San Miguel Consolidated Fire Protection Dist. v. Davis, C016756

• Court: California Court of Appeals
• Writing for the Court: NICHOLSON; DAVIS, Acting, P.J., and RAYE
• Citation: 30 Cal.Rptr.2d 343,25 Cal.App.4th 134
• Parties: , 90 Ed. Law Rep. 1116 SAN MIGUEL CONSOLIDATED FIRE PROTECTION DISTRICT et al., Plaintiffs and Appellants, v. Gray DAVIS, as State Controller, etc., et al., Defendants and Respondents; Harry WEINBERG, as Superintendent, etc., et al., Real Parties in Interest.
• Docket Number: No. C016756,C016756
• Decision Date: 25 May 1994

Page 343

30 Cal.Rptr.2d 343 25 Cal.App.4th 134, 90 Ed. Law Rep. 1116 SAN MIGUEL CONSOLIDATED FIRE PROTECTION DISTRICT et al., Plaintiffs and Appellants,
v.
Gray DAVIS, as State Controller, etc., et al., Defendants and Respondents;
Harry WEINBERG, as Superintendent, etc., et al., Real Parties in Interest. No. C016756. Court of Appeal, Third District, California. May 25, 1994.
Rehearing Denied June 20, 1994.
Review Denied Aug. 25, 1994.

Page 345

[25 Cal.App.4th 140] Ross & Scott, William D. Ross, and Carol B. Sherman, Los Angeles, for plaintiffs and appellants.

Daniel E. Lungren, Atty. Gen., Linda Cabatic, Supervising Deputy Atty. Gen., Allen Sumner, Sr. Asst. Atty. Gen., Thomas H. Gordinier, Co. Counsel, Vicki Sieber-Benson, Asst. Co. Counsel (Solano County), L.B. Elam, Co. Counsel, John F. Whisenhunt, Supervising Deputy Counsel (Sacramento County), Dwight L. Herr, Co. Counsel, Samuel Torres, Jr., Asst. Co. Counsel (Santa Cruz County), Lloyd M. Harmon, Jr., Co. Counsel, Diane Bardsley, Chief Deputy Counsel, Ian Fan and [25 Cal.App.4th 141] Theresa Osterman Stevenson, Deputies Counsel (San Diego County), for defendants and respondents.

Christian M. Keiner and J. Stanton Bair, Sacramento, for real parties in interest.

NICHOLSON, Associate Justice.

This appeal challenges the constitutionality of REVENUE AND TAXATION CODE SECTION 97.03¹, subdivision (c), which reallocates a percentage of property tax revenues from special districts to each county's Educational Revenue Augmentation Fund. ² Eight fire protection districts, a municipal improvement water district which provides fire protection services based on a contract with a neighboring city, and nine individual taxpayers from Sacramento, San Diego, Solano, and Santa Cruz counties, filed a Petition for Writ of Mandate and Complaint for Declaratory Relief against the State Controller, the State Director of Finance, and the County Auditor-Controllers for the four respective counties, challenging both the statute's constitutionality and respondents' computations pursuant to the statute. ³ The trial court denied the petition and entered judgment for respondents on the complaint. We affirm.

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FACTUAL AND PROCEDURAL BACKGROUND

The Legislature enacted section 97.03 in 1992. Pursuant to subdivision (c) of this section, for fiscal year 1992-93, ⁴ each county was required to reduce the amount of property tax revenue allocated to each special district in the prior fiscal year by 35 percent, and deposit these nonallocated funds in the county's Educational Revenue Augmentation Fund. ⁵ (§ 97.03, subds. (c)(1), (d)(1).)

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[25 Cal.App.4th 142] In the trial court, petitioners argued section 97.03, subdivision (c), denied them due process and equal protection, was unconstitutionally vague, violated article XIIIA of the California Constitution, and impaired their [25 Cal.App.4th 143] contract rights to property tax revenues. Petitioners further argued any computations pursuant to this section should exclude from the definition of "revenue" certain types of funds, such as mitigation fees, reimbursements, refunds, interest, and cost recoveries, and contended they were entitled to offset any shifting of property tax revenues by the amount of any reimbursement owed to the county by the State. The trial court rejected each of these contentions, denying the petition for writ of mandate and entering judgment for respondents on the complaint for declaratory relief.

DISCUSSION I

Standing

Preliminarily, respondents assert the eight fire protection districts and the municipal improvement water district, as political subdivisions of the State, have no standing to raise constitutional challenges to actions taken by another agency pursuant to state legislation. Even if respondents are correct, the petitioning individual taxpayers are private parties who clearly can maintain this suit.

"[P]olitical subdivision[s] of state government[ ] exercis[e] only the powers of the state, granted by the state, created for the purpose of advancing 'the policy of the state at large....' " (County of Marin v. Superior Court (1960) 53 Cal.2d 633, 638-639, 2 Cal.Rptr. 758, 349 P.2d 526.) Respondents correctly note special districts have no "vested right" to receive property tax revenues (Marin Hospital Dist. v. Rothman (1983) 139 Cal.App.3d 495, 501, 188 Cal.Rptr. 828) and no "property interest" in such revenues (Board of Supervisors v. McMahon (1990) 219 Cal.App.3d 286, 297, 268 Cal.Rptr. 219), because "as against the state, the county [or district] has no ultimate interest in the property under its care." (County of Marin v. Superior Court, supra, 53 Cal.2d at p. 639, 2 Cal.Rptr. 758, 349 P.2d 526, italics in original; see also Conlin v. Board of Supervisors (1893) 99 Cal. 17, 21, 33 P. 753 [local monies are public monies acquired under the authority of the state for public purposes; Legislature thus may direct a local government to make any payment of its funds].) "[A ]ll property under the care and control of a county is merely held in trust by the county for the people of the entire state.... The county holds all its property ... as agent of the state. [Citations.]" (County of Marin v. Superior Court, supra, 53 Cal.2d at pp. 638-639, 2 Cal.Rptr. 758, 349 P.2d 526, italics in original.)

The districts offer three arguments in their attempt to establish their standing to bring this lawsuit. They first contend these legal principles do [25 Cal.App.4th 144] not preclude them from seeking a declaratory judgment regarding the legality of section 97.03, citing City of Carmel-by-the-Sea v. Young (1970) 2 Cal.3d 259, 85 Cal.Rptr. 1, 466 P.2d 225. Carmel involved a constitutional attack on a 1969 financial disclosure statute, which the California Supreme Court found "undert[ook] an overbroad intrusion into the right of privacy and thereby invalidly restrict[ed] the right to seek or hold public office or employment." (Id. at p. 262, 85 Cal.Rptr. 1, 466 P.2d 225.) The districts cite a sentence from Carmel which states: "The declaratory relief here sought by the city on the ground of unconstitutionality of the statute is a proper remedy." (Id. at p. 263, 85 Cal.Rptr. 1, 466 P.2d 225.) However, the authority for this proposition merely holds either an injunction or declaratory relief is a "proper method of determining the constitutionality of [a] challenged ordinance." (Abbott v. City of Los Angeles (1960) 53 Cal.2d 674, 678, fn. 2, 3 Cal.Rptr. 158, 349 P.2d 974.) Nowhere within the Carmel opinion does the court address standing. Thus, we find the case inapposite.

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Second, the districts contend they may assert an equal protection argument pursuant to the California, rather than the federal, Constitution. However, we previously have rejected this very contention. (Board of Supervisors v. McMahon, supra, 219 Cal.App.3d at pp. 296-297, 268 Cal.Rptr. 219.)

Finally, the districts assert they have standing "to assert the rights of [their] residents and property taxpayers to equal protection and due process," citing Selinger v. City Council (1989) 216 Cal.App.3d 259, 264 Cal.Rptr. 499. Selinger involved a city's challenge to the Permit Streamlining Act as "fail[ing] to safeguard the constitutional rights of adjacent landowners to notice and a hearing before they are deprived of substantial property rights." (Id. at p. 270, 264 Cal.Rptr. 499.) The court held the City Council had standing to assert the rights of local citizens because "[l]ocal citizens' rights are inextricably bound up with the City's duty to review and condition subdivision approvals to assure appropriate land uses and prevent overburdening of local services. [p] More important, however, are the 'genuine obstacles' to local citizens' ability to raise their own rights. All legal challenges to decisions approving tentative maps must be brought within 90 days or they will be barred by the statute of limitations.... Without prior notice, affected property owners are unable to learn until after the fact that their rights have been jeopardized." (Id. at p. 271, 264 Cal.Rptr. 499.)

Petitioners argue "residents' and taxpayers' rights to due process and equal protection in the distribution of property tax revenues are 'inextricably bound up with the activity the [Districts] wish to pursue' (e.g., compliance with their duty to provide fire prevention, suppression and emergency [25 Cal.App.4th 145] services)." The due process interests implicated in Selinger due to "the City's duty to review and condition subdivision approvals" have no analogy here because the petitioning districts do not implement the statute in question. Thus, the special districts have no standing to bring this action.

Nevertheless, the action may proceed because standing is accorded the petitioning individual taxpayers. The trial court permitted amendment of the pleadings to add nine petitioners who are individual taxpayers. Respondents contend these individual taxpayers also lack standing because the individual taxpayers "stand in the shoes" of the districts. We disagree.

"Taxpayer suits are well recognized in California jurisprudence and are explicitly authorized by statute. (CODE CIV.PROC., § 526A. )⁶ Among other things, section 526a has been interpreted as authorizing a taxpayer to contest the legality of a taxing statute." (County of Sonoma v. State Bd. of Equalization (1987) 195 Cal.App.3d 982, 989, 241 Cal.Rptr. 215.)

Citing Sundance v. Municipal Court (1986) 42 Cal.3d 1101, 232 Cal.Rptr. 814, 729 P.2d 80, and Los Altos Property Owners Assn. v. Hutcheon (1977) 69 Cal.App.3d 22, 137 Cal.Rptr. 775, respondents argue the allocation of property tax revenues is a political determination, and petitioners' challenge amounts to a "mere difference in judgment as to how public funds should be spent." (Emphasis omitted.) Although these challenges may be motivated in part by politics, the constitutional arguments posed by the individual taxpayers are properly...