City of Westminster v. County of Orange

• Decision Date: 14 September 1988
• Docket Number: No. G006360,G006360
• Citation: 204 Cal.App.3d 623,251 Cal.Rptr. 511
• Court: California Court of Appeals Court of Appeals
• Parties: CITY OF WESTMINSTER, etc., Plaintiff and Appellant, v. COUNTY OF ORANGE et al., Defendants and Respondents; California Tax Reduction Movement, Intervenor and Respondent.

Page 511

251 Cal.Rptr. 511

204 Cal.App.3d 623

CITY OF WESTMINSTER, etc., Plaintiff and Appellant, v. COUNTY OF ORANGE et al., Defendants and Respondents;

California Tax Reduction Movement, Intervenor and Respondent.

No. G006360.

Court of Appeal, Fourth District, Division 3, California.

Sept. 14, 1988.

Review Denied Dec. 15, 1988.

[204 Cal.App.3d 625] Paul H. Morgan, Newport Beach, Howard, Rice, Nemerovski, Canady, Robertson & Falk and Steven L. Mayer, San Francisco, for plaintiff and appellant.

James K. Hahn, City Atty. (Los Angeles), Pedro B. Echeverria and Richard A. Dawson, Asst. City Attys., and Michael L. Klekner, Deputy City Atty., as amici curiae on behalf of plaintiff and appellant.

James P. Botz, County Counsel, Santa Rosa, as amicus curiae on behalf of plaintiff and appellant.

Adrian Kuyper, County Counsel, and Victor T. Bellerue, Deputy County Counsel,

Santa Ana, for defendants and respondents

Straw & Gilmartin, Lawrence J. Straw, Jr. and Paul T. Gough, Santa Monica, and Kaplanis & Grimm, and Trevor A. Grimm, Los Angeles, for intervener and respondent.

Daniel J. Popeo, Paul D. Kamenar, Washington, D.C., and Mark S. Pestal as amici curiae on behalf of intervener and respondent.

Ronald A. Zumbrun, Anthony T. Caso, Jonathan M. Coupal, and Jeffrey T. Even, Sacramento, as amici curiae on behalf of intervener and respondent.

OPINION

CROSBY, Associate Justice.

In a superior court action for injunctive and declaratory relief, the City of Westminster unsuccessfully challenged the constitutionality of Proposition 62, a statewide statutory initiative passed in November 1986. The initiative will nullify the city's recently enacted utility users' tax unless the municipal electorate approves the levy by November 5, 1988. We believe the requirement of local voter ratification violates the California Constitution and reverse with directions accordingly.

I

The City of Westminster is a general law city. It has encountered increasing fiscal difficulty in recent years, partially as a result of Proposition 13, an earlier statewide initiative, and the abatement of federal revenue sharing. On September 23, 1986, the Westminster City Council enacted a five percent utility users' tax and designated the revenues for the city's general fund. The tax became effective January 1, 1987, and continues in force. ¹

California voters approved Proposition 62, a statutory initiative, in the November 1986 general election. Sponsored by the California Tax Reduction Movement (CTRM), the initiative added sections 53720 through 53730 to the Government Code. ² As of November 15, 1988, Government Code section 53727, subdivision (b) prohibits collection of a general tax enacted after July 31, 1985, unless a majority of the city's voters has approved it within two years of the date of the initiative. If voter approval is not forthcoming, any utility users' tax revenues realized after November 15, 1988, will be offset dollar for dollar by a reduction in the city's property tax allocation.

The city sought a declaration that Proposition 62 is unconstitutional as applied to the utility users' tax and an injunction to restrain the County of Orange from withholding property tax monies after November 15, 1988. CTRM intervened in the action to defend the measure it had sponsored. The superior court entertained cross-motions for summary judgment and CTRM prevailed. ³

II

The threshold issue involves a brief consideration of terms. Is the ratification The submission of this particular tax to the local electorate resembles an initiative in some respects and a referendum in others. For example, Westminster's utility users' tax was enacted but not yet in effect when Proposition 62 was approved by the statewide electorate; and a referendum typically does operate to require voter ratification of measures passed but not yet in effect. (Referendum Committee v. City of Hermosa Beach (1986) 184 Cal.App.3d 152, 157-158, 229 Cal.Rptr. 51; see also American Federation of Labor v. Eu (1984) 36 Cal.3d 687, 713-714, 206 Cal.Rptr. 89, 686 P.2d 609; Assembly v. Deukmejian (1982) 30 Cal.3d 638, 656-657, 180 Cal.Rptr. 297, 639 P.2d 939; Carlson v. Cory, supra, 139 Cal.App.3d 724, 730-731, 189 Cal.Rptr. 185.) The referendum is "the right reserved to the people to adopt or reject any act or measure which has been passed by a legislative body, and which, in most cases, would without action on the part of the electors become a law." (Whitmore v. Carr (1934) 2 Cal.App.2d 590, 592, 38 P.2d 802.) The present ordinance did become operative, however, and is now in effect.

                election mandated by Proposition 62 an initiative or a referendum as applied to the city's utility users' tax?   If it is the latter, there is very little to discuss.  As the city correctly notes, Government Code section 53727, subdivision (b) is unconstitutional insofar as it calls for local tax referenda because article II, section 9, subdivision (a) of the California Constitution exempts tax levies from the referendum power of the statewide electorate, as well as the municipal electorate in general law cities.  (Cal. Const., art.  II, § 11;  Geiger v. Board of Supervisors (1957) 48 Cal.2d 832, 836-839, 313 P.2d 545;  cf. Hunt v. Mayor & Council of Riverside (1948) 31 Cal.2d 619, 623-624, 191 P.2d 426 [charter cities may provide broader referendum powers].)  CTRM insists, however, that Proposition 62 merely requires ratification by initiative of post-July 31, 1985 "window period" taxes and urges us to ignore the question of whether the proposition will violate article II, section 9 with respect to future tax ordinances because that specific issue is not presented in this proceeding
                

Moreover, referenda suspend the implementation of ordinances when they qualify for the ballot with the signatures of ten percent of the voters (Elec.Code, § 4051); but Proposition 62 carries no suspension provision for window period tax measures. Also, an initiative can be proposed by a local governing body without a petition from the electorate (Elec.Code, § 4017), but a referendum is only triggered by petition of the voters in response to a legislative enactment (Elec.Code, § 4055).

Consequently, and contrary to the city's argument, we believe the ratification process mandated by Proposition 62 describes a local initiative, rather than a referendum, in the case of window period tax ordinances. We will conclude, however, that under a virtually unbroken line of appellate authority, the label is not significant in this instance.

III

Article II, section 8, subdivision (a) of the California Constitution provides, "The initiative is the power of the electors to propose statutes and amendments to the Constitution and to adopt or reject them." Although use of the statewide initiative power has been upheld to repeal statewide taxes ( Carlson v. Cory, supra, 139 Cal.App.3d 724, 189 Cal.Rptr. 185), a host of other decisions have determined that the initiative may not be used as a substitute for an impermissible referendum. (Myers v. City Council of Pismo Beach (1966) 241 Cal.App.2d 237, 243, 50 Cal.Rptr. 402; see also City of Atascadero v. Daly (1982) 135 Cal.App.3d 466, 470, 185 Cal.Rptr. 228; Bock v. City Council (1980) 109 Cal.App.3d 52, 58, 167 Cal.Rptr. 43; Gibbs v. City of Napa (1976) 59 Cal.App.3d 148, 153, 130 Cal.Rptr. 382; Campen v. Greiner (1971) 15 Cal.App.3d 836, 843, 93 Cal.Rptr. 525; Dare v. Lakeport City Council (1970) 12 Cal.App.3d 864, 867, 91 Cal.Rptr. 124.)

These holdings cannot be overcome, based as they are on constitutional jurisprudence, by the mere passage of a statute; and Proposition 62 brought statutory changes, not constitutional amendments.

                Also, these cases are not distinguishable because they dealt with the powers of local voters;   Geiger v. Board of Supervisors, supra, 48 Cal.2d at pages 836-839, 313 P.2d 545 teaches that the statewide electorate has no more authority to ignore the state constitutional ban on interference with municipal fiscal affairs by implementing a scheme of local voter control than do the local voters themselves.  Thus, because "[a] statutory initiative is subject to the same ... constitutional limitations as are the Legislature and the statutes which it enacts" (Legislature v. Deukmejian (1983) 34 Cal.3d 658, 674, 194 Cal.Rptr. 781, 669 P.2d 17), Government Code section 53727, subdivision (b) is plainly unconstitutional under California Constitution, article II, section 9, subdivision (a)
                

For example, in Myers v. City Council of Pismo Beach, supra, 241 Cal.App.2d 237, 50 Cal.Rptr. 402, a local initiative would have repealed an existing room occupancy tax and prohibited the City of Pismo Beach from enacting another without local voter approval. The court determined the ordinance was invalid because it attempted to accomplish by initiative what could not be done by referendum: "A proposed initiative ordinance cannot be used as an indirect or backhanded technique to invoke the referendum process against a tax ordinance of a general law city.... It will be recalled that the last paragraph of the proposed initiative ordinance provides: 'Any ordinance conflicting with any of the provisions of this ordinance either in whole or in part is herewith repealed.' Thus if the vote at the special election on the proposed initiative ordinance were effective to make it a valid ordinance, the result would be to repeal [the ordinance] imposing a 4% room occupancy tax. Hence a type of referendum technique would have been discovered by which to attack and nullify a tax ordinance of a city ... governed by general laws. But ... the California Constitution[ ] expressly provides that the referendum powers therein reserved to the people do not extend to 'tax levies or appropriations for the usual current expenses of the State....' The same exception applies to the political subdivisions of the state that are governed by general laws as distinguished from charters [citation]. ...