Wednesday, September 6, 2017
IN MY OPINION (Column)
Supreme Court Ruling Imperils Every California Taxpayer
By JON COUPAL
Earlier this week the California Supreme Court issued a stunning decision which imperils every California taxpayer. At issue is whether taxes proposed by special interests using the local initiative process have to comply with taxpayer protections set forth in Proposition 218, the Right to Vote on Taxes Act, a Howard Jarvis Taxpayers Association sponsored statewide measure approved by California voters in 1996.
The case, California Cannabis Coalition v. City of Upland, at first glance seems limited to a narrow technical question: When a local initiative seeks to impose a new tax, does the issue need to be put to the voters at the next general election or can the proponents, relying on other laws, force a special election? The lower court had ruled that taxes proposed by initiative are exempt from the taxpayer protections contained in the state constitution, such as the provision dictating the timing of the election.
When the lower court in San Diego issued its decision, the Howard Jarvis Taxpayers Association was alarmed because the constitution’s taxpayer protections include the right to vote on taxes. For that reason HJTA provided legal representation to the city of Upland. Of major concern was that, if local initiatives are exempt from taxpayer protections, then public agencies could easily deny taxpayers their right to vote on taxes by colluding with outside interests to propose taxes in the form of an initiative, then submitting a tax under a lower vote threshold than that currently required. The worst case scenario would be if a local government were to rely on this case as legal authority to impose a tax without any election at all.
The import of the case was not lost on those who dislike Proposition 218’s requirement that local special taxes—those imposed for specific purposes—receive a two-thirds vote of the local electorate. For example, backers of a tax to subsidize a new sports arena in San Diego were hoping that the lower court ruling would allow them to impose a special tax with only a simple majority vote. Now that the lower court decision has received the imprimatur from the state’s highest court, these kinds of schemes are already being hatched.
The court in Upland based its decision on the view that local voters were different from the governing body when it comes to enacting legislation. But for decades courts have said that, when voters use the initiative power they are simply “stepping into the shoes” of the governing body and have the same powers and same limitations. For example, a local city council cannot seize someone’s real property without paying “just compensation,” but if local housing advocates propose an initiative to seize someone’s property, the reasoning of the court suggests that there’s no requirement to pay for it. That is surely an absurd result.
While there’s little dispute that the logic behind the majority opinion could substantially weaken the two-thirds vote requirement in Proposition 218, taxpayers are not wholly without hope.
First, the court barely mentioned the parallel two-thirds vote requirement in Proposition 13. Its vitality will surely be the subject of more litigation.
Second, while taxpayers are concerned about collusion between local governments and special interests, not all local governments are applauding the decision. In fact, some local governments filed a “friend of the court” brief in support of HJTA’s position. That’s because many local governments are concerned that special interests could usurp the governing body’s ability to tax.
Finally, the actual ruling dealt with the timing of local elections for tax increases proposed by initiative. While the dicta in the decision (verbiage in a decision not necessary for disposition of the case) is a huge threat to Propositions 13 and 218, the scope of the ruling will require years of additional litigation.
In the meantime, the decision has provided tax-and-spend interests with a roadmap of how to avoid taxpayer protections set forth in the California Constitution. When taxpayers see how they are being burned by collusion between those seeking additional tax revenue, like government employee unions and complicit local officials, it may be necessary to go back to the initiative process to close yet another court created loophole.
Copyright 2017, Metropolitan News Company