City of Woodlake v. Logan

• Decision Date: 29 May 1991
• Docket Number: No. F014631,F014631
• Court: California Court of Appeals Court of Appeals
• Parties: CITY OF WOODLAKE, Plaintiff and Appellant, v. Thomas C. LOGAN, as County Auditor, etc., Defendant and Respondent.

Page 27

282 Cal.Rptr. 27

230 Cal.App.3d 1058

CITY OF WOODLAKE, Plaintiff and Appellant, v. Thomas C. LOGAN, as County Auditor, etc., Defendant and Respondent.

No. F014631.

Court of Appeal, Fifth District, California.

May 29, 1991.

[230 Cal.App.3d 1060] McCormick, Kabot, Michner & Foley, Walter K. McCormick, and S.L. Kabot, Visalia, for plaintiff and appellant.

James K. Hahn, City Atty., Los Angeles, Richard A. Dawson, Asst. City Atty., and Michael L. Klekner, Deputy City Atty., Jerome F. Coleman, City Atty., Burlingame, Thomas Haas, City Atty., Walnut [230 Cal.App.3d 1061] Creek, Paul Valle-Riestra, Asst. City Atty., Robert K. Booth, Jr., Los Altos, Michael F. Dean, City Atty., Roseville, John L. Cook, Napa, Brian M. Libow, San Pablo, Jeffrey G. Jorgensen, San Luis Obispo, Carol B. Tanenbaum, City Atty., Placentia, Jeffrey A. Walter, Martinez, Benicia, Cotati and Corte Madera, Maurice F. O'Shea, Paramount, Bellflower and Hawaiian Gardens, and Thomas W. Allen, City Attys., Los Alamitos and Stanton, as amici curiae on behalf of plaintiff and appellant.

Lita O'Neill Blatner, County Counsel, Tulare, Robert L. Felts, Asst. County Counsel, and James G. Line, Deputy County Counsel, for defendant and respondent.

OPINION

THAXTER, Associate Justice.

We declare the unconstitutionality of the voter approval requirement for local general tax enactments adopted by the electorate as part of a statewide statutory initiative (Prop. 62) in the November 1986 General Election and codified as GOVERNMENT CODE SECTIONS 53723¹ and 53724. We further decide that the enforcement provisions codified in section 53728, reducing a local government's share of property taxes on a dollar-for-dollar basis for general taxes enacted and collected without voter approval, cannot withstand constitutional scrutiny. As a result, the City of Woodlake's General Utility Users Tax was validly enacted and the County of Tulare is improperly withholding property taxes from the City to offset the utility tax.

FACTS

The facts were stipulated to by the parties and are not in dispute. Appellant City of Woodlake is a general law city. Its city council enacted by unanimous vote on May 22, 1989, a general utility tax on electrical power, gas, telephone, and cable television service supplied and consumed within the city. The tax was levied to benefit the general fund of the city. The tax became effective 30 days after adoption and was not submitted to the voters for approval or rejection in accordance with sections 53723 and 53724.

Respondent Thomas C. Logan is the auditor of Tulare County and named in his official capacity. Because the tax enacted by Woodlake was not submitted to the voters for approval or rejection as mandated by sections 53723 and 53724, Logan withheld and continues to withhold pursuant to section 53728 a portion of Woodlake's share of the general property taxes collected by Tulare County. Section 53728 is the enforcement provision of Proposition 62.

Woodlake filed a petition for writ of mandate and complaint for declaratory relief seeking release of the property taxes withheld and challenging the constitutionality of sections 53723, 53724 and 53728. After the respondent answered, the parties filed cross-motions for summary judgment.

The trial court concluded that Proposition 62, insofar as it applies to Woodlake's utility tax, is constitutional and granted judgment in favor of respondent. Woodlake appeals. Several other cities have joined in an amicus brief in support of Woodlake's position.

DISCUSSION

I. CONSTITUTIONALITY OF SECTIONS 53723 AND 53724

A. Constitutional Source of and Limitations on Referendum Power.

Article II, section 9, subdivision (a) of the California Constitution reserves to citizens of this state the power of referendum as follows:

"The referendum is the power of the electors to approve or reject statutes or parts of statutes except urgency statutes, statutes calling elections, and statutes providing for tax levies or appropriations for usual current expenses of the State." (Emphasis added.)

Article II, section 11 grants initiative and referendum powers ² to the electors of each city or county under procedures provided by the state Legislature. The power of referendum is thus of constitutional origin for both the state and local electors. The local power of referendum stands independent of legislative action. (Associated Home Builders etc., Inc. v. City of Livermore (1976) 18 Cal.3d 582, 591-592, 135 Cal.Rptr. 41, 557 P.2d 473.) The constitutional exemption of certain statutes from the referendum powers extends to local governments. (Geiger v. Board of Supervisors (1957) 48 Cal.2d 832, 836, 313 P.2d 545; Fenton v. City of Delano (1984) 162 Cal.App.3d 400, 405-406, 208 Cal.Rptr. 486; Community Health Assn. v. Board of Supervisors (1983) 146 Cal.App.3d 990, 993, 194 Cal.Rptr. 557 and cases cited therein.)

The listing of exemptions in article II, section 9 of the California Constitution is a statement of policy by the people against subjecting legislation concerning taxes and the other excepted matters to the vote of the people. (Geiger v. Board of Supervisors, supra, 48 Cal.2d at pp. 836-837, 313 P.2d 545.)

"One of the primary reasons the Constitution exempts acts providing for tax levies or appropriations for the current usual expenses of the state from referendum or initiative power is to 'prevent disruption of its operations by interference with the administration of its fiscal powers and policies.' [Citation omitted.]" (Community Health Assn. v. Board of Supervisors, supra, 146 Cal.App.3d at p. 994, 194 Cal.Rptr. 557.)

The referendum process may not be used to attack or nullify a tax ordinance of a city or county under article II, sections 9 and 11. (See Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 143, 130 Cal.Rptr. 465, 550 P.2d 1001; City of Westminster v. County of Orange (1988) 204 Cal.App.3d 623, 627, 251 Cal.Rptr. 511; Fenton v. City of Delano, supra, 162 Cal.App.3d at p. 405, 208 Cal.Rptr. 486; Community Health Assn. v. Board of Supervisors, supra, 146 Cal.App.3d at pp. 994-996, 194 Cal.Rptr. 557; City of Atascadero v. Daly (1982) 135 Cal.App.3d 466, 470, 185 Cal.Rptr. 228.)

It is also not permissible to achieve a prohibited purpose by disguising as an initiative a referendum addressing exempted matters. (Dare v. Lakeport City Council (1970) 12 Cal.App.3d 864, 867, 91 Cal.Rptr. 124; Myers v. City Council of Pismo Beach (1966) 241 Cal.App.2d 237, 243-244, 50 Cal.Rptr. 402.) "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...." (Id. at p. 243, 50 Cal.Rptr. 402.) "That which the electors have no power to do directly, they obviously cannot do indirectly." (Dare v. Lakeport City Council, supra, 12 Cal.App.3d at p. 868, 91 Cal.Rptr. 124.)

B. Proposition 62.

Proposition 62, a statewide statutory initiative, was approved by California voters in the November 1986 General Election. The initiative was sponsored by the California Tax Reduction Movement and added sections 53720 through 53730 to the Government Code. The intent of the proposition was to give the local electorate a greater degree of control over the exercise of local taxing power with the obvious goal of reducing the tax burden. (City of Westminster v. County of Orange, supra, 204 Cal.App.3d at pp. 626, 635-638, 251 Cal.Rptr. 511.) Section 53723 prohibits a local government from imposing any general tax unless and until such tax is submitted to the electorate of the local government for approval by majority vote. ³ Section 53724 sets forth the procedure by which the ratification process required by both sections 53722 ⁴ and 53723 is to occur. ⁵

The "window period" tax provision of Proposition 62, codified as section 53727, subdivision (b), was directly challenged and found to be constitutionally invalid in City of Westminster v. County of Orange, supra, 204 Cal.App.3d at pages 628-631, 251 Cal.Rptr. 511. The Westminster court held the severability clause within the proposition, now located in section 53730, saved the remaining provisions. (Id. at pp. 631-633, 251 Cal.Rptr. 511.)

C. Sections 53723 and 53724 Require Unconstitutional Referendums on Local General Tax Enactments.

Appellant contends section 53723 and the relevant portions of section 53724 impose a constitutionally impermissible referendum requirement on the taxing power of local government. We agree.

Despite the wealth of authority holding referendum power may not be used to curtail the power to tax at either the state or local levels, respondent argues these well-accepted principles do not govern in the instant case. Respondent advances two contentions.

First, respondent contends sections 53723 and 53724 do not invoke the referendum power. According to respondent, the initiative (Prop. 62) merely restricts the general power of taxing authority granted by the state Legislature pursuant to article XIII, section 24--something, respondent argues, the Legislature itself could do. The initiative process allows the people to enact statutes in the same manner as the Legislature and is not restricted in subject matter. (Legislature v. Deukmejian (1983) 34 Cal.3d 658, 675, 194 Cal.Rptr. 781, 669 P.2d 17; Referendum Committee v. City of Hermosa Beach (1986) 184 Cal.App.3d 152, 157-158, 229 Cal.Rptr. 51; Campen v. Greiner (1971) 15 Cal.App.3d 836, 841, 93 Cal.Rptr. 525.)

The power of a local government to tax is not inherent. The power is derived from the Constitution upon authorization by the Legislature. (Art. XIII, § 24.) Section 37100.5 grants to local government the power to levy a general tax, which includes a utility tax, without voter approval. (Fenton v. City of Delano, supra, 162 Cal.App.3d at pp. 407-408, 208 Cal.Rptr. 486.) Respondent contends Proposition 62 merely adds a condition (voter approval) to this general grant of authority. Accordingly...