A semi-truck leaves an Amazon Fulfillment in Eastvale on Thursday, Nov. 12, 2020. (Photo by Watchara Phomicinda, The Press-Enterprise/SCNG)

The South Coast Air Quality Management District is trying to suppress your right to vote on local taxes by pretending a major tax increase is simply a “fee,” but the law is not on the district’s side.

Rules proposed by the district would require warehouses with more than 100,000 square feet of indoor space in a single building to reduce emissions or pay a “mitigation fee” that actually is a tax. The mislabeling is a scheme by district bureaucrats to avoid letting voters answer the question: “Should we pile more taxes on essential businesses during a pandemic?”

Under California law, local taxes cannot be imposed without voter approval. “Special taxes” – those that earmark the revenue for specific purposes, as the district’s proposal does – need approval by at least two-thirds of the voters.

In 2010, Californians approved Proposition 26, the Stop Hidden Taxes Initiative, to keep government agencies like the South Coast AQMD from using the “fee” loophole to avoid going to the voters. A key provision states that in a fee-vs.-tax dispute, the government bears the burden of proof.

Proposition 26 states that government activity funded by a legitimate fee must benefit only the taxpayers that pay the charge – think of things like permit fees, license fees, or trash service charges. Activity benefiting entire communities, and charges that pick winners and losers, are not evenly distributed and therefore constitute a tax.


The district’s charge would apply to a limited subset of taxpayers – those that operate warehouses above a specific size – and the payers would not receive any specific benefit. That’s a tax.

The district said proceeds from the charge would be used to provide financial incentives for truck owners to purchase new electric trucks, “or for the installation of fueling and charging infrastructure, with priority given for projects in the communities near warehouses that paid the fee.”

Since most warehouse operators do not own or have reason to own trucks, the incentives to purchase zero-emission trucks would be of little to no use to them. Furthermore, warehouse operators have little or no control over what types of vehicles come and go from their facilities, so the installation of fueling and charging infrastructure – even in communities near the warehouses – would provide no specific benefits to the payers.

Another factor is that the district does not provide a sunset date for the charge. If the true goal is to control local and regional emissions, the charge should end when that goal has been accomplished.

Why would a government agency try to keep you from being able to exercise rights guaranteed by the state constitution? Why is the district trying to create a loophole rather than respecting the voters?

The only logical explanation is the agency can’t make a sound argument for increasing taxes on essential links in the supply chain that delivers goods to your doorstep and keeps local stores stocked. The agency knows that a tax on warehouses ultimately falls on consumers, and that the cost of living in Southern California already is too high.

Rather than make its case in the court of public opinion, the district is heading down a path that almost certainly will lead to a court of law.

There still is time for the agency to do the right thing and withdraw the proposal when it meets Friday, or at the very least put it on the ballot as a special tax.

Ben Lee is tax counsel for the California Taxpayers Association, the oldest and largest organization representing taxpayers in California. CalTax sponsored Proposition 26 in 2010, and co-chaired the Stop Hidden Taxes campaign.  

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