Santa Clara County Local Transportation Authority v. Guardino

LUCAS, C. J.

I respectfully dissent.

The majority in this case, and in another recent case (Rossi v. Brown (1995) 9 Cal.4th 688 [38 Cal.Rptr.2d 363, 889 P.2d 557]), has seriously undermined the ability of local government to finance sorely needed projects and improvements through local tax measures. In the past, the constitutional prohibition against using the referendum process to annul “tax levies” (Cal. Const., art. II, § 9, subd. (a)) assured that a proposed new tax could not be nullified by submitting the tax measure to the voters before it could take effect. In Rossi, however, this court allowed the opponents of a proposed San Francisco utility tax to annul the tax merely by labeling their petition an “initiative” rather than a “referendum,” on the questionable theory that the petition acted “prospectively” and did not affect current fiscal year financing. (Rossi v. Brown, supra, 9 Cal.4th at p. 711; see id. at pp. 730-735 (dis. opn. of Mosk, J.).)

The present case continues this court’s apparent trend of widely expanding the rights of local voters to reject proposed tax measures at the expense of local government, in contravention of the state Constitution. It is well established that the foregoing constitutional provision limiting the reach of the referendum process “amounts to a declaration of policy against subjecting [tax] legislation ... to a vote of the people.” (Geiger v. Board of Supervisors (1957) 48 Cal.2d 832, 836 [313 P.2d 545], italics added.) Here, the majority upholds a statutory initiative measure (Proposition 62) that purports to require a two-thirds vote of the electorate to approve special taxes sought to be assessed by local governmental entities or districts. The policy of the Constitution clearly forbids this procedure.

The majority responds that technically, the vote contemplated by Proposition 62 is not a referendum because it would occur prior to formal enactment of the tax measure rather than afterward. (See maj. opn., ante, at pp. 239-242.) But the effect is identical: a proposed tax measure is gutted by popular vote before the tax can be levied. This result is forbidden by constitutional policy, that is, by the spirit, if not the letter, of the state Constitution, as recognized by Geiger v. Board of Supervisors, supra, 48 Cal.2d at page 836.

By approving Proposition 62 and its supermajority vote requirement, the majority sanctions wholesale avoidance of the constitutional prohibition against tax referenda whenever special governmental taxes are involved. Because the “approval” vote is timed to take place before the tax measure is formally enacted, the measure may be disapproved by the voters (and by a minority of them) and rendered a nullity in the same manner as a constitutionally forbidden referendum.

I also believe that Proposition 62’s supermajority vote requirement violates the constitutional provision calling for a simple majority vote on initiatives and referenda. (Cal. Const., art. II, § 10, subd. (a).) True, the measure does not expressly purport to contemplate a “referendum” or “initiative,” but simply calls for a “voter approval.” (See maj. opn., ante, at pp. 239-242.) Again, however, this distinction is overly technical, and contravenes the policy of the Constitution. “Approval” by the voters is a form of direct democracy tantamount to an initiative or referendum and is subject to the same constitutional restrictions and requirements.

Our decision in this case could have a devastating effect on local district financing of long-awaited projects and improvements. Given the general unpopularity of new tax measures (a factor that undoubtedly led to the initial adoption of the constitutional prohibition against tax referenda), it is likely that few, if any, proposed local tax measures will meet the required two-thirds voter approval.

Ironically, language in Rossi v. Brown, supra, 9 Cal.4th at page 703, fully supports my analysis. As the majority observed in that case: “The constitutional and charter exemptions from the referendum (statutes and ordinances calling elections, levying taxes, appropriating funds for current expenses, and other ‘urgency’ measures) are measures having special urgency, a delay in the implementation of which could disrupt essential governmental operations. County ordinances fixing the amount of money to be raised by taxes and those fixing the tax rate therefore go into effect immediately, while the effective date of other ordinances is delayed. (Elec. Code, §§ 9141-9143.) When a referendum petition qualifies prior to the effective date of a county ordinance, the ordinance is suspended pending reconsideration and repeal of the ordinance by the board of supervisors or submission of the measure to the voters at a regular or special election. The ordinance does not become effective unless and until a majority of the voters approves it at the referendum election. (Elec. Code, §§ 9144, 9145.) Therefore, if a tax measure were subject to referendum, the county’s ability to adopt a balanced budget and raise funds for current operating expenses through taxation would be delayed and might be impossible. As a result, the county would be unable to comply with the law or to provide essential services to residents of the county.

“For that reason, when taxes levied to support essential governmental services arguably are involved in a referendum, the general rule requiring that referendum provisions be liberally construed to uphold the power is inapplicable. ‘If essential governmental functions would be seriously impaired by the referendum process, the courts, in construing the applicable constitutional and statutory provisions, will assume that no such result was intended. [Citations.] One of the reasons, if not the chief reason, why the Constitution excepts from the referendum power acts of the Legislature providing for tax levies or appropriations for the usual current expenses of the state is to prevent disruption of its operations by interference with the administration of its fiscal powers and policies.’ (Geiger v. Board of Supervisors, supra, 48 Cal.2d 839-840.)” (Rossi v. Brown, supra, 9 Cal.4th at p. 703, italics added.)

The foregoing reasoning is directly applicable to Proposition 62 and its requirement of voter preapproval of proposed new local tax measures needed to assure the continued functioning of government. In the present case, for example, the petition for review asserted that if the challenged tax is invalidated, extensive transportation and highway improvement projects will be abandoned, and over $350 million in matching state and federal funds will be lost. The inevitable effect of the operation of Proposition 62 will be to severely impair the functioning of local government.

Because I agree with his views regarding the unconstitutionality of Proposition 62, I adopt the following pertinent portion of Justice Wunderlich’s well-reasoned dissenting opinion for the Court of Appeal in this case:

“In City of Woodlake v. Logan [(1991)] 230 Cal.App.3d 1058 [282 Cal.Rptr. 27] (Woodlake), the court held that the voter approval requirement in other sections of Proposition 62 was an unconstitutional referendum on local tax measures. (Id. at pp. 1061, 1064-1069.) [Fn. omitted.] The court’s analysis and conclusion apply with equal force to the voter approval requirement in section 53722.

“The court explained that under the Constitution, the people may by referenda approve or reject state and local legislation except for, among other things, tax levies. [Fn. omitted.] (Woodlake, supra, 230 Cal.App.3d at p. 1062; see Geiger v. Board of Supervisors[, supra,] 48 Cal.2d 832, 836 [313 P.2d 545].) Thus, referenda may not be used to attack or nullify a tax ordinance of a city or county. (Woodlake, supra, 230 Cal.App.3d at p. 1063; [City of] Westminster [v. County of Orange (1988)] 204 Cal.App.3d [623,] 627 [251 Cal.Rptr. 511] [(Westminster)].)

“The court concluded that given the constitutional origin of the referendum power, it cannot be expanded by statute in a way that negates the express limitation on tax measures. (Woodlake, supra, 230 Cal.App.3d at p. 1067; Westminster, supra, 204 Cal.App.3d at p. 628.) ‘ “The listing of exceptions in the Constitution amounts to a declaration of policy against subjecting legislation concerning the excepted matters to a vote of the people. While [sections 9 and 11 of article II do] not expressly prohibit the Legislature from extending the right of referendum to include a county sales tax ordinance, any holding that such measures are subject to referendum would be contrary to this policy and against the clear implication of the constitutional provision[s]. . . . It is obvious, however, that the authorization to adopt procedural regulations does not include the power to enact substantive measures which would extend the scope of the basic referendum right. There is no provision authorizing substantive changes, and we have concluded that it was not intended that the Legislature should have the power to extend or expand the scope of referendum.” ’ (Woodlake, supra, 230 Cal.App.3d at p. 1067, quoting Geiger v. Board of Supervisors, supra, 48 Cal.2d at pp. 836-837.)

“Finally, the court noted that one of the primary reasons tax levies for current expenses are exempted from the referendum or initiative power is to prevent disruption of its operations by interference with the administration of. its fiscal powers and policies. (Woodlake, supra, 230 Cal.App.3d at p. 1063.) Thus, ‘. . . the initiative and referendum power may not be used where the inevitable effect would be greatly to impair or wholly destroy the efficacy of some other governmental power .... The power to tax for revenue purposes is probably the most vital and essential attribute of the government. Without such power it cannot function. [Citations.]’ (Id. at p. 1068, internal quotation marks omitted.)

“[Real parties in interest, hereafter RPI] believe that Woodlake is wrong and therefore should not be followed. They claim that the voter approval requirement in Proposition 62 is not a referendum but an ‘extension’ of the people’s initiative power under article II, section 8, of the California Constitution, which is not limited as to subject matter. [Fn. omitted.]

“In particular, RPI assert that while a referendum ‘involves the approval or rejection of an existing statute[,]' an initiative involves the enactment of a statute. (Italics in original.) They note that under section 53722, a proposed tax does not become effective unless and until approved by the electorate. They argue that the voter approval requirement makes the voters an integral part of an enactment process shared with the legislative body rather than a referendum on an ‘existing tax.’ [Fn. omitted.] I am unpersuaded.

“The Woodlake court rejected RPI’s claim that voter approval requirements merely reflect a sharing of the legislative process rather than a mandatory referendum. ‘By definition the referendum and initiative process is a sharing of the power to legislate. It is a reservation by the people of the legislative power granted government. [Citation.] Creatively recharacterizing the power as a joint grant of authority does not change the elemental nature of the power itself. The referendum is the reservation of power to speak to matters upon which the legislative body has acted, i.e., the right to adopt or reject any act or measure. The initiative is purer in form, but is also a sharing of this basic governmental power. It is the reservation of the power of the people to legislate directly without input from the legislative body. [Citation.]’ (Woodlake, supra, 230 Cal.App.3d at p. 1065.) I agree with this analysis.

“Next, a referendum, contrary to RPI’s view, does not operate on an ‘existing statute,’ if by that term RPI mean a statute that has become effective. Rather, a referendum operates ‘to require voter ratification of measures passed but not yet in effect.’ (Westminster, supra, 204 Cal.App.3d at p. 627; see Whitmore v. Carr (1934) 2 Cal.App.2d 590, 592 [38 P.2d 802].) Indeed, a referendum petition stays the effective date of a measure that has been enacted by the legislative body. (See Elec. Code, §§ 3753, 4051.) If the voters ratify the measure, then it becomes effective; if they reject it, then it does not. This process accurately describes the operation of section 53722: if a local government passes a tax measure, voters must ratify it to make it effective.

“RPI argue that the voter approval requirement cannot be a referendum because the statutory approval process is not initiated by a petition from the people. (See Cal. Const., art. II, § 9, subd. (b) [referenda may be proposed by petition from the people]; Elec. Code, § 3753.) This argument is meritless.

“Initiatives may also be proposed by petition from the people. (Cal. Const, art. II, § 8, subd. (b); Elec. Code, § 3701; see Cal. Const., art. II, § 10, subds. (d) and (e).) Moreover, the Woodlake court observed that Proposition 62 eliminates the need for a petition by requiring automatic referenda on tax measures. ‘Nonetheless, the result is the same—approval or rejection by the voters of a legislative enactment which would otherwise become law.’ (230 Cal.App.3d at pp. 1065-1066; see id. at p. 1068; cf. Westbrook v. Mihaly (1970) 2 Cal.3d 765, 777, fn. 16, 790, fn. 48, 793-794, fn. 53 [87 Cal.Rptr. 839, 471 P.2d 487] [referring to the supermajority voter approval requirement in different articles of the California Constitution as a ‘mandatory referendum’], vacated and remanded on other grounds, Mihaly et al. v. Westbrook et al. (1971) 403 U.S. 915 [29 L.Ed.2d 692, 91 S.Ct. 2224], cert, den. (1971) 403 U.S. 922 [29 L.Ed.2d 700, 91 S.Ct. 2225].) [Fn. omitted.]

“I next observe that if, as RPI claim, the supermajority voter approval requirement is derived from the people’s initiative power, then the constitutionality of the requirement is questionable because it would conflict with article II, section 10, subdivision (a), of the California Constitution, which provides that initiative measures require only a majority vote to pass. [Fn. omitted.] (See Newport Beach Fire & Police Protective League v. City Council (1961) 189 Cal.App.2d 17, 21-23 [10 Cal.Rptr. 919] [city charter provision requiring supermajority voter approval for adoption of initiative measure is unconstitutional].)

“RPI argue there would be no conflict because ‘as to voter approval of local special taxes, Proposition 62 restates and reinforces Article XIII A, Section 4. In this respect, Proposition 62 can be deemed to implement existing constitutional language.’ (Italics in original.) This argument is irrelevant here. If Section 4 created an exception to the article II, section 10, subdivision (a), it would apply only to ‘special taxes’ levied by counties, cities, and ‘special districts’ within the meaning of Section 4. As I conclude above, [Santa Clara County Local Transportation Authority, hereafter SCCLTA] is not a ‘special district.’

“Moreover, the definition of ‘district’ in section 53722 is much broader than the definition of ‘special district’ in Section 4. (See Monterey [Penninsula Taxpayers Assn. v. County of Monterey (1992)] 8 Cal.App.4th [1520,] 1535 [11 Cal.Rptr.2d 188].) Consequently, if, as Woodlake explains, the people may not enact a statute that eliminates the constitutional restriction on their referendum power (see Geiger v. Board of Supervisors, supra, 48 Cal.2d at pp. 836-837), they may not enact a statute that expands an exception to the constitutional provision allowing approval of initiatives by a simple majority.

“RPI claim that Woodlake's view on the limits of legislation is erroneous, and they criticize its reliance on Geiger v. Board of Supervisors, supra, 48 Cal.2d at pages 836-837, quoted at [230 Cal.App.3d at page 1067]. RPI reiterate the criticism of Geiger by Justice George in his concurring opinion in Rider [v. County of San Diego (1991) 1 Cal.4th 1, 17-24 [2 Cal.Rptr.2d 490, 820 P.2d 1000], hereafter Rider]. There, he noted that the Constitution limited the people's referendum power, exempting tax measures. However, ‘[i]n view of the well-established principles concerning the breadth of the legislative power retained by the Legislature (see, e.g., Collins v. Riley (1944) 24 Cal.2d 912, 915-916 . . . ; Fitts v. Superior Court (1936) 6 Cal.2d 230, 234 . . .), and the absence of any specific constitutional provision purporting to restrict the Legislature’s authority to extend by statute the people’s referendum power, I believe the broad dictum in Geiger is questionable.’ (Rider, supra, 1 Cal.4th 1, 22 (conc. opn. of George, J.).) [Fn. omitted.]

“This criticism has no application here. Section 53722 was not an assertion of unrestricted legislative power by the Legislature but a popular initiative. The pertinent question then is whether the people can nullify by statutory initiative the constitutional limitation on their referendum power. The court in Woodlake said no: ‘It is also not permissible to achieve a prohibited purpose by disguising as an initiative a referendum addressing exempted matters. [Citations.] “A proposed initiative ordinance cannot be used as an indirect or backhanded technique to invoke the referendum process against a tax ordinance of a general law city . . . .” [Citation.] “That which the electors have no power to do directly, they obviously cannot do indirectly.” [Citation.]’ (Woodlake, supra, 230 Cal.App.3d at p. 1063; Westminster, supra, 204 Cal.App.3d at p. 628 [an initiative ‘may not be used as a substitute for an impermissible referendum’].)

“The import of the court’s language is not without ironic significance here. For while RPI claim that SCCLTA’s tax is invalid because it was imposed by an agency created to circumvent a constitutional limitation on taxes, they ask us to uphold a statutory scheme designed to circumvent the constitutional limitation on referenda.

“Citing Carlson v. Cory (1983) 139 Cal.App.3d 724 [189 Cal.Rptr. 185], RPI claim that the people’s initiative power is broad enough to do just that. However, the court in Woodlake rejected similar reliance on Carlson. ‘The Carlson court’s conclusion that initiatives are unrestricted and thus what cannot be done by referendum may be done by initiative has not been followed in other districts, and the decision has been limited in other cases. [Citations.] [*][] Even if Carlson is correctly decided, it is not controlling here. Proposition 62 does not repeal an existing statewide tax. It mandates referendums [sic] to validate future local tax ordinances. It thus effectively ties the hands of local government with respect to future budget planning. Under Geiger [v. Board of Supervisors, supra, 48 Cal.2d 832] this is constitutionally impermissible. If the proponents of Proposition 62 wish to accomplish this goal through use of referendum, they must achieve a constitutional amendment. Nothing else will suffice.’ (Woodlake, supra, 230 Cal.App.3d at p. 1068, italics in original.) [Fn. omitted.] I agree.

“Finally, RPI suggest that the policy reasons justifying the limitation on referenda do not apply to Proposition 62 and therefore the voter approval requirement is not a referendum on taxes. Again, they rely on Justice George’s concurrence in Rider. There, he explained that ‘. . . when a legislative body establishes tax levels in connection with the budget process, the governmental entity must be able to rely on the receipt of those tax revenues and cannot have the viability of such measures continually placed in doubt by the possibility that a referendum may be initiated by a relatively small percentage of the electorate. [Citations.]’ (Rider, supra, 1 Cal.4th at p. 23 (conc. opn. of George, J.).) He opined, however, that this reason does not apply to a voter-approval requirement because (1) such a requirement ‘always will be known in advance,’ (2) ‘the local legislative body will be aware that it lacks the power to levy the tax until voter approval has been obtained,’ and thus (3) ‘the local entity will not include the anticipated tax revenue in its enacted budget until after the electorate has approved the tax.’ (Ibid., italics in original.)

“I consider the voter approval requirements in Proposition 62 to be far more disruptive to the budget process than would be the possibility of referenda initiated by petition, if constitutionally permissible. The Proposition 62 requirements are mandatory and require an election for every general and special tax a local government attempts to levy. Local government officials, not the electorate, are charged with responsibility for maintaining vital public services such as public transportation. To do so, for example, they must be able to maintain existing levels of funding and find and develop new sources of revenue not only to cover the ever-growing costs associated with current operations and the replacement of aging facilities and equipment but also to finance expansion to meet increasing public need and demand for transportation services. The voter approval requirements in Proposition 62 substantially interfere[] with the ability of government to perform this essential function.

“RPI claim that ‘[t]his is not disruption, but democracy.’ Not so. In actual effect, the voter approval requirement in section 53722 mandates that a minority of the voters be given an opportunity to determine whether the government may collect a sales tax for transportation projects after the current sales tax terminates in 1995. As explained in [Los Angeles County Transportation Com. v.] Richmond [(1982) 31 Cal.3d 197, 202-208 (182 Cal.Rptr. 324, 643 P.2d 941)], this procedure is fundamentally undemocratic. This is especially so here because the majority of voters voted in favor of SCCLTA’s sales tax extension.

“In light of my discussion, I conclude that section 53722 is unconstitutional and therefore does not invalidate SCCLTA’s sales tax.”

I agree with the foregoing reasoning. Accordingly, I dissent to the majority’s holding invalidating the tax.