California voters weigh Prop. 41 tax and spending changes, effect on Prop. 40 billionaire tax

California voters will decide whether to change state tax and spending rules under Proposition 41, one of two ballot measures that could invalidate Proposition 40 if approved to levy a one-time wealth tax on billionaires.

Prop. 41 would require California's State Auditor to review programs funded by new special taxes – taxes whose revenue is dedicated to a special purpose — before a measure would qualify for the ballot. The measure also would require audits every four years for programs receiving revenue from special taxes created or increased by voters or the Legislature after Jan. 1, 2026.

Prop. 41 would also restrict the state's ability to exclude new special-tax revenue from the state spending limit. Prop. 40 would exempt its wealth-tax revenue from that limit.

The measure also contains a provision that could invalidate a conflicting ballot measure, including Prop. 40, if Prop. 41 receives more "yes" votes. 

Separately, Prop. 42 — which would prohibit new state taxes on personal property and financial assets  — could also upend Prop. 40 if it receives more "yes" votes than the measure aimed at taxing billionaires. According to the state Legislative Analyst's Office, passage of either measure could prevent Prop. 40 from taking effect — even if it wins approval from a majority of voters —  because courts could find that they conflict with Proposition 40.

Supporters of Prop. 41, including the California Taxpayers Association, California Society of Certified Public Accountants, and CalAsian Chamber of Commerce, say it would provide taxpayers more transparency and accountability. Opponents of the measure include SEIU United Healthcare Workers West and the coalition supporting Prop. 40, who argue the measure was designed to undermine the proposed tax on billionaires.

The political action committee Building a Better California, funded by billionaires such as Google co-founders Sergey Brin and Larry Page, venture capitalist John Doerr, and PayPal and Palantir co-founder Peter Thiel, has spent $58.4 million into the campaign for Prop. 41. Opponents have spent $34.4 million, most from SEIU United Healthcare Workers West, as of October 23.