Legal Alerts Jul 13, 2020

Special Taxes by Voter Initiative Not Restricted by Proposition 13 or Proposition 218

Court of Appeal Holds Only Simple Majority Needed to Impose Special Taxes by Initiative Power

Special Taxes by Voter Initiative Not Restricted by Proposition 13 or Proposition 218

While the California Constitution prohibits local governments from imposing a special tax without two-thirds voter approval, the approval threshold for special taxes proposed by a citizen initiative is a simple majority, according to a recent California appellate court decision.
Initiative power is the power of the electorate to propose new laws subject to approval by voters, including the right to impose taxes for specialized purposes. On June 30, the First District Court of Appeal, Division 4 upheld the lower court’s decision in City and County of San Francisco v. All Persons Interested in the Matter of Proposition C. In so doing, the appellate court relied on the Supreme Court’s decision in California Cannabis Coalition v. City of Upland et al.
City and County of San Francisco involved approval of a citizen initiated measure, Proposition C, which proposed a special tax to be used for homeless services. Despite only being approved by 61.34 percent, Proposition C was certified by the City as passing. The City’s certification was challenged by a group of business and taxpayer associations, who alleged that the City violated article XIII A, section 4, and article XIII C, section 2, of the California Constitution, added as a part of Propositions 13 and 218, respectively, because passage of Proposition C did not receive two-thirds voter approval.
The court looked to the plain language of Proposition 13, which requires that “cities, counties and special districts” seeking to impose special taxes must first obtain two-thirds voter approval. None of the provisions of the California Constitution amended by Proposition 13 spoke expressly to the powers of initiative. At the time voters approved Proposition 13, “the initiative power had long been ensconced in our Constitution.” As such, the Court inferred that if the intent was to constrain future voters to approve initiatives by two-thirds vote, that requirement would have been clear. Instead, there is express language under article II, section 10(a) of the California Constitution that provides that an initiative requires a majority vote only, a “defining characteristic of the initiative” that must be “jealously guard[ed]” by the courts, and where doubts exist, must be resolved in favor of the exercise of that right. This point is bolstered by provisions in the Elections Code stating that the people’s power by initiative to raise City taxes was similarly subject only to a majority vote.
The challenging associations also argued that Proposition C was invalid under article XIII C, section 2(d) of the California Constitution, which was added by Proposition 218. Similar to Proposition 13, Section 2(d) states that a special tax imposed, extended or increased by a “local government” must be approved by a two-thirds vote. The court concluded that the plain language of Section 2(d), shows that the initiative power was not intended to be similarly limited.
City and County of San Francisco is the first appellate-level decision to apply California Cannabis Coalition to the question of whether the super-majority requirements of Proposition 218 and Proposition 13 apply to special taxes placed on the ballot by initiative. Other cases are being decided on the same issue, including challenges to the City of Fresno’s Measure P and the City of Oakland’s Measure AA. While they lost on appeal, the petitioners may still petition the Supreme Court for review in this case. Depending on how the various appellate courts rule in those other cases, there is a chance for conflicting appellate court decisions, which will increase the likelihood of further review by the Supreme Court.

Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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