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Landmark Legal Victories for Taxpayers

Nordlinger v. Hahn (1992) 505 U.S. 1. The purchaser of a house in Los Angeles County challenged the constitutionality of Proposition 13 because his property tax, based on his purchase price, was higher than his neighbors whose taxes were based on the lower prices they paid years earlier. This disparity, he argued, violated the Equal Protection Clause of the U.S. Constitution. The U.S. Supreme Court upheld Proposition 13 as constitutional.

Hoogasian Flowers v. Board of Equalization (1994) 23 Cal.App.4th 1264. Retailers sought a  refund of a parcel tax levied by a school district without the two-thirds voter approval required by Proposition 13. The school district argued it was not a “special district” because it wasn’t governed by a city or county. The court of appeal held that school districts are “special districts” subject to Proposition 13.

Rossi v. Brown (1995) 9 Cal.4th 688. San Francisco voters passed an initiative to repeal the city’s utility tax on residential users. The plaintiff sued to declare the initiative invalid, arguing that the initiative power does not extend to repealing taxes. HJTA filed an amicus brief. The California Supreme Court held that voters can use their initiative power to repeal a tax.

Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220. After a ballot measure proposing a sales tax for transportation bonds received 54% voter approval, opponents sued over whether it passed with less than two-thirds approval. The transportation Authority argued that it was not a “special district” because it never had power to levy a property tax, and the two-thirds vote requirement violated the Constitution’s delegation of taxation power to legislative representatives. The California Supreme Court held that the Authority was a “special district” and that the two-thirds vote requirement is constitutional.

Howard Jarvis Taxpayers Assn. v. Fresno Metropolitan Projects Authority (1995) 40 Cal.App.4th 1359. Fresno County voters, by a simple majority vote, approved the creation of a private “community benefit” corporation and delegated to it the power to levy a sales tax. HJTA sued over the lack of a two-thirds vote. The Authority argued it was not a “special district” because it wasn’t a governmental agency. The court of appeal held that it was a “special district” subject to the two-thirds vote requirement.

Huson v. County of Ventura (2000) 80 Cal.App.4th 1131. The county assessor ignored a homebuyer’s purchase price and instead enrolled a value that he believed better represented fair market value. HJTA sued the assessor, arguing that one’s purchase price is presumed to be fair market value unless the sale was not an arm’s length transaction. The court of appeal agreed and remanded the case to the trial court for further proceedings.

Ventura Group Ventures, Inc. v. Ventura Port District (2001) 24 Cal.4th 1089. A port district’s creditor sued the district, seeking a court order forcing the district to levy a property tax or an assessment to pay the district’s debt. The creditor argued that Proposition 13 did not repeal a statute requiring the port district to levy special taxes or assessments when necessary to pay its debts. HJTA filed an amicus brief. The California Supreme Court ruled that Proposition 13 superseded all statutes in conflict with its one percent cap on property taxes, and that an assessment solely to pay the creditor would not specially benefit property owners.

Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809. HJTA sued the City of La Habra for collecting a utility users tax imposed without voter approval in violation of Proposition 62. The city argued that the statute of limitations had expired because the tax had been enacted more than three years earlier. The California Supreme Court held that a city’s continued collection of a tax without voter approval is an ongoing violation of Proposition 62, thus the statute of limitations begins anew with each collection.

Howard Jarvis Taxpayers Assn. v. City of Roseville (2002) 97 Cal.App.4th 637. HJTA sued the City of Roseville, challenging an “in-lieu franchise fee” imposed on customers of the city’s own water, sewer and refuse collection departments. We argued that the fee was not an actual cost of providing service, but simply a General Fund revenue generator, and thus unconstitutional under Proposition 218. The court of appeal agreed and invalidated the fee.

Howard Jarvis Taxpayers Assn. v. City of Salinas (2002) 98 Cal.App.4th 1351. HJTA challenged a storm drainage fee added to sewer bills by the City of Salinas without voter approval. We argued that the storm drains in public streets are not a component of property-related sewer service, and therefore not exempt from Proposition 218’s voter-approval requirement. The court of appeal agreed and invalidated the fee.

Howard Jarvis Taxpayers Assn. v. County of Orange (2003) 110 Cal.App.4th 1375. HJTA sued to prevent a “Proposition 13 override” from being added to property tax bills in the City of Huntington Beach. The city argued it could override Prop. 13’s one-percent cap to pay its public-employee retirement debt because voters approved a pension plan prior to Prop. 13’s enactment. We argued that Prop. 13 could not be overridden for higher pension amounts, new benefits and lower retirement ages added after its enactment. The court of appeal agreed, ruling that the city could not override Prop. 13’s limit.

Howard Jarvis Taxpayers Assn. v. City of Roseville (2003) 106 Cal.App.4th 1178. Taxpayers qualified a ballot initiative to repeal Roseville’s utility users tax. The city placed a competing measure on the ballot to ratify the tax and dedicate it to “police, fire, parks and libraries.” Both measures received majority approval. The city’s measure received more votes, but less than two-thirds. HJTA sued, arguing that a tax dedicated to four specific purposes is a special tax needing two-thirds approval. The court of appeal agreed, ruling that the city’s measure failed and that the measure repealing the tax passed.

White v. Davis (2003) 30 Cal.4th 528. Due to a legislative impasse, no state budget was passed by the constitutional deadline, yet the state controller continued issuing full paychecks to state employees. HJTA argued that taxpayer dollars cannot be spent without an appropriation therefor. The California Supreme Court held that full pay must be impounded, that state employees were entitled to receive only federal minimum wage until a budget was passed.

Howard Jarvis Taxpayers Assn. v. City of Fresno (2005) 127 Cal.App.4th 914. HJTA sued the City of Fresno, challenging its assessment of a fee in lieu of property taxes on its own utility departments, which was then passed along to customers through rates. We argued that the fee was not an actual cost of providing utility services. The city argued that it was authorized by the voter-approved City Charter. The court of appeal held that the fee was not a voter-approved utility users tax, but an invalid transfer of utility revenue to the General Fund in violation of Propostion 218.

Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205. A water district sought declaratory relief against a proposed voter initiative that would reduce water rates. The district argued that Proposition 218’s initiative provision did not apply because water rates are not subject to Proposition 218. HJTA filed an amicus brief. The California Supreme Court held that rates for domestic water service are subject to Proposition 218, including its protest procedures and its initiative provision.

City of Los Angeles v. All PersonsSlam Dunk in the Trial Court
After the California Supreme Court decided Bighorn-Desert View Water Agency v. Verjil the City of Los Angeles feigned “confusion” as to the current state of the law and filed suit against all its water customers, asking the court to “validate” the continuation of its historic practice of padding water rates, accumulating a surplus, then transferring the surplus to its General Fund. HJTA alone filed an answer to the city’s lawsuit and defended the case on behalf of the city’s water customers. After a trial on stipulated facts, the court ruled in our favor. The court’s decision states, “Proposition 218 prohibits the City and its Department of Water and Power from transferring surplus revenue derived from water service fees to the City’s…General Fund, or any other fund for expenditure on non-water related purposes.”

Silicon Valley Taxpayers Assn. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431. HJTA brought this action to challenge a benefit assessment for open-space land acquisition. We argued that a countywide assessment, even if voter approved, was invalid where it was unknown which parcels might be benefited because the agency had no specific land acquisitions planned, but was simply assessing a uniform dollar amount on every parcel to build up a fund. The agency argued that the court must defer to the agency’s finding that all parcels would eventually be benefited. The California Supreme Court ruled that courts should exercise independent judgment in reviewing local property levies, and that potential future benefits of open-space land were general benefits that could not be funded by an assessment.

Howard Jarvis Taxpayers Assn. v. Bowen (2011) 192 Cal.App.4th 110. HJTA sought a court order directing the Secretary of State to remove a ballot label, title and summary written by the Legislature for its own ballot measure proposing bonds to fund high-speed rail. We argued that the Legislature had a conflict of interest preventing it from authoring impartial ballot descriptions, which in any event are entrusted to the Attorney General to write. The court of appeal held that the Political Reform Act requires the Attorney General, not the Legislature, to prepare ballot descriptions.

San Diego County Employees Retirement Assn. v. Superior Court (2011) 196 Cal.App.4th 1228. In response to Public Records Act requests for disclosure of the names and former positions of public employees collecting a pension in excess of $100,000, the retirement agency refused to comply on grounds of retiree privacy. HJTA argued that payments of taxpayer funds can never be kept private. The court of appeal ordered disclosure, ruling that public interest favored disclosure, and public pensions are not shielded by constitutional right of privacy.

Ardon v. City of Los Angeles (2011) 52 Cal.4th 241. A taxpayer lawsuit challenging application of the Los Angeles telephone users tax to cell phones was fashioned as a class action seeking refunds for all members of the class. The city argued that tax refunds must be claimed individually, they cannot be sought on behalf of a class. HJTA filed an amicus brief. The California Supreme Court ruled in favor of the taxpayers, holding that class refund claims are permissible.

Young v. Schmidt (2012) 2d Dist. Ct. of Appeal No. B230629. A former UCLA chancellor sued the clerks of the State Senate and Assembly, seeking a court order that new state taxes do not need two-thirds legislative approval because Proposition 13 was an invalid “revision” (rather than an amendment) of the state Constitution, and thus beyond the voters’ initiative power. The clerks put up no defense, but HJTA intervened. The court of appeal, in an unpublished decision, upheld Proposition 13 as a valid amendment of the Constitution.

Mission Springs Water District v. Verjil (2013) 218 Cal.App.4th 892. A water district, presented with a qualified initiative to roll back water rates, refused to call an election and instead sued the proponents to invalidate their initiative. HJTA filed an anti-SLAPP (strategic lawsuit against public participation) motion, hoping to have the case dismissed. The district cited precedent from that very court of appeal holding that the government is not subject to an anti-SLAPP motion. The court of appeal overruled its own precedent and held that government suits can be dismissed using this motion.

Capistrano Taxpayers Assn. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493. Ratepayers challenged tiered water rates in San Juan Capistrano, alleging that tiers were not based on actual costs to produce water at higher demands. The city argued that it could exercise its police power to coerce conservation by punishing water waste. As amicus, HJTA argued that Proposition 218 requires that water service be funded by fees and charges, not fines, and that all revenues derived from fees and charges be based on cost of service. The court of appeal agreed, ruling that rate tiers must be based on differences in costs, and “penalty rates” are not allowed.

Mercury Casualty Company v. City of Pasadena (2017) 222 Cal.Rptr.3d 408. An insurance company that paid many claims for property damage after a freak windstorm toppled hundreds of city-owned street trees, sued the city for reimbursement on the theory that private property damaged by public property is entitled to just compensation under the Takings Clause of the U.S. Constitution. As amicus, HJTA argued that storms are not government acts. The court of appeal agreed, holding that taxpayers need not reimburse insurance companies for acts of nature.