Santa Clara County Local Transportation Authority v. Guardino, S036269

• Court: United States State Supreme Court (California)
• Writing for the Court: MOSK; LUCAS; WERDEGAR
• Citation: 45 Cal.Rptr.2d 207,11 Cal.4th 220,902 P.2d 225
• Parties: , 12 Cal.4th 344E, 902 P.2d 225, 95 Cal. Daily Op. Serv. 7622, 95 Daily Journal D.A.R. 13,017 SANTA CLARA COUNTY LOCAL TRANSPORTATION AUTHORITY, Petitioner, v. Carl GUARDINO, as Auditor-Controller, etc., Respondent; HOWARD JARVIS TAXPAYERS' ASSOCIATION et al., Real Parties in Interest.
• Docket Number: No. S036269,S036269
• Decision Date: 28 September 1995

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45 Cal.Rptr.2d 207 11 Cal.4th 220, 12 Cal.4th 344E, 902 P.2d 225, 95 Cal. Daily Op. Serv. 7622, 95 Daily Journal D.A.R. 13,017 SANTA CLARA COUNTY LOCAL TRANSPORTATION AUTHORITY, Petitioner,
v.
Carl GUARDINO, as Auditor-Controller, etc., Respondent;
HOWARD JARVIS TAXPAYERS' ASSOCIATION et al., Real Parties in Interest. No. S036269. Supreme Court of California,
In Bank. Sept. 28, 1995.
As Modified on Denial of Rehearing
Dec. 14, 1995.

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[11 Cal.4th 226] Andrew L. Faber, Berliner Cohen, Nossaman, Guthner, Knox & Elliott, Alvin S. Kaufer and Winfield D. Wilson for petitioner.

Larry W. Kreig, Debra A. Greenfield, Orrick, Herrington & Sutcliffe, Mary A. Collins, Lynne T. Hirata, Robert K. Innes, Lempres & Wulfsberg, H. James Wulfsberg, Mark A. Stump, Hanson, Bridgett, Marcus, Vlahos & Rudy, David J. Miller, Ray E. McDevitt, Susan B. Laitin, Kennedy & Wasserman, R. Zachary Wasserman, Bertha A. Ontiveros, Francis F. Chin, Christopher M. Micheli, Lester W. Schiefelbein, John R. Masterman, Fred L. Main, D. Craig Nordlund, Denise LaChance, Peter M. Greenwald, Barbara Baird, Remcho, Johansen, & Purcell, Robin B. Johansen, Charles C. Marson and Wendy S. Strimling as Amici Curiae on behalf of petitioner.

No appearance for respondent.

Jonathan Mark Coupal, Timothy J. Morgan, Kaplanis & Grimm, Trevor A. Grimm, Bell & Hiltachk, Bell, McAndrews & Hiltachk and Thomas W. Hiltachk for real parties in interest.

Ronald A. Zumbrun, Anthony T. Caso and Alan W. Foutz as Amici Curiae on behalf of real parties in interest.

Steven N. Skolnik, City Attorney (Huntington Park and Santa Fe Springs) as Amicus Curiae.

MOSK, Justice.

A local agency proposed a sales tax to fund certain transportation projects, and the tax was approved by a majority but less than two-thirds [11 Cal.4th 227] of the electors voting on it. The agency filed this original proceeding in the Court of Appeal for a writ of mandate to validate the tax, contending the tax does not violate either (1) the requirement of a two-thirds voter approval imposed by Government Code section 53722, a provision of Proposition 62, a statutory initiative adopted at the 1986 General Election, or (2) the requirement of a two-thirds voter approval imposed by section 4 of article XIII A of the California Constitution, a provision of Proposition 13, a constitutional initiative adopted at the 1978 Primary Election. In a divided opinion the Court of Appeal held the tax invalid under Proposition 13 and denied the writ. As will appear, we conclude that the tax is invalid under Proposition 62 and that the judgment of the Court of Appeal denying the writ should be affirmed on that ground.

FACTS

In 1987 the Legislature enacted the Local Transportation Authority and Improvement Act (hereafter the Act). (Pub.Util.Code, §§ 180000-180264.) The Act declared that "federal and state funding ... is inadequate" to meet local transportation needs, and proposed a scheme to "raise additional local revenues" for the maintenance and improvement of local streets, highways, and mass transit systems. (Id., § 180001, subds. (c) and (d).) To this end, the Act authorized the board of supervisors of any county to create a "local transportation authority" composed of elected officials of local governmental agencies. (Id., § 180051.) ¹ The Act then empowered each such authority to adopt an ordinance imposing a retail transactions and use tax--i.e., a sales tax--on a countywide

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basis at a rate not to exceed 1 percent, provided the ordinance is submitted to the voters and approved by a majority of those voting. (Id., § 180201.) The Act further required the authority to adopt a "county transportation expenditure plan" approved by the board of supervisors and a majority of the city councils of the county. (Id., § 180206.) Finally, the Act empowered the authority, for the purpose of financing any planned capital expenditures, to issue revenue bonds payable from the proceeds of the tax, provided the voters also approved the issuance of such bonds. (Id., § 180250.)

In June 1992, pursuant to this legislation, the Board of Supervisors of Santa Clara County created the Santa Clara Local Transportation Authority. In July 1992 that authority adopted an ordinance imposing a countywide sales tax at the rate of one-half of 1 percent for 20 years beginning on April 1, 1995. The ordinance further empowered the transportation authority to [11 Cal.4th 228] issue bonds payable from the revenues from this tax, and declared that such revenues and the bond proceeds could be used only for the projects described in the county transportation expenditure plan.

The board of supervisors then placed the ordinance on the November 1992 General Election Ballot as Measure A. It received an affirmative vote of 54.1 percent, i.e., more than a majority but less than two-thirds of those voting.

Following the election a number of nonprofit organizations and individuals opposed to Measure A filed an action in the Santa Clara Superior Court challenging the tax as violative of both Proposition 13 and Proposition 62.

In January 1993 the transportation authority adopted a resolution for the issuance of $275 million in bonds (revenue notes) payable out of its anticipated revenues from this tax, and directed its auditor-controller, Carl Guardino, to sign the bonds. (See Pub.Util.Code, § 180257.) Guardino refused to do so unless and until the tax was determined to be valid. The transportation authority (hereafter petitioner) then filed a petition for writ of mandate in the Court of Appeal in the first instance, contending the tax is not in violation of either Proposition 13 or Proposition 62. The petition named Guardino as respondent and named the plaintiffs in the pending superior court action as real parties in interest, and prayed for a writ compelling Guardino to sign the bonds.

The Court of Appeal exercised its original jurisdiction over the petition (Cal. Const., art. VI, § 10), held the tax invalid under Proposition 13, and denied the writ. ² We granted review.

I

As it did in the Court of Appeal, petitioner now contends the challenged tax is not invalidated by either Government Code section 53722 ³ or section 4 of article XIII A of the California Constitution. A holding that the tax violates the constitutional provision, of course, would be dispositive of this proceeding. (See, e.g., Rider v. County of San Diego (1991) 1 Cal.4th 1, 2 [11 Cal.4th 229] Cal.Rptr.2d 490, 820 P.2d 1000 (hereafter Rider ).) But the same would be true of a holding that the tax violates section 53722: in either event respondent would be under no duty to sign the bonds and the petition to compel him to do so would be without merit, as the Court of Appeal held. When a similar local sales tax was challenged on the same two constitutional and statutory grounds in Rider, this court chose to address only the constitutional ground and held the tax invalid under Proposition 13. (1 Cal.4th at pp. 10-15, 2 Cal.Rptr.2d 490, 820 P.2d 1000.) The majority opinion in Rider, however, expressly left the statutory ground open (id. at p. 15, 2 Cal.Rptr.2d

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490, 820 P.2d 1000); and the concurring opinion of Justice George, joined by Justice Panelli, discussed the merits of that ground at some length, concluding that the tax was also invalid under section 53722 and that section 53722 was constitutional (1 Cal.4th at pp. 17-24, 2 Cal.Rptr.2d 490, 820 P.2d 1000).

Nevertheless, the constitutionality of section 53722 remains in doubt. In City of Westminster v. County of Orange (1988) 204 Cal.App.3d 623, 251 Cal.Rptr. 511, the Court of Appeal held unconstitutional a section of Proposition 62 (§ 53727, subd. (b)) that requires majority voter approval of any local taxes imposed during a 16-month "window period" preceding the effective date of the proposition. And in City of Woodlake v. Logan (1991) 230 Cal.App.3d 1058, 282 Cal.Rptr. 27, the Court of Appeal held unconstitutional three more sections of Proposition 62: viz., section 53723, a closely related provision that requires majority voter approval of all new general taxes, and two procedural provisions implementing that requirement (§§ 53724, 53728).

These holdings inevitably cast a cloud over the constitutionality of section 53722, because the two procedural provisions just cited (§§ 53724, 53728) also govern section 53722, and the defects found in all three provisions of Proposition 62 invalidated in City of Woodlake v. Logan, supra, 230 Cal.App.3d 1058, 282 Cal.Rptr. 27, are defects that petitioner now contends invalidate section 53722. Indeed, although the majority Court of Appeal opinion in this case did not reach the question, the dissenting opinion discussed it in detail and concluded that section 53722 is unconstitutional for the very reason that Woodlake 's "analysis and conclusion apply with equal force to the voter approval requirement in section 53722."

These circumstances call for a prompt resolution of the issue by this court. In the nine years since Proposition 62 was adopted, the Legislature has enacted numerous statutes like the Act in issue here (Pub.Util.Code, §§ 180000-180264) purporting to authorize local governmental entities to impose taxes with the approval of less than two-thirds of the voters, and local entities like petitioner have relied on those statutes. Accordingly, in its [11 Cal.4th 230] brief on the merits petitioner expressly "requests this Court to enter a definitive ruling on Proposition 62. Local governments issue bonds secured by taxes and, until this Court rules on the constitutionality of Proposition 62, there is a cloud hanging over those bonds. That cloud adds an element of risk which, obviously, compels investors to demand higher interest to compensate for the risk." A higher cost of money, of course, results in increased expense to the local agency and ultimately to the public. Equally important, the question is ripe for decision: the parties have...