Contact: Ron Roach (916) 441-0490
April 15, 1996
Shock waves from a landmark California Supreme Court decision late last year are still reverberating at city halls and county administration buildings throughout the state.
The high court's revival of Proposition 62, the 1986 ballot initiative that told local governments they had to consult voters before raising their taxes, is hard for city councils and boards of supervisors to swallow.
Instead of correcting their mistakes by repealing illegally imposed taxes, or asking voters to affirm continued collections of non-voted taxes, local governments' lobbyists have stormed the state Capitol. They are pushing Senate Bill 1590, by Senator Jack O'Connell, in an all-out effort to protect hundreds of non-voted taxes that bring in hundreds of millions of dollars a year.
Local governments contend the non-voted taxes, often in the form of utility user taxes or business license taxes, were adopted in good faith -- because appellate court decisions had emasculated Proposition 62.
The thrust of SB 1590 is to maintain non-voted taxes adopted between November 1986 and December 14, 1995, when the court's Santa Clara County Local Transportation Agency v. Guardino decision became final. Local governments want the court's ruling to apply prospectively, even though the court did not make that distinction.
Further, an opinion of California's legislative counsel has said that the Legislature cannot change the effective date of Proposition 62. It takes a vote of the people to amend a voter-approved ballot initiative.
It is the California Taxpayers' Association view that all local taxes imposed without voter approval since 1986 should be placed on local ballots, on or before November 5, 1996.
Representatives of cities and counties told the Senate Local Government Committee on April 10 that SB 1590 is needed to avoid calamity should these sources of revenue be cut off.
If this is true, local officials should educate voters on the consequences and gain support at the polls that would produce untainted revenues.
There also is the issue of refunds. They should not be prohibited, as SB 1590 would do. While many local governments were hit hard by the recession and property tax shifts, granting them amnesty for illegal tax actions is not the answer.
When the taxpayer is proved wrong after following court decisions, the taxpayer's liability is not forgiven. Government should play by the same rules it imposes on taxpayers.
Further, the potential for refunds may cause local officials to think twice before adopting questionable tax policies that are ruled illegal. Allowing local governments to face no consequences when their taxes are invalidated encourages them to overreach with new, expansive taxes that hurt the state's economy.
Cities and counties knew they were going against the will of the people -- 58% voted for Proposition 62 -- when they imposed non-voted tax increases. Some argue that court decisions precluded them from allowing votes on the taxes, but they could still have placed advisory measures on their ballots.
After all, what's so bad about trusting the voters?