Wilde v. City of Dunsmuir
The California Supreme Court granted review January 30, 2019, in this case concerning your right of referendum. It is similar to HJTA v. Amador Water Agency below.
The California Constitution expressly reserves your rights to voter initiative and referendum. When it comes to local water rates, you have a right to lower them via initiative (newly drafted legislation) or referendum (recall of legislation just passed by your legislative body). Under the Constitution, including Proposition 218, you share power with your local legislative body. Generally, as long as rates are not lowered to a nonfunctional level, the people’s word reigns over the legislative body’s. In other words, you are not obligated to pay for the fanciest new water system simply because your city council wants to spend your money on one.
In March 2016, the City of Dunsmuir passed a resolution raising water rates to fund an extensive upgrade. Dunsmuir is a very small city in the Shasta Cascade area with a population of just over 1,500 residents. One resident, Leslie Wilde, gathered sufficient signatures to call for a referendum of the resolution. She followed all procedures.
The city refused to put her referendum on the ballot. The city’s excuse: It claimed that voters do not possess the power to referend water rates because water rate-setting is administrative, not legislative, and because Proposition 218 — by reinforcing the voters’ right to repeal or reduce fees via initiative — impliedly denied voters the right to do so via referendum. Ms. Wilde petitioned the court. The court agreed with the city.
But the Third District Court of Appeal reversed the decision, finding correctly that Ms. Wilde’s right of referendum here is a constitutional one. HJTA is stepping in to stand up for Ms. Wilde and the voters of Dunsmuir at the California Supreme Court.
HJTA v. Chiang and the California Secure Choice Retirement Savings Program
This is a federal case challenging a new state-run retirement savings program for private employees called CalSavers. The problem: CalSavers is expressly preempted by ERISA, the federal Employee Retirement Income Security Act of 1974. There was a short-lived Department of Labor regulation under the Obama Administration that might have authorized state-run private employee retirement programs, but it was repealed by Congress in May 2017. The State Treasurer implemented CalSavers anyway.
So what’s the harm? The treasurer is wasting taxpayer funds implementing what is known to be an illegal and unnecessary program. CalSavers is a deliberately byzantine system of Roth IRAs combined with the high risks of pooling private employee funds with each other and possibly with existing public pension programs. This is dangerous for private employees. Since any person today can easily open an IRA (Roth or traditional) and set up automatic payroll debits at any bank in person, online or by telephone, CalSavers is responding to a need that doesn’t exist. CalSavers also imposes serious burdens and liabilities on private employers who are mandated to participate if they do not already have an ERISA retirement plan. These risks to employees and employers are exactly what ERISA was designed to safeguard against in a uniform nationwide fashion since 1974. CalSavers self-proclaims that ERISA doesn’t apply, but wishing doesn’t make it so. Put simply, CalSavers is illegal for many reasons established by federal law and policy, and taxpayer funds shouldn’t be wasted on it.
This case is pending before Judge Morrison England in the Eastern District Court.
HJTA v. City and County of San Francisco, and All Interested Persons
Based on a city attorney memorandum from October 2017 interpreting the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland (see below) to mean that special taxes proposed by initiative need only simple majority approval, the San Francisco Board of Supervisors declared that Proposition C, a gross receipts special tax on commercial rents, passed with only 50.87% voter approval at the June 2018 election.
On August 3, 2018, HJTA filed a reverse validation action, joined by the Building Owners and Managers Association of California, California Business Properties Association, and California Business Roundtable, alleging that two-thirds approval was required by Propositions 13 and 218.
The city admits that a supervisor was the proponent of the measure and obtained the signatures. The city knows the two-thirds vote requirement applies because it did impose that vote requirement on a competing special tax proposal to fund homeless services. In fact, it styled the competing measure the “same tax.”
HJTA v. Bay Area Toll Authority, California State Legislature
Regional Measure 3 (RM3) is a $3 toll increase on the seven state-owned Bay Area bridges that appeared on the June 5th ballot in the nine Bay Area counties. The Bay Area Toll Authority (BATA) declared that RM3 passed with 54% voter approval, but it needed the two-thirds vote required to pass a “special tax” because the revenue will be used mostly for activities unrelated to bridge maintenance (i.e., BART, MUNI, ferries, Port of Oakland, and bicycle and pedestrian trails). Our complaint also challenges SB 595, the bill that authorized BATA to propose and implement the toll increase, because it did not receive two-thirds approval in the Assembly.
This case is important to Propositions 26 and 218, and is pending trial.
HJTA v. Brown
Represented by Anthony Caso of the Chapman University Center for Constitutional Jurisprudence, HJTA and former State Senator and Judge Quentin Kopp sought a writ of mandate and a declaration that Senate Bill 1107 is invalid as a violation of the Political Reform Act, which was enacted by voter initiative. SB 1107 would allow public funds to be used for political campaigning, which we alleged is expressly prohibited by the Act as amended by Proposition 73 in 1988. While the Act permits legislative amendments that “further the purposes of the Act,” we allege that SB 1107 is at cross-purposes with the Act and therefore needed voter approval.
The Attorney General answered our complaint, and a hearing was held on August 3, 2017. The Superior Court judge asked Mr. Caso and the Deputy Attorney General four questions about the power of the Legislature versus the long-standing initiatives that for decades have established no public financing of elections and a voter approval requirement to change that rule. The judge ruled for HJTA, invalidating SB 1107 and requiring the state to disregard it. The state has appealed this decision.
HJTA v. Amador Water Agency
This lawsuit is a petition for writ of mandate asking the court to order the clerk and the board of the Amador Water Agency (AWA) to process a voter referendum and place it on the Primary Election ballot. The referendum would have submitted to the voters, for their approval or disapproval, a new rate structure adopted by the AWA Board. The referendum complied with all statutory requirements of the Elections Code, and the County Registrar of Voters verified a sufficient number of valid signatures. Despite this, the clerk sent a letter to the proponents detailing three legal theories that the agency believes justify its refusal to act. In our view, none has merit.
The trial court ruled against us, agreeing (among other things) that Proposition 218 limits voters only to the initiative power. We appealed to the Third District Court of Appeal. At this point our opening brief, the agency’s brief and our reply are filed. Amicus briefs were filed by the Association of California Water Agencies and the Metropolitan Water District in support of the agency, which we answered. Now we are waiting for the court to schedule oral argument. Now we are waiting for a decision.
Citizens for Fair REU Rates v. City of Redding
This case challenges a city-owned electrical utility surcharge imposed on its ratepayers, known as a PILOT (payment in lieu of taxes), designed to capture the ad valorem property taxes that the utility would have had to pay if it were privately owned. PILOT revenue was transferred to the city’s general fund. The city did not codify the PILOT. Rather, it was a line item in the municipal budget passed by the city council biennially. The intermediate appellate court rendered a decision in favor of the ratepayers that is perfectly in line with our Roseville, Fresno and La Habra cases. It found that the PILOT was a tax under Proposition 26 necessitating two-thirds voter approval.
Unfortunately, the California Supreme Court agreed to review this case for no good, readily apparent reason. This is one of several cases that were correctly decided, but that the California Supreme Court was poised to overturn. The parties completed their briefing. HJTA filed an amicus brief in support of the ratepayers in August 2016. Although the high court reversed the court of appeal as we expected, we breathed a sigh of relief that it did no damage to Proposition 26. It held that the PILOT (payment in lieu of taxes) was not a tax because the utility had more than enough non rate revenue to cover it, and thus its charges were not necessarily passed through to and imposed on ratepayers.
McClain v. Sav-on Drugs
Diabetics need insulin and the supplies to test their insulin levels several times a day. Since 2000, by a statutorily authorized regulation, they should not be charged sales tax on the supplies. But they have been, and the state has been content to keep tens of millions of dollars in improperly charged sales tax.
By a quirky California law, sales tax is technically paid by the retailer, not the customer. The retailer takes “reimbursement” from customers at the cash register, but the retailer is the legal taxpayer. That means the retailer is the only one who can take the state to court. But retailers have no incentive to get involved in fixing this problem. They have a statutory “safe harbor” from liability once they remit the funds.
The California Supreme Court had recently decided a similar case about coffee sales at Target, and in that case even the attorney general said what’s obvious under our quirky law: the customer needs a remedy.
We filed a letter in support of the petition for review. The Supreme Court granted review, and we filed an amicus brief in support of the diabetic plaintiffs. Oral argument occurred in December. HJTA hopes for a positive outcome for all sales taxpayers.
Plantier v. Ramona Municipal Water District
Ramona Municipal Water District uses a non volumetric EDU (equivalent dwelling unit) billing methodology for sewer services. A taxpayer made the case in court that it does not comply with Proposition 218’s proportionality requirement. The trial court found the suit barred on the ground that the plaintiff failed to exhaust administrative remedies. The water district’s argument had been that, under Proposition 218 itself, before a ratepayer can make a case about proportionality, they must have participated at the most recent public hearing for a rate increase and must have submitted a written protest at that hearing.
HJTA filed an amicus brief to argue that nonparticipation in the most recent protest proceeding for a rate increase should not bar a ratepayer from challenging the rate structure. If a rate structure is challenged as unconstitutionally disproportionate, it does not matter whether the rates were recently raised. The structure was not necessarily considered. The purpose of the exhaustion doctrine is not served by such a requirement, nor does Proposition 218 impose such a condition on access to judicial review.
The court of appeal ruled for the taxpayer in a published decision, finding no special exhaustion requirement in Proposition 218. Footnote 3 of the opinion stated, “We found the amicus brief of Howard Jarvis Taxpayers Association — the author and principal sponsor of Proposition 218 — particularly useful in resolving this case.”
The Ramona Municipal Water District petitioned the California Supreme Court for review and it was granted. HJTA filed an amicus brief in support of the court of appeal’s well-reasoned decision.
In addition to our own cases, HJTA regularly files amicus curiae briefs (“friend of the court” briefs) in cases brought by others where we have determined that the case could affect taxpayer rights. Courts have often expressed appreciation for our perspective, and the contribution that our legal analysis adds to the case.