A CAREER OF VICTORIES FOR TAXPAYERS
HJTA attorneys Tim Bittle and Laura Dougherty
This is my last time writing this column. On July 1 I handed off my title as Director of Legal Affairs to my colleague Laura Dougherty and transitioned to a semi-retirement role with Howard Jarvis Taxpayers Association.
Twenty-five years ago, Jon Coupal rescued me from a manual labor job by offering me a position with HJTA. One year earlier, when Republicans held a majority of the State Assembly, I was working as an attorney for the Assembly Natural Resources Committee. When Democrats took control in 1996, however, they fired all Republican committee employees. Unable to find work in the Capitol community, I took a job building dormitory housing at Travis Air Force Base. When Jon called, it was a godsend.
In those days, Joel Fox was the president of HJTA. Jon was the Director of Legal Affairs, and I worked under Jon. Proposition 218 had just been passed by the voters in 1996, and there was no shortage of litigation bred by resistant local agencies unwilling to submit to the voters’ will.
Some time later, Joel Fox retired and HJTA’s Board elevated Jon to president. Jon, in turn, promoted me to Director of Legal Affairs. The staff attorney’s chair in the office next to mine was filled several times by persons who had the IQ but lacked the dedication needed to effectively serve the taxpayers of California. Until I hired Laura Dougherty. HJTA’s Office of Legal Affairs will be in good hands with Laura as the new Director.
As I look back at my 25-year career with HJTA, I take pride in several landmark precedents we won. My first important victory was a case called Huson v. County of Ventura. The issue was whether county tax assessors could second-guess a homebuyer’s purchase price and instead enroll a value that the assessor believed better represented fair market value. We argued that when a home is offered for sale on the open market by a seller who is under no pressure to sell, the price he accepts from a stranger must be deemed the fair market value of that particular property. The Court of Appeal agreed and struck the Assessor’s higher valuation.
In Ventura Group Ventures, Inc. v. Ventura Port District, the question was whether Proposition 13 impliedly repealed statutes, still on the books, authorizing local agencies to levy property taxes when necessary to satisfy liabilities imposed on them by superior tiers or branches of government. The plaintiff had obtained a court judgment against the Ventura Port District and was trying to force the District to levy a property tax to pay its debt. We argued that a voter initiative like Prop. 13 cannot be expected to identify and list all of the statutes that will be in conflict with it. The California Supreme Court agreed and ruled that the provisions added to the state constitution by Prop. 13 supersede any contrary statute.
HJTA v. City of La Habra, although it involved only a procedural issue, was one of our most important victories. We 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. We argued that every new collection of an illegal tax is a new injury, triggering a new statute of limitations. The California Supreme Court agreed and held that a city’s continued collection of a tax without voter approval is an ongoing violation of the voter approval requirement, thus the statute of limitations begins anew with each collection.
In HJTA v. City of Roseville, taxpayers had qualified a ballot initiative to repeal the City’s utility users tax. The City fought back by placing 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. The City declared its measure passed. HJTA sued, arguing that dedicating the revenue to four specific purposes was not a ratification, but a new special tax needing two-thirds approval. The Court of Appeal agreed, ruling that the City’s measure failed and the measure repealing the tax passed.
In another HJTA v. City of Roseville, we challenged what Roseville called an “in-lieu franchise fee” imposed on customers of the City’s own water, sewer, and refuse collection departments. The City reasoned that, if those services were provided by private companies, the City would be able to charge them a franchise fee, and it should not be deprived of that revenue just because the City provided those services itself. We argued that the fee was not an actual cost of providing service, and thus prohibited under Proposition 218. The Court of Appeal agreed and invalidated the fee. Many cities throughout California charged similar fees and were forced to give them up.
HJTA v. City of Fresno challenged a similar widespread strategy for fleecing its own utility customers. The City collected a “fee in-lieu of property taxes” from city utility departments, which was then passed on to customers through rates. The City reasoned that, if those services were provided by private companies, the City would receive revenue from property taxes paid by the private utilities. It also argued that the fee was authorized by the City Charter, which voters approved. The Court of Appeal, however, agreed with us that the fee was not an actual cost of providing utility services, and was thus prohibited under Prop. 218.
Proposition 218 requires voter approval of all property-related fees except fees for “sewer, water, and refuse collection services.” In HJTA v. City of Salinas, the City enacted a storm drainage fee and added it to customers’ sewer bills without seeking voter approval. We sued, arguing that stormwater collection is not the same thing as sanitary sewer, which is a measurable utility service connected to the property. The Court of Appeal agreed and tossed the fee. This decision continues to restrain local agencies even though the State Legislature subsequently passed a statute declaring storm drains to be a type of “sewer” service for purposes of Prop. 218.
Proposition 13 caps property taxes at 1% of enrolled value, but allows its cap to be overridden to pay for “indebtedness” that was voter approved prior to Prop. 13’s enactment. In HJTA v. County of Orange, we sued to prevent a “Prop. 13 override” from being added to property tax bills in Huntington Beach to pay the City’s public employee retirement debt. Even though the debt was due to new pension benefits added after Prop. 13’s enactment, the City argued that voters approved a retirement “system.” The Court of Appeal agreed with us, however, ruling that Prop. 13 could be overridden only for benefits in existence at the time of voter approval.
In Silicon Valley Taxpayers Assn. v. Santa Clara County Open Space Authority, the Open Space Authority imposed a countywide assessment of a flat dollar amount on all private property to create a fund for purchasing open space whenever suitable parcels became available. HJTA sued, arguing that, even if voter approved, an assessment is not valid where it is impossible to know which parcels might be benefited because the Agency has no specific land acquisitions planned. The California Supreme Court agreed, ruling that courts should exercise independent judgment in reviewing local property levies, and that potential future benefits of unspecified projects or acquisitions are general benefits that cannot be funded by an assessment.
A victory in which I take special pride was HJTA v. Bowen, where we sued to prevent the Secretary of State from printing ballots containing a ballot question, 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. This precedent halted a growing trend of the Legislature writing the “impartial” ballot descriptions for its own measures.
San Diego County Employees Retirement Assn. v. Superior Court was another very important victory. 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 San Diego County retirement agency, along with many others to whom we made similar requests, refused to comply on grounds of retiree privacy. HJTA sued, arguing that payments of taxpayer funds can never be kept private. The Court of Appeal agreed and ordered disclosure, ruling that the public interest in transparency outweighs any privacy concerns.
HJTA had many other wins during my tenure as Director of Legal Affairs, but the cases above were milestones in steering the course of the law in the direction benefiting taxpayers. And my duties, of course, extended beyond litigation. I had the privilege of contributing to the drafting of Proposition 26, which in 2010 amended the state constitution to provide a definition of what counts as a “tax” that needs voter approval. As defined, “‘tax’ means any levy, charge, or exaction of any kind imposed by [the] government,” unless it fits one of a short list of narrow exceptions.
As comprehensive as that definition sounds, however, the courts recently created a huge loophole by ruling that special taxes proposed by a citizens’ initiative need only simple majority approval rather than two-thirds. This has led to an avalanche of new special taxes drafted and qualified by politicians, disguising them as “citizens’ initiatives.”
One of my last major efforts as HJTA’s Director of Legal Affairs was to help draft the “Taxpayer Protection and Government Accountability Act,” a proposed constitutional amendment that will not only close the loophole above, but will fix several other injustices against taxpayers that I’ve cataloged during my tenure. That measure is currently being circulated for signatures and, if all goes well, will be on the ballot in 2024. If the measure passes, it will be my crowning achievement.
Having served at a managerial level, seeing the inner workings of HJTA, I can assure our Members that HJTA’s small staff delivers more bang for your buck than most other nonprofit organizations, creating the perception among politicians and government lawyers that HJTA is much bigger than it really is. Our staff has a high level of integrity and dedication, and it has been my privilege to work with them.