Prohibits New State Taxes That Exclude Revenues from State Spending Limit. Requires Audits for New State Special Taxes

The measure would apply the state spending limit to every state tax enacted or taking effect on or after January 1, 2026. It also would require audits before voter-proposed special-tax measures reach the ballot and every four years after new or higher special taxes take effect.

What it does ​

• Prohibits the state from imposing, collecting, or enforcing a new state tax that is excluded from the state spending limit.
• Requires the State Auditor to begin audits of programs funded by a voter-proposed special tax after proponents submit signatures equal to 25 percent of those needed to qualify.
• Requires those audits to assess program costs, results, fraud, waste, compliance, data, oversight, comparable private-sector costs, and ways to reduce annual costs by at least 10 percent.
• Requires the audit summary to appear in the state voter information guide if the special-tax initiative qualifies for the ballot.
• Requires State Auditor audits every four years for programs funded by special taxes enacted or increased by the Legislature or voters on or after January 1, 2026.
• Requires special-tax revenues to reimburse the State Auditor for audit costs when the tax is approved.
• Voids a conflicting statewide initiative on the same ballot if this measure receives more affirmative votes.

Who it affects ​

• State lawmakers and voters considering new or higher state special taxes.
• State programs designated to receive revenue from new or increased special taxes.
• The California State Auditor, Secretary of State, and state voter information guide.
• Taxpayers whose new state taxes and related program spending would be subject to these rules.

Context ​

California’s Constitution limits the amount of tax revenue the state may spend each year, while some spending, including certain infrastructure spending, can be excluded from that limit. Current law does not require these pre-ballot or four-year audits for programs funded by new or increased special taxes.

A yes vote means ​

A yes vote would bar new state taxes from being excluded from the state spending limit and require pre-ballot and recurring State Auditor audits for programs funded by new or higher special taxes.

A no vote means ​

A no vote would keep existing rules allowing some new state-tax revenues or spending to be excluded from the spending limit and would not create these audit requirements.

Fiscal effect ​

The Legislative Analyst's Office estimates:

• Unknown net fiscal effect. Increased costs for the California State Auditor to implement new one-time and ongoing audit requirements of programs funded by special taxes. These costs would be mostly paid from the new revenues collected from the special taxes. Possible savings associated with implementing recommendations from the audits.

Official sources ​

• Official voter guide page
• Legislative Analyst's analysis
• Arguments for and against
• Full text (PDF)