Opinion: SJ’s Measure E still causes “budget trauma” because it was approved as a general tax
A special local tax in California needs two-thirds voter approval to pass. The “affordable housing” Measure E was never going to get that. But as a general tax it slipped through with a simple majority. So says twice-elected D6 Councilmember Dev Davis, who opposed it because now, as she predicted, there’s a yearly fight over how to spend the money. From the December ep of her excellent podcast The Upside of Down with SJ Chief of Staff Lam Nguyen.
Dev Davis: Measure E was a citywide transfer tax. So, when a property over $2 million gets sold, there's a tax on the sale of a property. [17:39]
[Editor’s note: after July 1, 2025, the threshold was raised so that properties valued at $2.3 million and above are subject to the tax.]
And that goes to the City of San Jose. It actually just goes to the general fund because it's messed up in California. I do not understand the thinking on this. For a local measure to pass, it has to pass by two-thirds if it's for something specific. It only has to pass by a simple majority – so that's 50% plus one vote – if it's going to the general fund.
When something is polling over 50% but it's not polling enough to hit two-thirds, then most localities will do it as a general tax, and they say, ‘you know, we will use it for this [specific] thing.’
So we did that with Measure E in the city. I did not endorse the measure because of this problem, and because of what I foresaw was likely to happen, and it did. We said, ‘oh, we're putting it in the general fund, but we're going to earmark these dollars as these are Measure E dollars, and we're only going to spend them on affordable housing. Then, we're going to make it so that we have to pass it by eight votes [of city council members] if we're going to change the percentages of how we're going to spend this money.
So every year at budget time, there's a fight: can you get eight people to agree to change the percentages? Because every single year since we passed that tax, we have had a fight over what the percentages are supposed to be.
Lam Nguyen: Honestly, it's the thing that gives you the most trauma about the budget. Everything else is workoutable. But the last three years have been a nightmare with Measure E.
Listen to the whole episode here.
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