Voters May Enact Local Taxes at Special Elections

Tuesday, August 29, 2017

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California Supreme Court Holds:

Voters May Enact Local Taxes at Special Elections

Cuéllar Says a State Constitutional Provision Requiring Local Governments to Put Proposed Taxes On a General Election Ballot Does Not Apply to Initiatives; Kruger, Liu Dissent

By a MetNews Staff Writer

A state constitutional provision barring a “local government” from imposing a new tax unless it is approved by voters at a general election does not preclude the electorate from itself imposing a new tax, through the initiative process, at a special election, the California Supreme Court held yesterday in a 5-2 opinion.

At issue was the effect of Art. XIII C of the state Constitution, added by initiative in 1996, which provides:

“No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by. a majority vote….The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.”

Writing for the majority, Justice Mariano-Florentino Cuéllar said:

“The question before us is whether article XIII C also restricts the ability of voters to impose taxes via initiative….In light of the text and other indicia of the purpose associated with the relevant constitutional and statutory provisions, we agree with the Court of Appeal that article XIII C does not limit voters’ ‘power to raise taxes by statutory initiative.’ ”

He commented:

“A contrary conclusion would require an unreasonably broad construction of the term “local government” at the expense of the people’s constitutional right to direct democracy, undermining our longstanding and consistent view that courts should protect and liberally construe it….As Ulysses once tied himself to the mast so he could resist the Sirens’ tempting song…, voters too can conceivably make the clear and important choice to bind themselves by making it more difficult to enact initiatives in the future. The electorate made no such clear choice to tie itself to the mast here. Without a direct reference in the text of a provision—or a similarly clear, unambiguous indication that it was within the ambit of a provision’s purpose to constrain the people’s initiative power––we will not construe a provision as imposing such a limitation.”

The jurist noted that Art. XIII C defines “local government” as “any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity.”

Cuéllar noted that Upland’s position “is that this definition is broad enough to include the electorate,” and responded:

“It is true enough that in the contemporary understanding of our democracy, governmental entities exist to serve the public, and not the other way around…. But this important principle does not, in the abstract or in the context of the laws at issue in this case, imply that we should assume the public and the governmental entity corresponding to where the public resides to be one and the same.”

Intent of Voters

Art. XIII C was added to the Constitution through Proposition 218. Cuéllar observed:

“The crux of the concern repeatedly reflected in the ballot materials is with local governments and politicians––not the electorate––imposing taxes. Nowhere in the materials is there any suggestion that Proposition 218 would rescue voters from measures they might, through a majority vote, impose on themselves.”

Responding to the concurring and dissenting opinion by Justice Leondra R. Kruger, in which Justice Goodwin Liu concurred, Cuéllar said:

“In reaching a contrary conclusion, the concurring and dissenting opinion starts from the premise that the electors must have wanted to tie their own hands with respect to the imposition of local taxes. This very premise then undergirds the opinion’s reading of the term ‘local government’ as necessarily including the electorate. Nothing supports this premise….”

City’s Approach

In a brief portion of his opinion—Sec. “D”—Cuéllar took issue with the manner in which the City of Upland (located in San Bernardino County) handled the underlying matter.

An initiative was drafted by the California Cannabis Coalition to lift the city’s ban on marijuana dispensaries, and to authorize up to three such facilities in the city, requiring each to pay an annual “licensing and inspection fee” in the amount of $75,000. At least 15 percent of Upland’s registered voters signed the petition, at which point the city had the option, under Elections Code §9214 of enacting the measure, ordering a special election, or ordering an agency report.

It ordered a report, and the report said the actual cost of licensing and inspecting would be about $15,000, so the balance would be a tax. After receiving the report, it had the option, under the statute of then adopting the measure or ordering a special election.

Instead, the city, relying on Article XIII C, declined to call a special election, instead putting the measure on the Nov. 8, 2016 general election ballot.

City Ignored Law

Cuéllar said the provisions of §9214 are mandatory and Upland “erred when it ignored them.” He wrote:

“Its unilateral determination that the proposed initiative constituted a general tax and was therefore governed by article XIII C, section 2 did not relieve it of its obligation to adhere to section 9214—particularly given that the initiative purported to propose a ‘fee’ and was thus, facially at least, not a tax measure. In the future, cities should follow section 9214 and order a special election. At that point, either the city or other interested parties may pursue any appropriate legal challenge to the measure either in the pre-, or more likely, postelection context.”

He noted that the dispute in the case was actually moot because the initiative in question was voted on in the general election, and defeated. Cuéllar said the court is exercising its prerogative of deciding the matter, anyway, because the appeal “presents important questions of continuing public interest that may evade review” otherwise.

Kruger’s Opinion

Kruger concurred only in Sec. “D” of the majority opinion. She said:

“I agree with the majority that the city council erred in refusing the request, though for a narrow reason: The city council should have put the initiative on the special election ballot and left questions about the validity of the fee to be sorted out in the courts. That conclusion would suffice to dispose of this case, which, as the majority says, is now moot in any event.”

She maintained that Art. XIII C “is a constitutional restriction on the taxation power of local government, and, by its terms, it applies to the imposition of all local government taxes” and “[w]hether a local government tax has been enacted by voter initiative or by vote of the city council” is immaterial.

The case is California Cannabis Coalition v. City of Upland, 17 S.O.S. 4321.