In a victory for taxpayers, the Fresno Superior Court decided in favor of Howard Jarvis Taxpayers Association earlier this month, ruling that special taxes proposed by a voter initiative are not exempt from the state constitution’s two-thirds vote requirement.
At issue was Fresno’s Measure P, a sales tax initiative on the November 2018 ballot that proposed a 3/8 percent sales tax increase to provide extra funding for city parks, recreation, and after-school programs. The measure received 52% of the vote and was declared failed for lacking the two-thirds voter approval required by two constitutional amendments – Proposition 13 (1978) and Proposition 218 (1996).
The special interests that put the initiative on the ballot filed a lawsuit against the city of Fresno and other government officials claiming that Proposition 13 should be ignored. They argued that the two-thirds vote requirement applies only to special taxes proposed by public agencies such as cities and counties and that it didn’t apply to taxes proposed by a voter initiative. Interestingly, the city of Fresno filed its own lawsuit against the proponents simply seeking clarification of its legal obligations to collect the tax or not. Because of the city’s apparent neutrality, it left no one to defend Proposition 13.
Howard Jarvis Taxpayers Association intervened on the grounds that the interest of taxpayers was unrepresented in the litigation. HJTA filed a motion for judgment on the pleadings, arguing that it would open a huge loophole in the two-thirds vote protection if taxes proposed by initiative were exempt.
Earlier this month, the Fresno County Superior Court agreed with HJTA in a five page decision explaining that the two-thirds vote requirement was not imposed on public agencies, but on the voters. Regardless of who authors the proposal, it must be submitted to the voters who must approve it by two-thirds, otherwise it is rejected.
This question about the vote requirement for tax initiatives arose from a ruling by the California Supreme Court in an unrelated 2017 case, California Cannabis Coalition v. City of Upland. In that case, the court ruled on the narrow technical question of whether initiatives had to be put before voters in the next general election or whether a special election could be required. The ruling that initiatives were exempt from the election timing requirement in the state constitution appeared to leave open the possibility that initiatives were exempt from the two-thirds vote requirement.
The issue is also being litigated in Oakland and San Francisco, where special tax initiatives resulted in lawsuits. Relying on the Upland case, a San Francisco judge in July upheld the validity of a local special tax that had failed to secure two-thirds voter approval, ruling that tax initiatives needed only a simple majority to pass.
That case involved a tax on commercial rents for the purpose of raising $145 million per year for child care, early education, and salary increases for pre-school teachers. The San Francisco judge’s ruling, if upheld, would allow every well-funded special interest group to collect signatures for initiatives that raise taxes for their own programs or salaries, then pass them with a simple majority.
Last week’s court ruling is an important victory for taxpayers, not only in Fresno, but statewide. The fact that there are now conflicting rulings among the trial courts virtually assures that the issue will ultimately have to be resolved by the California Supreme Court. In the meantime, taxpayers, local governments and anti-Prop. 13 activists will be battling over the two-thirds vote requirement in other similar lawsuits for months, if not years, to come.