Fenton v. City of Delano

• Decision Date: 03 December 1984
• Citation: 208 Cal.Rptr. 486,162 Cal.App.3d 400
• Court: California Court of Appeals Court of Appeals
• Parties: Kenneth FENTON et al., Plaintiffs and Appellants, v. CITY OF DELANO, etc. et al., Defendants and Respondents. Civ. F003247.

Page 486

208 Cal.Rptr. 486

162 Cal.App.3d 400

Kenneth FENTON et al., Plaintiffs and Appellants, v. CITY OF DELANO, etc. et al., Defendants and Respondents.

Civ. F003247.

Court of Appeal, Fifth District, California.

Dec. 3, 1984.

John T. Hourigan, City Atty., and Dale Parham, Delano, for defendants and respondents.

OPINION

FRANSON, Acting Retired Justice.

STATEMENT OF THE CASE

Appellants filed below a complaint for declaratory and injunctive relief against respondents the City of Delano and various city officials. Appellants consist of a class of citizens of the City of Delano who signed a referendum in opposition to an ordinance imposed by respondents. The complaint asked that the ordinance be declared void and that respondents be restrained from enforcing it. That same day, appellants filed a petition for writ of mandate/prohibition asking that respondents be compelled to process the petition for referendum or that respondents be restrained from enforcing the ordinance in question.

Appellants' petition for writ of mandate/prohibition and their request for injunctive relief was denied by the trial court with the following memorandum of decision "The Court finds that the utilities charge in issue is a tax and not a fee. The Court finds that the ordinance in issue is not subject to the referendum process. The law was settled before Proposition 13 that the referendum could not be used in a manner which interfered with a local legislative body's responsibility for fiscal management; DARE vs. LAKEPORT CITY COUNCIL [1970] 12 CA 3rd 864 .

"The Court further finds that the tax imposed in this case is not a 'special tax' as defined by the California Supreme Court in CITY and COUNTY OF SAN FRANCISCO vs. FARRELL [1982] 32 Cal 3rd 47 [184 Cal.Rptr. 713, 648 P.2d 935], and therefore Proposition 13 and the statutes that followed do not prohibit the tax in this case. This ruling is despite the fact that this Court finds the dissenting opinions to be persuasive, IF WE ASSUME, that is, that this tax is the result of Proposition 13 limitations."

The trial court thereafter amended its statement of decision to acknowledge that the ordinance in question imposed a financial burden on the consumers of gas, electricity, telephone service and cable television.

The court pronounced judgment. A timely appeal followed.

THE FACTS

On April 4, 1983, the Delano City Council passed ordinance No. 799 imposing a "fee" on the users of gas, electricity, the telephone and cable television. A 5 percent charge on each of these services was imposed for fiscal years 1983-1984 and 1984-1985 with a 3 percent charge to be imposed in fiscal year 1985-1986. By the terms of the ordinance, the consumer would not be subject to a charge of more than $25 per month per service.

Ordinance No. 799 was amended June 6, 1983, by ordinance No. 802 which provided for a 3 percent charge on the above-named services for fiscal year 1983-1984 and a 2 percent charge for fiscal years 1984-1985 and 1985-1986. According to ordinance No. 802, the consumer could not be charged more than $15 per month per service for fiscal year 1983-1984 and $10 per month per service for fiscal years 1984-1985 and 1985-1986.

A total of 2,153 signatures were collected and presented to City Clerk Dorothy Dowell on April 28, 1983, in opposition to the ordinance No. 799 and in support of a referendum. Ms. Dowell was advised by City Attorney John Hourigan that such taxes were exempt from the referendum process and that she should not process appellants' petition. On May 9, 1983, the city council was notified by both Dowell and Hourigan that no action would be taken on the petition.

At a court hearing July 29, 1983, City Finance Director Mike Corn testified that ordinance No. 802 could be expected to bring in $240,000 the first year and $160,000 per year for the two years following. He stated that the city would not have enough money to pay its bills without the ordinance and that over $100,000 was currently owed on a recently purchased fire truck. The city was also making plans, he stated, to build a new fire station.

Mr. Corn went on to testify that he learned of the possibility of enacting such a "tax" at a symposium he attended. He learned that such a tax was a means of replenishing funds lost through Proposition 13. The money from the tax, he stated, would be placed in the city's general fund for municipal functions such as police and fire protection.

At the time ordinance No. 799 was adopted, the city's projected deficit was $500,000 and at the time ordinance No. 802 was adopted the projected deficit was $300,000.

The city theoretically could have used revenue sharing funds in place of general fund assets to cover its general fund expenses; however, the city had no known revenue sharing funds available to it past September 1983. The use of money from the city's capital improvement fund would forestall capital projects and make repayment to the fund unlikely. Other special revenue funds, such as the gas tax fund, are designated for particular purposes and cannot be drawn upon for general fund projects.

DISCUSSION

I. The trial court properly found that the fee/tax in question is not subject to the referendum process.

Appellants first argue that the city should be estopped from contending that their ordinance is a tax and not a fee since it did "not define the fee as a 'tax' in any way." This argument is made to bring the city within the purview of the Elections Code governing referenda petitions in municipal elections. Elections Code section 4055 states in pertinent part:

" § 4055. Submission to voters; time for holding election; effect of adverse vote

"If the legislative body does not entirely repeal the ordinance against which the [referendum] petition is filed, the legislative body shall submit the ordinance to the voters ...."

Appellants cite no authority for the proposition that ordinances such as those in the present case impose "fees" rather than taxes. Nevertheless,

" '... designating as a tax that which in its elements is an assessment can have no effect in determining whether it is one or the other. The question must be decided by the nature of the imposition, and not by the mere name by which it is called.' There are many other instances where the word 'tax' has been used to designate a special assessment. [Citations.]" (Los Angeles Co. F.C. Dist. v. Hamilton (1917) 177 Cal. 119, 129, 169 P. 1028.)

Black's Law Dictionary (5th ed. 1979) page 307, columns 1-2, makes the following comments regarding the difference between "taxes" and "assessments":

"In a broad sense, taxes undoubtedly include assessments, and the right to impose assessments has its foundation in the taxing power of the government; and yet, in practice and as generally understood, there is a broad distinction between the two terms. 'Taxes,' as the term is generally used, are public burdens imposed generally upon the inhabitants of the whole state, or upon some civil division thereof, for governmental purposes, without reference to peculiar benefits to particular individuals or property. 'Assessments' have reference to impositions or improvements which are specially beneficial to particular individuals or property, and which are imposed in proportion to the particular benefits supposed to be conferred. They are justified only because the improvements confer special benefits, and are just only when they are divided in proportion to such benefits. As distinguished from other kinds of taxation, 'assessments' are those special and local impositions upon property in the immediate vicinity of municipal improvements which are necessary to pay for the improvement, and are laid with reference to the special benefit which the property is supposed to have derived therefrom."

One court has characterized a collection of fees for the maintenance of a sewer system as a tax, stating that such a tax:

"must reasonably be considered a taxation function. 'Taxes' are defined as burdens imposed by legislative power on persons or property to raise money for public purposes. [Citations.] ... And both assessment, i.e., 'the process of ascertaining and adjusting the shares respectively to be contributed by several persons toward a common beneficial object according to the benefit received' [citation], and collection, are included in 'the operation called levying the tax. The words are so used in the [C]onstitution.' [Citation.]" (Dare v. Lakeport City Council (1970) 12 Cal.App.3d 864, 868, 91 Cal.Rptr. 124.)

We conclude that the trial court properly found "the utilities charge in issue is a tax and not a fee."

The next question is whether this tax was subject to referendum. The overwhelming weight of authority, beginning with the California Constitution itself, holds that citizens may not challenge properly imposed taxes by referendum.

"Sec. 9. (a) 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." (Cal. Const., art. II, § 9, subd. (a), emphasis added.)

Several cases recognize that not only state taxes but local taxes are immune from the referendum:

"California's Constitution, article IV, section 23 ... provides that the referendum power does not lie to 'statutes providing for tax levies or appropriations for usual current expenses of the State.' ...

"However, Geiger v. Board of Supervisors, [ (1957) ] 48 Cal.2d 832, 836 ... and Hunt v. Mayor & Council of Riverside, 31 Cal.2d 619, 623-630 ... have held respectively that county and municipal referendum powers cannot affect ordinances providing for 'tax levies.' " (Dare v. Lakeport City Council, supra, 12 Cal.App.3d 864, 867, 91 Cal.Rptr. 124.)

In Geiger v. Board of Supervisors (1957) 48 Cal.2d 832, 313 P.2d 545, the California Supreme Court held that a sales and use...