White v. State of California

• Decision Date: 04 April 2001
• Docket Number: No. D036822.,D036822.
• Citation: 88 Cal.App.4th 298,105 Cal.Rptr.2d 714
• Court: California Court of Appeals Court of Appeals
• Parties: Steven WHITE, Plaintiff and Appellant, v. STATE OF CALIFORNIA et al., Defendants and Respondents.

105 Cal.Rptr.2d 714

88 Cal.App.4th 298

Steven WHITE, Plaintiff and Appellant, v. STATE OF CALIFORNIA et al., Defendants and Respondents.

No. D036822.

Court of Appeal, Fourth District, Division 1.

April 4, 2001.

Review Denied June 27, 2001.

Richard I. Fine & Associates and Richard I. Fine, Los Angeles, for Plaintiff and Appellant.

Hennigan, Mercer & Bennett and Bruce Bennett, Laura Lindgren, Lawrence C. Jones, Gregory K. Jones, Los Angeles, for Defendants and Respondents County of Orange, Orange County Development Agency, Donald J. Saltarelli, James W. Silva, Roger R. Stanton, and William G. Steiner.

Woodruff, Spradlin & Smart and Kennard R. Smart, Jr., Daniel K. Spradlin and M. Lois Bobak, Orange, for Defendant and Respondent Orange County Transportation Authority.

Bill Lockyer, Attorney General; Linda A. Cabatic, Senior Assistant Attorney General; Marsha A. Bedwell and Keith Yamanaka, Deputy Attorneys General, for Defendant and Respondent State of California.

HALLER, J.

In 1994, Orange County filed for bankruptcy. To resolve this financial crisis and assist Orange County to emerge from bankruptcy, the California Legislature passed four bills allocating certain property and sales tax revenues to Orange County's general fund that were previously allocated to other Orange County public agencies.

Steven White, an Orange County taxpayer, brought this action seeking declaratory relief that the statutes enacted through these bills are unconstitutional and/or violate applicable statutes. The trial court entered a judgment of dismissal after defendants successfully demurred to the complaint. White appeals. We affirm.

FACTS

In December 1994, Orange County filed for bankruptcy. In June 1995, Orange County voters rejected a ½ cent sales tax to be used to help the county emerge from bankruptcy. In October 1995, the Legislature passed four bills in an attempt to resolve Orange County's financial problems (Recovery laws). In passing each of these bills, the Legislature made the following findings and statements of purpose:

"(a) The County of Orange government lacks sufficient resources to finance an acceptable plan of adjustment in its pending bankruptcy case.

(b) On June 27, 1995, the voters of the county defeated a proposed sales tax increase, indicating the public's unwillingness to raise new revenue to finance a plan of adjustment.

(c) It is in the interest of the state and all public debt issuers within the state to enable the county to finance an acceptable plan of adjustment in order to improve the credit standing of California public debt issuers and to preserve and protect the health, safety, and welfare of the residents of the county and the state. To that end, successfully resolving the county bankruptcy and restoring the financial position of Orange County government and thereby permitting the full performance under the county's indebtedness is a matter of statewide interest and concern.

(d) In the absence of some alternative source of revenue not now available to the county, resources from other governmental units within the county must be transferred to the county to enable it to prepare, and obtain confirmation of, an acceptable plan of adjustment.

(e) The transfer of resources to the county should be designed to minimize the impact on affected entities.

(f) The emergence from bankruptcy of the county through the confirmation of an adequate plan of adjustment will assist in the effectuation of the primary purposes of the Community Redevelopment Law ..., including job creation, attracting new private commercial investments, the physical and social improvement of residential neighborhoods, and the provision and maintenance of low- and moderate-income housing...." (Sen. Bill No. 863 (1995-1996 Reg. Sess.) § 2; Assem. Bill No. 1664 (1995-1996 Reg. Sess.) § 2; Sen. Bill No. 1276 (1995-1996 Reg. Sess.) § 2.)

To achieve these goals, the Legislature passed the four bills—Senate Bill No. 863, Assembly Bill No. 1664, Senate Bill No. 1276, and Assembly Bill No. 200—adding to and amending various codes, including the Government Code, Health and Safety Code, Revenue and Taxation Code, and Streets and Highways Code. We briefly describe the primary subject matter of each of these bills below, and will later discuss the bills in more detail when relevant to a particular legal issue raised on appeal.

Senate Bill No. 863 modified the annual allocation of Orange County property tax revenues by reducing the property tax allocation to two Orange County districts (a flood control district and a harbors, beaches and park fund ("park fund")) and requiring that $4 million that would have previously been placed annually in each of these funds be deposited in the county's general fund for 18 years. (Sen. Bill No. 863 (1995-1996 Reg. Sess.) § 5.) Senate Bill No. 863 also required Orange County's redevelopment agency to transfer $4 million per year to the general fund for 20 years; the Legislature stated these payments constituted repayment for the redevelopment agency's debt for "general and specific benefits ... previously provided by the county." (Sen. Bill No. 863 (1995-1996 Reg. Sess.) § 2.)

Assembly Bill No. 1661* concerns law that permits a county board of supervisors to contract with the State Board of Equalization to establish a local transportation fund in the county treasury, and then provides a formula for depositing sales and use taxes into this fund. (Assem. Bill No. 1664 (1995-1996 Reg. Sess.) subd. (1); see Gov.Code, § 29530.) This bill authorized Orange County's Board of Supervisors to modify its contract with the State Board of Equalization to require, with respect to sales taxes levied during a 15-year period, that annual revenues of approximately $38 million be deposited in the Orange County general fund instead of into the county's local transportation fund (OCTA). (Assem. Bill No. 1664 (1995-1996 Reg. Sess.) § 10; see Gov.Code, § 29530.5.)

Senate Bill No. 1276 concerns California law providing for a "Highway Users Tax Account" into which the state deposits state gas tax funds to be used for road work, mass transit and related purposes. (Sts. & Hy.Code, § 2100 et seq.) The state controller apportions funds from state gas tax funds to localities according to statutory directives. (Sts. & Hy.Code, § 2103.) Senate Bill No. 1276 directs the controller to allocate $1.9 million per month to the OCTA from the Highway Users Tax Account; these funds would have previously been allocated to the county. (Sen. Bill No. 1276 (1995-1996 Reg. Sess.) § 4.) Senate Bill No. 1276 also concerns the appointment of a trustee pending bankruptcy recovery. (Sen. Bill No. 1276 (1995-1996 Reg. Sess.) § 3.)

Assembly Bill No. 200 is primarily nonsubstantive and corrects technical problems in the other three bills. It was enacted to: (1) make changes to provisions added by Assembly Bill No. 1664 with regard to sales taxes; (2) revise certain language in Senate Bill No. 1276 regarding the trustee appointment; and (3) change the operative dates contained in Senate Bill No. 1276. (Assem. Bill No. 200 (1995-1996 Reg. Sess.).)

The Governor signed the Recovery laws on October 9, 1995. In May 1996, the bankruptcy court confirmed the county's plan of adjustment to emerge from bankruptcy. Under the plan, the county would issue bonds to be funded using county revenues allocated to the county general fund by the Recovery laws.

Seven months later, in December 1996, White filed his complaint requesting the court to declare the Recovery laws invalid. White named various public officials and public entities as defendants.¹ The trial court sustained defendants' demurrer to the complaint. White appeals.

DISCUSSION

I. Standard of Review

In evaluating a judgment sustaining a demurrer, we review the complaint de novo to determine whether it states a cause of action. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501, 82 Cal.Rptr.2d 368.) We assume the truth of all facts properly pled and the truth of facts that may be implied or inferred from these allegations. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459, 80 Cal.Rptr.2d 329.) In addition, we read the pleadings as if they contained all matters of which we may take judicial notice, including the statutory law of this state. (El Rancho Unified School Dist. v. National Education Assn. (1983) 33 Cal.3d 946, 950, fn. 6, 192 Cal.Rptr. 123, 663 P.2d 893; see Evid.Code, § 451, subd. (a).) "The judgment must be affirmed `if any one of the several grounds of demurrer is well taken.... [Citations.]'" (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, 9 Cal.Rptr.2d 92, 831 P.2d 317.) We must reverse if "the plaintiff has stated a cause of action under any possible legal theory. [Citation.]" (Id. at p. 967, 9 Cal.Rptr.2d 92, 831 P.2d 317.)

II. California Constitution Article IV, Section 16²

As the primary focus of his appellate briefs, White contends the Recovery laws violate article IV, section 16 because they apply only to Orange County, and therefore are improper "special legislation." Article IV, section 16 states: "(a) All laws of a general nature have uniform operation, [¶] (b) A local or special statute is invalid in any case if a general statute can be made applicable." (Italics added.)

It is well settled that article IV, section 16 does not prohibit the Legislature from enacting statutes that are applicable solely to a particular county or local entity. (See People v. Mullender (1901) 132 Cal. 217, 221, 64 P. 299; Baldwin v. County of Tehama (1994) 31 Cal.App.4th 166, 177, 36 Cal.Rptr.2d 886.) By its express terms, article IV, section 16 prohibits this type of legislation only if "a general statute can be made applicable." (See People v. Mullender, supra, 132 Cal. at p. 221, 64 P. 299.) In determining whether "a general statute can be made applicable," the issue is not whether the Legislature could conceivably enact a...