California High Court Dumps Supermajority Rule for Voter-Backed Taxes

(CN) – The California Supreme Court on Monday made it much easier for municipalities to collect special taxes: Let citizens propose and pass them through the initiative process – and a simple majority vote.

In 2014, Upland residents James Velez and Nicole De La Rosa joined with the California Cannabis Coalition to introduce a ballot initiative aimed at overturning the city’s ban on medical pot dispensaries.

De La Rosa and Velez gathered 6,865 signatures, the required 15 percent of voters needed for the proposal to qualify for a special election under election code. But the city refused to call a special election, deciding that it needed to be placed on the November 2016 general election ballot because a $75,000 yearly dispensary licensing and inspection fee constituted a general tax.

The city pointed to article XIII C of the California Constitution, which requires general tax proposals be submitted to voters at general elections and approved by a supermajority of voters.

The article, added to the Constitution in 1996 through Proposition 218 says, “No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote.”

This past November, 64 percent of Upland voters said no to lifting the city’s ban on dispensaries.

Writing for the majority, California Supreme Court Justice Mariano Florentino Cuellar said that while moot at this point since only 36 percent voted yes, the case “nonetheless presents important questions of continuing public interest that may evade review,” the most important among them being the people’s initiative power.

The California Constitution does not limit voters’ power to raise taxes through a statutory initiative, Cuellar wrote, adding that its general tax provision does not apply to taxes imposed by initiative.

“A contrary conclusion would require an unreasonably broad construction of the term ‘local government’ at the expense of the people’s constitutional right to direct democracy, undermining our longstanding and consistent view that courts should protect and liberally construe it,” he said. “As Ulysses once tied himself to the mast so he could resist the Sirens’ tempting song, voters too can conceivably make the clear and important choice to bind themselves by making it more difficult to enact initiatives in the future. The electorate made no such clear choice to tie itself to the mast here.”

Cuellar said the purpose of Proposition 218 was to protect voters from having tax increases foisted on them by politicians, not to protect voters from themselves.

“The alternative is to treat the term ‘local government’ as encompassing the entire coterie of individuals constituting the electorate – thus burdening voters’ power to propose and adopt initiatives concerning taxation,” he wrote. Otherwise, he added, there would have been some mention of this in the ballot materials for Proposition 218.

“The city and the concurring and dissenting opinion cite no such evidence. Nor can we find any,” he said. “To the contrary: The crux of the concern repeatedly reflected in the ballot materials is with local governments and politicians – not the electorate – imposing taxes. Nowhere in the materials is there any suggestion that Proposition 218 would rescue voters from measures they might, through a majority vote, impose on themselves.”

The court concluded its opinion with an admonishment to cities, ruling, “In the future, cities should follow section 9214 and order a special election.”

In her partial dissent joined by Justice Goodwin Liu, Justice Leondra Kruger said the Upland City Council should have put the initiative up for a special election and left questions about the validity of the fee to the courts. However, the dissenting justices diverged from the majority regarding whether a voter-approved tax is still a tax for the purposes of Proposition 218.

“It is a basic tenet of the system that when a city’s voters enact legislation by initiative, they do so ‘by and for’ the city itself,” Kruger wrote. “A tax passed by voter initiative, no less than a tax passed by a vote of the City Council, is a tax of the local government, to be collected by the local government, to raise revenue for the local government. None of this could have been lost on the electorate that, also by initiative, amended the California Constitution to set ground rules for voter approval of local taxes.”

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