body set certain other fees.

Summary of estimated fiscal impact on state and local governments: Lower annual state and local revenues, potentially substantially lower, depending on future actions of the Legislature, local governing bodies, voters, and the courts.

Initiative No. 21-0037 - Provides Funding for Programs to Reduce Greenhouse Gas Emissions by Increasing Tax on Personal Income Over $2 Million

Initiative Summary: Increases tax on personal income over $2 million by 1.75% for individuals and married couples and allocates new tax revenues as follows: (1) 45% for rebates and other incentives for zero-emission vehicle purchases and 35% for charging stations for zero-emission vehicles, with at least half of this funding directed to low-income households and communities; and (2) 20% for wildfire prevention and suppression programs, with priority given to hiring and training firefighters. Requires audits of programs and expenditures.

Summary of estimated fiscal impact on state and local governments: Increased annual state tax revenue ranging from $3 billion to $4.5 billion, with the additional revenue used to support zero-emission vehicle programs and wildfire-related activities. Potential increased state administrative costs paid from other funding sources could reach tens of millions to the low hundreds of millions of dollars annually. Net decrease in state and local transportation revenue of up to several tens of millions of dollars annually in the initial years, and growing to up to a few hundreds of millions of dollars annually after several years.

Initiative No. 21-0022 - Provides Funding for Pandemic Detection and Prevention by Increasing Tax on Personal Income Over $5 million

Initiative Summary: Increases tax on personal income over $5 million by 0.75% for 10 years, and allocates new tax revenues as follows: 50% to the California Institute for Pandemic Prevention (established by this measure), to award grants for research and development of technologies to detect and prevent future pandemics; 25% for public health programs for pandemic preparedness; and 25% for improvements to school facilities to limit disease transmission. Creates Independent Scientific Governing Board to administer the Institute; requires board members have specified medical, technological, or public-health expertise.

Summary of estimated fiscal impact on state and local governments: Increased state tax revenues that likely would range from around $500 million to $1.5 billion annually for the ten-year period the new tax would be in effect. Revenues entirely would support activities related to infectious disease control and pandemic prevention.

Initiative No. 21-0015 - Eliminates Property Tax Reassessment for Certain Family Real Property Transfers

Initiative Summary: Exempts from property tax reassessment transfers of primary residences between parents and children (and grandparents to grandchildren if parents are deceased), regardless of value (removing cap set in 2020 by Proposition 19). Also exempts transfers between the same family members of other real properties valued up to $2.4 million (e.g., second homes, rental/business properties). Reduces local property tax revenues and eliminates California Fire Response Fund created by Proposition 19. Requires the state to reimburse local agencies for property tax losses due to Proposition 19’s other tax changes.

Summary of estimated fiscal impact on state and local governments: Increased state costs of hundreds of millions of dollars per year to cover recent local government property tax losses. These costs would grow over time, possibly to $1 billion or more per year. Local government funding would decline by tens of millions of dollars per year. Over time, these losses would grow to hundreds of millions of dollars per year. Schools would have losses of similar amounts.

Public Safety

Initiative No. 21-0035 - Repeals Three Strikes Sentencing Law

Initiative Summary: Eliminates third-strike sentencing enhancement that currently imposes life imprisonment with the possibility of parole for serious felony offenders with two or more prior serious or violent felony convictions. Eliminates second-strike sentencing enhancement that currently doubles sentence term for felony offenders with one prior serious or violent felony conviction. Requires resentencing of inmates who would have received lesser sentences under this measure. Maintains other sentencing enhancements for repeat offenders. Applies savings from sentencing changes to public school youth-mentoring programs, tuition assistance at California Community Colleges and California State University, and restorative justice and transitional housing programs.

Summary of estimated fiscal impact on state and local governments: Net state criminal justice system savings could range from the low hundreds of millions of dollars to over $1 billion annually, which would be spent on education, restorative justice, and transitional housing. Temporary increase in county criminal justice system costs that could be in the tens of millions of dollars annually.

Initiative No. 21-0010 - Amends Laws Regarding Police Officer Use of Force, Training, Body Camera, and Budget Requirements

Initiative Summary: Seeks to limit when police officers may be shielded from liability for excessive force under the federal “qualified immunity” defense. Requires officers found guilty of excessive force to be fired and barred from future service. Requires officers to report, and intervene to stop, the use of excessive force by other officers. Requires use of body cameras during all on-duty interactions with the public, and online posting of all incident recordings. Requires 20 percent of police departments’ budgets and on-duty officer time be used for training.

Summary of estimated fiscal impact on state and local governments: Increased state and local government costs, which could reach billions of dollars annually, primarily related to the use of body cameras and increased use of force training.

Initiative No. 21-0008 - Eliminates Collective Bargaining for Teachers, Police Officers, Nurses, Firefighters, and Other Public Employees

Initiative Summary: Eliminates collective bargaining between state/local governments and labor organizations (including unions) representing teachers, police officers, nurses, firefighters, and other public employees about wages, benefits, hours, labor disputes, or other work conditions. Requires the Governor-appointed State Personnel Board to establish wages and benefits for state employees. Prohibits new or amended public-employee labor agreements, including extensions, but does not impact existing agreements. Authorizes state/local governments to provide up to 12 months of severance pay to employees who resign within three months of the measure’s enactment.

Summary of estimated fiscal impact on state and local governments: One-time costs, potentially in the range of hundreds of millions to low billions of dollars, across state and local governments. The long-term fiscal effect depends on future actions by state and local policymakers.

Housing

Initiative No. 21-0016 - Provides that Local Land-Use and Zoning Laws Override Conflicting State Laws

Initiative Summary: Provides that city and county land-use and zoning laws (including local housing laws) override all conflicting state laws, except in certain circumstances related to three areas of statewide concern: (1) the California Coastal Act of 1976; (2) siting of power plants; or (3) development of water, communication, or transportation infrastructure projects. Prevents state legislature and local legislative bodies from passing laws invalidating voter-approved local land-use or zoning initiatives. Prohibits the state from changing, granting, or denying funding to local governments based on their implementation of this measure.

Summary of estimated fiscal impact on state and local governments: Fiscal effects of the measure depend on future decisions by the cities and counties and therefore are unknown.

Initiative No. 21-0032 - Increases Homeowners' Property Tax Exemption and Renters' Tax Credit. Increases Taxes on High-Value Properties. Limits Local Restrictions on Housing Development.

Initiative Summary: Increases the portion of homeowner’s property value that is exempt from property tax from $7,000 to $200,000 (adjusted for inflation). Increases renters’ income tax credit to up to $2,000 (adjusted for inflation); increases income limit for claiming credit to up to $400,000. Reimburses local governments’ lost revenue from these changes with a new property tax surcharge of up to 1.2% on properties valued at over $4 million. Limits local government discretion to deny certain housing development projects.

Summary of estimated fiscal impact on state and local governments: Increased property taxes on a property with a taxable value of more than $4 million providing $16 billion to $19 billion in new revenue. Increased state costs resulting from the increases to the homeowners’ property tax exemption and renters’ tax credit. Increased costs to local governments for carrying out the measure. Total costs would be $16 billion to $19 billion annually and likely would be fully offset by revenue from increased property taxes on higher-value properties.

Economic Development

Initiative No. 21-0022 - Raises Minimum Wage

Initiative Summary: Existing law requires annual increases to California’s minimum wage until it has reached $15.00 per hour for all businesses on January 1, 2023. This measure extends these annual increases ($1.00 per year) until minimum wage—currently, $15.00 per hour for businesses with 26 or more employees, and $14.00 per hour for smaller businesses—reaches $18.00 per hour. Thereafter, as existing law requires, the minimum wage will annually adjust for inflation. In periods of decreased economic activity or a General Fund deficit, the Governor may suspend annual increases up to two times, thereby extending the timeline for reaching $18.00 per hour.

Summary of estimated fiscal impact on state and local governments: Unclear change in annual state and local tax revenues, likely between a loss of a couple of billion dollars and again of a few hundred million dollars. An increase in annual state and local government costs is likely between half a billion dollars and a few billion dollars.

COVID-19

Initiative 21-0018 - Limits State and Local Officials' Authority to Respond to Public-Health and Other Emergencies

Initiative Summary: Restricts state and local officials’ authority to issue orders restricting business or school operations during public health and certain other emergencies, including storms, drought, energy shortage, or cyberterrorism. Limits orders’ duration to 30 days, unless extended by Legislature or local governing body. Prohibits orders from distinguishing between businesses based on size. Requires orders to permit schools to remain open to the maximum extent possible. Requires online publication of information justifying orders; prohibits officials from relying on other information to defend orders against legal challenge.

Summary of estimated fiscal impact on state and local governments: Unknown fiscal effect on the state and local governments due to requirements that could change the use of shutdown orders during emergencies.