The Fourth District Court of Appeal’s decision in this case was a disaster for taxpayers, opening a loophole that would allow taxes proposed by initiative to be enacted without a vote of the people. When the City of Upland decided to cut its losses and admit defeat, HJTA offered to take up the case as pro bono counsel of record. The city accepted, and we petitioned the California Supreme Court for review.
The California Supreme Court granted review, which was a feat in itself. Our opening brief, the California Cannabis Coalition’s brief, and our reply were filed. We successfully solicited six amicus briefs supporting our side. One amicus brief was filed for the other side by the San Diego Chargers football team, which we answered. Oral argument was held May 30, 2017.
The California Supreme Court issued its decision on August 28, 2017. It found that the “common understanding of government does not readily lend itself to include the electorate” and that the voters of Proposition 218 were only concerned with what politicians might pass or place on the ballot. Therefore, when a local group of the electorate (which can be just 10–15%) proposes an initiative, the city council can do one of three things: adopt the ordinance without any election, schedule it right away for a special election (not waiting for a regular general election as the court of appeal had decided), or order a report and then consider adoption or a special election.
The Court has clearly ruled that taxes proposed by a voter initiative with enough signatures to secure a special election are not subject to Proposition 218’s requirement that such taxes appear on a general election ballot alongside candidates running for office. Internal inconsistencies in the opinion, however, are causing confusion and concern about whether the two-thirds vote requirement for local special taxes has been affected. If special taxes proposed by initiative can be passed with only the simple majority applicable to initiatives, then local agencies could evade Proposition 218’s two-thirds vote requirement by working through special-interest groups acting as initiative proponents. Assembly Constitutional Amendment 19 has already been introduced to close this potential loophole, and we will be monitoring its progress. Members of the Senate are planning their own amendment.
We filed a petition for rehearing with the California Supreme Court, seeking clarification that its decision applies only to the election date. The California League of Cities filed a letter in support of our petition for rehearing. The California Supreme Court denied our petition on November 1, 2017, modifying its decision only to clarify a recent legislative change. The Legislature has since changed election law so that initiative proponents may no longer request a special election, but a city council may still choose to hold one.
HJTA v. Padilla
In reaction to gas and car tax hikes, a petition to recall State Senator Josh Newman (www.firejoshnewman.com) rapidly gathered more than sufficient signatures to compel an immediate recall election. The Legislature then passed a “budget-trailer” bill, SB 96, with language expressly intended to change the Elections Code retroactively to stop the recall from happening. The Governor signed it. SB 96 unconstitutionally prohibited the Secretary of State from certifying the sufficiency of the petition, blocking the election from its proper placement on the November 2017 ballot.
Represented by Bell, McAndrews & Hiltachk, HJTA filed an original writ petition directly in the Third District Court of Appeal on July 27, 2017. Our request for an immediate stay of SB 96 was granted on August 14. The reelection should have been set to go forward.
After summer recess, the Legislature enacted the same provisions again as SB 117. We filed another writ petition directly in the court of appeal on August 28. The court of appeal issued an “alternative writ” September 1 requiring the Secretary of State to perform his ministerial duties to certify the recall petition. The court required further briefing by October 2. The state moved to have the alternative writ discharged, but the court denied their motion. Therefore, while the case was being decided, the recall process was not stopped.
The state filed a demurrer and return to the writ of mandate to which Bell, McAndrews & Hiltachk filed a thorough reply on October 17. The reply firmly advocates for the writ of mandate, asserting the people’s vested constitutional rights in the recall process and exposing the Legislature for its abuse of the term “budget bill.”
HJTA v. California Dept. of Forestry
This is the “Fire Tax” case, in which HJTA is challenging the fire prevention fee imposed on owners of habitable structures within the State Responsibility Area. We assert that the “fee” is actually a tax, and is thus invalid because it failed to receive two-thirds support in either house of the Legislature. After getting buried by more than 13,000 pages of documents in response to our first set of discovery requests, HJTA’s legal team created a spreadsheet index to use as a summary of the evidence produced.
After surviving multiple demurrers, we successfully moved for certification of the class. Thus, we were permitted to continue the case as a class action, representing all persons entitled to refunds (i.e., those who paid the “fee” and filed at least one timely petition for redetermination).
In January of 2016, the court granted our motion for approval of the form of Notice to the Class. Notice was completed via newspaper publication, direct email, and posting on the HJTA and Fire Tax Protest websites. The opt-out deadline was March 7, 2016. Eleven parcels asked to be excluded from the class, and we filed our report with the court accordingly in April 2016. We then catalogued the 13,000 pages of discovery along with seemingly infinite public reports on fire prevention and climate change. We received information from a variety of professionals. We also communicated with thousands of fee payers, resulting in hundreds of affidavits testifying to the lack of fire prevention service. Using these exhibits, we argued that as a matter of law, the fire prevention fee violates Proposition 26 as an illegal tax because it meets none of the exceptions to a tax. The superior court was scheduled to hear our motion on December 8, 2017. In response to our motion, the Attorney General fully briefed the case with extensive evidence of its own, but simultaneously moved for dismissal and the judge granted this motion. A full report on this unusual turn of events can be found here: http://firetaxprotest.org/2017/12/12/hjta-to-appeal-court-ruling-dismissing-fire-tax-lawsuit/. HJTA attorneys promptly appealed the dismissal and are hopeful for a remand.
Fortunately, our lobbying efforts had paid off earlier in 2017 when the fee was suspended starting July 1, thus minimizing the damage to rural homeowners. Litigation continues with our appeal.
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.
HJTA v. City of Pasadena
Successful settlement pending!
In this lawsuit, HJTA has been challenging Pasadena’s 25% water surcharge for nonresidents, and prosecuting this suit as a class action as well. The trial court approved a joint proposal for notifying the members of the class. The notices were mailed on October 16, 2015, and by the opt-out deadline of December 2, a total of 113 parcels asked to be excluded from the class.
Over the parties’ objections, the court ordered another round of mediation, scheduled for March 16, 2016, in the hope that the case would settle. We acted in good faith as required, but no settlement resulted.
In anticipation of the case’s going to trial, we served another round of written discovery on February 18, 2017 (interrogatories and requests for production of documents). We hired two expert witnesses, and completed our written discovery and document production. We took depositions of certain city employees and the parties’ experts, all of which went very well.
Trial was set for November 6, 2017. We reached a settlement that would require returning significant funds to ratepayers and repairing the rate structure. The Pasadena City Council then approved our settlement. We are now mutually pursuing court approval of this settlement for the class.
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.
Hickenlooper v. Kerr
This case from the 10th Circuit Court of Appeals involves a federal constitutional challenge to provisions of the Colorado State Constitution that limit the taxing authority of the Colorado Legislature by requiring voter approval of new taxes. HJTA became involved because the challenged provisions could be deemed analogous to Prop. 13. The challengers argue that, by hamstringing the Legislature, these provisions violate the Republican Form of Governance clause of the U.S. Constitution. In other words, it was argued that when voters passed a constitutional amendment requiring voter approval of new taxes, the State of Colorado no longer had a “republican” form of government.
In late November 2014, HJTA joined an amicus brief principally authored by the National Federation of Independent Business urging the U.S. Supreme Court to grant certiorari and reverse the decision of the 10th Circuit. The U.S. Supreme Court granted certiorari on June 30, 2015, but immediately remanded the case to the 10th Circuit for reconsideration in light of an Arizona redistricting case that found that a state legislature does have standing to challenge an initiative.
On remand, the 10th Circuit found that the legislator-plaintiffs had no standing, and remanded the case to the U.S. District Court for Colorado to determine if any of the nonlegislator plaintiffs had standing.
In finding that the nonlegislator plaintiffs (county commissions, boards and districts) also lacked standing, the U.S. District Court for Colorado concluded that a republican form of governance is “for the people of Colorado,” not for its political subdivisions. Political subdivisions therefore do not have a right to enforce a Constitution “republican in form.” The case was thus dismissed for lack of subject matter jurisdiction. Plaintiffs have again appealed, however, back to the 10th Circuit.
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 Prop. 218 cases that were correctly decided, but that the California Supreme Court seems poised to overturn. The parties completed their briefing. HJTA filed an amicus brief in support of the ratepayers in August 2016. We await oral argument and decision.
Jacks v. City of Santa Barbara
Pursuant to the terms of a franchise agreement between the City of Santa Barbara and private electrical utility Southern California Edison (SCE), SCE imposed on its ratepayers a one percent surcharge that it remitted to the city, which placed it into its General Fund. The surcharge was imposed after Prop. 218 became law, and was never put before the voters for approval. The Second District Court of Appeal concluded that the franchise fee was an illegal tax masquerading as a franchise fee, and thus determined that it violated Prop. 218. The California Supreme Court granted review, and limited review to the following issue: Is the City of Santa Barbara’s one percent increase on its electricity bills (i.e., the one percent surcharge) a tax subject to Proposition 218’s voter-approval requirement or a franchise fee that may be imposed by the city without voter consent?
HJTA filed an amicus brief in support of the ratepayers. The California Supreme Court issued its decision on June 29, 2017, finding the surcharge to be a valid franchise fee that may be negotiated without voter ratification and deposited in the city’s General Fund. The Court cautioned, however, that the amount of a franchise fee must not exceed the reasonable value of the easements and rights of way utilized by the franchisee. No harm done to Propositions 218 or 26.
City of San Buenaventura v. United Water Conservation District
This case challenges an extraction fee imposed by a water conservation district on well users that is designed to encourage conservation and combat saltwater intrusion from the sea caused by aquifer depletion. This fee fell primarily on the City of San Buenaventura because it uses six major wells to provide water service to its residents. The city challenged the extraction fee on the basis that groundwater management is water service within the meaning of Prop. 218, and that the fee did not satisfy the cost-of-service requirements thereof.
The Second District Court of Appeal held that the extraction fee was not a fee for a property-related service within the meaning of Proposition 218. It specifically held that groundwater management is not within the meaning of water service, directly contradicting two Sixth DCA cases. The court ruled that such fees are regulatory in nature, and thus subject to Proposition 26 instead.
The California Supreme Court granted review. The parties completed their briefing in October 2015, and HJTA filed an amicus brief in support of the city, reminding the Supreme Court that groundwater service has traditionally fallen within the purview of Proposition 218, and that under Proposition 26 it wouldnot qualify as a regulatory fee. This case was argued and submitted on September 6, 2017. On December 4, 2017, the Court issued its decision. It found that groundwater pumping is an individual privilege or benefit (not regulatory) subject to Proposition 26 rather than Proposition 218. It then remanded the case, requiring enforcement of Proposition 26’s requirement that fees be proportional to an individual user’s benefit from the groundwater pumping privileges funded by the fee. This is a very positive step forward for Proposition 26.
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.