Two Lawsuits Continue California’s Tax Wars - GV Wire - Explore. Explain. Expose

2022-08-20 03:29:31 By : Mr. Leon Yang

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Two Lawsuits Continue California’s Tax Wars

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When California voters passed Proposition 13, the state’s iconic property tax limit, in 1978, it was merely the opening salvo of a decades-long political war over curbing the ability of state and local governments to impose taxes.

The latest of many battles over tax limits occurred just two years ago, when voters rejected an effort to modify Proposition 13 by making it easier to raise taxes on commercial property.

As officials fashioned new ways to raise revenues without violating Proposition’s 13’s strictures, anti-tax groups countered with new ballot measures to prohibit or limit them and were largely successful.

One of the more important post-Proposition 13 clashes was over Proposition 218 in 1996, which sought to limit the ability of local governments to levy non-property taxes without voter approval and limit fees to the actual cost of services, rather than provide general revenue. Its limits on fees were later tightened up by Proposition 26 in 2010.

One Proposition 218 section required that taxes for special purposes be approved by two-thirds voter majorities, but the state Supreme Court recently ruled that special taxes proposed by initiative, rather than by governments themselves, require only a simple majority vote.

However, the rest of Proposition 218 remained intact and figures in two lawsuits, one decided last week by the state Supreme Court, that test the measure’s potency.

The Supreme Court case (Zolly vs. City of Oakland) involves franchises the city issued for the collection of trash and other materials. The suit alleges that Oakland collected unreasonably high franchise fees from waste haulers and the extra costs were passed on to consumers in the form of charges, thus violating Proposition 218 and Proposition 26 requirements that fees be strictly related to the cost of services.

The city won at the trial level but an appellate court ruled that the franchise fees are subject to constitutional limits and the Supreme Court upheld the appellate ruling, thus jeopardizing the validity of Oakland’s trash franchises and bolstering Proposition 218’s impact.

The second lawsuit involving Proposition 218 was filed this year against the City of Sacramento, alleging that an election to approve new fees for stormwater facilities was tainted because the city, in effect, stuffed the ballot box.

The election was limited to property owners who would pay the fees, rather than ordinary voters, and the city cast more than 2,000 ballots in favor of the fees on behalf of city-owned parcels while, the lawsuit alleges, limiting the ability of those who owned multiple properties to do the same.

“By casting votes on behalf of city-owned property in favor of a fee that will effectively be paid to the city, the city subverted Proposition 218’s goal of protecting taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent,” the lawsuit, filed by commercial property owner Dessins LLC, declares.

The Sacramento case is not only another test of Proposition 218 but a new wrinkle in the recent phenomenon of local governments being more aggressive in promoting revenue and bond measures to voters.

As chronicled in this space and other venues, local officials often hire political consultants to design full-fledged campaigns for their measures under the guise of “information.” At one point, the Fair Political Practices Commission was starting to crack down on the deceptive and perhaps illegal practice of spending taxpayer money for political campaigns, but it continues.

It was once said, allegedly by Benjamin Franklin, that nothing is certain but death and taxes. In California, it’s also certain that we will continue to battle over tax limits.

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. For more columns by Walters, go to calmatters.org/commentary.

GV Wire encourages vigorous debate from people and organizations on local, state, and national issues. Submit your op-ed to rreed@gvwire.com for consideration. 

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Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He has written more than 9,000 columns about the state and its politics and is the founding editor of the “California Political Almanac.” Dan has also been a frequent guest on national television news shows, commenting on California issues and policies.