Friday, June 21, 2019
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California Supreme Court:
Local Entity May Compel State Unit to Collect Parking Taxes
Unanimous Court Says Tax Is Posed on Private Citizen Using a Parking Lot, Not on State; Burden of Securing, Remitting Tax Is Minimal and Does Not Offend State Sovereignty
By a MetNews Staff Writer
The California Supreme Court, in a unanimous opinion, yesterday reversed a Court of Appeal decision which exempted state universities from imposing San Francisco’s parking tax on users of their parking lots and collecting and remitting the taxes, a decision which will put an estimated $4 million in the city/county’s coffers annually.
In 2011, San Francisco demanded that the state universities within the city/county remit parking taxes to it—which, since 1980, has been 25 percent of the parking fee—and the institutions declined. San Francisco sought a writ of mandate in San Francisco Superior Court, which was denied, and the Court of Appeal, in a May 25, 2017 2-1 decision by the First District’s Div. One, affirmed.
Justice Leondra R. Kruger wrote yesterday’s opinion which reverses that decision.
Call for Review
In taking up the case, the high court heeded the call by the dissenter on the Court of Appeal panel, Justice Kathleen M. Banke, who commented:
“[M]unicipalities need to know with some assurance whether third parties who do business with a state entity will essentially receive a pass on a general local tax. It is time for our Supreme Court to squarely address this issue and to state clearly whether or not a state entity can be asked to collect a local tax imposed on third parties doing business with the entity, particularly where, as here, the entity will be reimbursed its costs of doing so.”
The majority opinion in the Court of Appeal was authored by Presiding Justice Jim Humes who said that “although San Francisco has broad powers under the home-rule provision, including the power to tax, the doctrine exempting state entities from local regulation prevents San Francisco from forcing the universities to collect and remit city taxes imposed on users of the universities’ parking facilities.”
State Not Taxed
In the Supreme Court’s opinion rejecting Humes’s view, Kruger noted that it is well established that one governmental entity may not tax another governmental unit, and stressed that the tax would not be imposed by the city/county on the state universities.
“It is, rather, imposed on private parties—namely, drivers who use parking lots,” she said. “This is a critical distinction.”
She elaborated:
“The parking tax here, which applies to drivers in precisely the same way regardless of whether they use the university parking lot or a private parking lot across the street, belongs to this second category of taxes. There is no assertion here that the drivers here stand in the shoes of the universities themselves. Principles of governmental tax immunity do not bar the parking tax.”
Any “indirect economic consequences” to the universities, Kruger said, “are insufficient to invalidate a nondiscriminatory municipal tax on third parties doing business with the state or its agencies.”
Collecting Tax
The jurist said that while it is common for governments to impose a requirement on individuals to collect taxes from customers, “[w]hat makes this case unusual is that one government has sought to impose such a requirement on another.”
Governments often help each other out by agreement, she noted, but said that in this instance, there was no accord. Kruger recited:
“The universities contend that principles of ‘hierarchical sovereignty’ embodied in the California Constitution forbid a municipality from imposing any sort of requirement on the sovereign state or state agencies engaged in their assigned functions—including a requirement to collect and remit local taxes from users of their facilities—unless the state consents to the imposition.”
Eschewing an absolutist approach, Kruger weighed the parties’ respective interests. She said that “as a practical matter,” the state universities’ “burdens associated with the particular tax-collection requirement at issue here are minimal” while “San Francisco has a legitimate interest in the millions of dollars in contested tax money, and a tax is effective only if it can be collected.”
Kruger declared:
“[W]e conclude that San Francisco’s parking tax collection requirement, as applied to the state universities, does not violate principles of state sovereignty embodied in the California Constitution. The universities maintain the autonomy to manage their property as they wish, and the universities have failed to demonstrate that the minimal burden associated with collecting and remitting the parking tax poses a risk of substantial interference with their ability to carry out their governmental functions.”
The case is City and County of San Francisco v. The Regents of the University of California, 2019 S.O.S. 2892.
Copyright 2019, Metropolitan News Company