A California appellate court held that Proposition 39, which mandated single-sales factor apportionment, did not violate the single-subject rule. In 2012, California voters enacted Proposition 39, which established a program to promote the creation of clean energy jobs. It funded the program by eliminating the option for taxpayers to apportion its California tax based on a three-factor apportionment formula, requiring instead single-sales factor apportionment. A Texas-based provider of credit score and credit reporting services paid tax to California pursuant to the single sales-factor method and filed a complaint for refund on the basis that Proposition 39 was invalid under the single-subject rule for ballot initiatives. The court held that Proposition 39 did not violate the rule because its purpose was to fund a clean energy job creation program by raising taxes on some multistate businesses. The proposition’s provisions were “reasonably germane” to this purpose because “they provided the mechanisms to raise tax revenues and direct them to clean energy job creation.” Plus, the provisions were “functionally related” because the apportionment formula change funded the clean energy jobs program.

One Technologies LLC v. Franchise Tax Board, 314 Cal.Rptr.3d 718 (Cal. Ct. App. 2023).