Howard Jarvis Taxpayers Assn. v. The City

• Decision Date: 10 February 2003
• Docket Number: No. C039942.,C039942.
• Citation: 106 Cal.App.4th 1178,132 Cal.Rptr.2d 1
• Court: California Court of Appeals
• Parties: HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Respondents, v. CITY OF ROSEVILLE, Defendant and Appellant.

132 Cal.Rptr.2d 1

106 Cal.App.4th 1178

HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Respondents, v. CITY OF ROSEVILLE, Defendant and Appellant.

No. C039942.

Court of Appeal, Third District.

February 10, 2003.

Eisen & Johnston Law Corporation, Jay-Allen Eisen, Marian M. Johnston, Sacramento, Frederic L. Snowden; Law Office of Dennis W. De Cuir, Dennis W. De Cuir and F. Ronald Laupheimer; Mark J. Doane and Richard G. Glenn, City Attorneys, for Defendant and Appellant.

Trevor A. Grimm, Los Angeles, Jonathan M. Coupal, Sacramento, and Timothy A. Bittle for Plaintiffs and Respondents.

SCOTLAND, P.J.

At the November 7, 2000 General Election, a majority of the voters of the City of Roseville (the City) voted to approve two conflicting tax measures. Measure Q proposed to ratify the City's utility user's tax and to restrict use of its revenues to certain specified purposes. Measure S proposed to repeal the City's utility user's tax.

In an action for declaratory relief brought by plaintiffs Howard Jarvis Taxpayers Association and Phil Ozenick, the trial court determined that Measure Q proposed a special tax requiring approval by two-thirds of the voters and that, because it did not obtain such approval, Measure Q was ineffective for any purpose. The court determined that Measure S required majority approval, was so approved, and effectively repealed the utility user's tax. The City appeals. We agree with the trial court and shall affirm the judgment.

BACKGROUND

The City is a charter city. In 1971, its city council, without a vote of the electorate, adopted by ordinance a utility user's tax on electricity. In 1990, again without a vote of the electorate, the tax was expanded to include other utilities, including water, telephone, sewer, refuse, gas, and cable television. The ordinance established a general tax, i.e., the revenues from the tax were paid into the City's general fund for the unrestricted use of the City. The tax has not been increased or otherwise amended since 1990.

For the November 7, 2000 General Election, citizens of the City qualified an initiative, Measure S, to repeal the utility user's tax and to prohibit the City from imposing such a tax. The initiative also provided that it could not be amended or superseded except upon approval by the voters.

In response to Measure S, the city council placed Measure Q before the voters to ratify the utility user's tax and incorporate it as a charter provision. Measure Q also provided: "All Utility Users Tax Revenue received shall be budgeted and appropriated solely for police, fire, parks and recreation or library services."

Measure Q and Measure S each received a majority vote of those who voted. Measure Q, to ratify the tax, incorporate it as a charter provision, and restrict the use of its revenues, received 16,763 yes votes and 15,328 no votes. Measure S, to repeal the utility user's tax, received 16,674 yes votes and 15,851 no votes. Thus, Measure Q received 89 more yes votes and 523 fewer no votes than did Measure S. In percentage terms, Measure Q received a 52.24 percent yes vote and Measure S received a 51.27 percent yes vote among those who voted on the respective measures.

Since the election, the City has continued to collect the utility user's tax. Plaintiffs brought this action for declaratory relief. Ruling on a motion for summary judgment, the trial court concluded Measure Q imposed a special tax for which a two-thirds vote of the electorate is required. (Cal. Const., art. XIII C.) Since Measure Q did not receive approval from two-thirds of the voters, the court found it did not pass and is of no effect. The court concluded Measure S required only a majority vote. Thus, the court found that it did pass and effectively repealed the City's utility user's tax. Judgment was entered accordingly.

DISCUSSION

I

In 1978, the voters added article XIII A to California's Constitution to significantly change our system of real property taxation and tax procedure. (See Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 218, 149 Cal.Rptr. 239, 583 P.2d 1281.) That measure, often referred to as Proposition 13, is best known for its restrictions on the maximum real property tax that may be imposed. (Id. at p. 220, 149 Cal. Rptr. 239, 583 P.2d 1281.) It also included a restriction on other types of local taxation. (Ibid.) Section 4 of article XIII A provides: "Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district, except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County or special district."

In City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47, 184 Cal.Rptr. 713, 648 P.2d 935, our state Supreme Court was called upon to define the term "special taxes" as used in article XIII A. It was vigorously argued that "special taxes" were intended to refer to any taxes imposed by a local government or district other than ad valorem property taxes. The court conceded that this was one reasonable interpretation of the term. (Id. at p. 56, 184 Cal.Rptr. 713, 648 P.2d 935.) However, the court found the term to be ambiguous and opted for strict construction. (Id. at pp. 53, 57, 184 Cal.Rptr. 713, 648 P.2d 935.) The court construed the term "to mean taxes which are levied for a specific purpose rather than ... a levy placed in the general fund to be utilized for general governmental purposes." (Id. at p. 57, 184 Cal.Rptr. 713, 648 P.2d 935; see also Rider v. County of San Diego (1991) 1 Cal.4th 1, 15, 2 Cal.Rptr.2d 490, 820 P.2d 1000.) That decision was the genesis of the distinction between general taxes and special taxes that would be utilized in subsequent initiative measures.

At the November 4, 1986 General Election, the voters approved Proposition 62, which added sections 53720 through 53730 to the Government Code. Section 53721 of that code states: "All taxes are either special taxes or general taxes. General taxes are taxes imposed for general governmental purposes. Special taxes are taxes imposed for specific purposes." Government Code section 53722 provides that a local government may not impose a special tax unless and until the tax is submitted to the electorate and is approved by a two-thirds vote of the voters voting on the issue. Pursuant to Government Code section 53723, a local government may not impose a general tax unless and until the tax is submitted to the voters and is approved by a majority of the voters voting on the issue.¹

In Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220, 45 Cal.Rptr.2d 207, 902 P.2d 225, the Supreme Court rejected various arguments that Proposition 62 was unconstitutional, and upheld the measure. The court found it unnecessary to determine whether Proposition 62, as a statutory measure, can be applied to charter cities. (Id. at pp. 260-261, 45 Cal.Rptr.2d 207, 902 P.2d 225.)

At the November 5, 1996 General Election, the voters added article XIII C to the Constitution by approving Proposition 218. Article XIII C states in full:

"Section 1. Definitions. As used in this article:

"(a) `General tax' means any tax imposed for general governmental purposes.

"(b) `Local government' means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity.

"(c) `Special district' means an agency of the State, formed pursuant to general law or a special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies.

"(d) `Special tax' means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.

"Sec. 2. Local Government Tax Limitation. Notwithstanding any other provision of this Constitution:

"(a) All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes.

"(b) No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.

"(c) Any general tax imposed, extended, or increased, without voter approval, by any local government on or after January 1, 1995, and prior to the effective date of this article, shall continue to be imposed only if approved by a majority vote of the voters voting in an election on the issue of the imposition, which election shall be held within two years of the effective date of this article and in compliance with subdivision (b).

"(d) No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved.

"Sec. 3. Initiative Power for Local Taxes, Assessments, Fees and Charges. Notwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be unprohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all...