California Proposition 218 (1996)

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Proposition 218 was an adopted initiative constitutional amendment in the state of California on the November 5, 1996 ballot. Proposition 218 significantly changed local government finance. Called the “Right to Vote on Taxes Act,” Proposition 218 was sponsored by the Howard Jarvis Taxpayers Association, and was drafted by attorneys Jon Coupal (the current president of HJTA) and Jack Cohen.[1]

Proposition 218 came to the rescue of Proposition 13.[2] Section 2 of Proposition 218 contains its findings and declarations: “The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent.”

Proposition 218 amended the California Constitution (adding Articles XIII C and XIII D) which, as it relates to property assessments, requires local governments to have a vote of the affected property owners for any proposed new or increased assessment before it could be levied.

One of the most sweeping provisions of Proposition 218 is Section 3 of Article XIII C which constitutionally reserves to local voters the exercise of the initiative power to reduce or repeal any local tax, assessment, fee or charge. The local initiative power under Proposition 218 is subject to a significantly reduced signature requirement which cannot exceed the requirement for statewide initiatives (5 percent of the votes for all candidates for Governor at the last gubernatorial election within the boundaries of the local agency). Exercise of the local initiative power under Proposition 218 was generally upheld by the California Supreme Court in Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th 205 (July 2006).

The local initiative power under Proposition 218 can be used to reduce or repeal local taxes like utility taxes, and also to reduce or repeal local government utility fees such as for sewer or water service. Exercise of the local initiative power under Proposition 218 gives voters a powerful tool to use such as when local government officials are not responsive to the needs of their constituents, when local voters have not previously voted on a levy, when there has been significant waste or mismanagement by a local agency, when the amount of a local levy is excessive or unreasonable, or when promises previously made by local politicians about the imposition of a levy are broken.

Proposition 218 was initially estimated to cost local governments $100 million a year, and Moody's Investors Service warned it would cause “significantly declining credit quality”.[3] Still it was considered a “sleeper” proposition as local governments were prohibited from using public funds to campaign against it, and because greater attention had been given to the Proposition 209 ban on affirmative action and the Proposition 215 medical marijuana liberalization.[4] Proposition 218 was passed[5] by California voters on November 5, 1996, and the assessments portion became effective on July 1, 1997.

Prior to Proposition 218, local governments were not required to obtain ballot approval from property owners before levying special assessments on real property; only approval by the local agency governing body was required, even if there were significant protests.

Government agencies subject to Proposition 218 are local and regional governments, including counties, cities, school districts, community college districts and special districts. The California Supreme Court interpreted Proposition 218 protections to apply to water rates, including consumption based water rates, charged by local governments.[6][7]

On April 20, 2015, the California Court of Appeal in Orange County construed Proposition 218 as prohibiting local governments from charging higher water rates on heavier water users (tiered water rates) without complying with the "cost of service" requirements under the measure.[8][9] That case decision received international coverage in the media. On July 22, 2015, the California Supreme Court denied requests by California Attorney General Kamala Harris (representing the State Water Resources Control Board) and local government interest organizations (Association of California Water Agencies, League of California Cities, and California State Association of Counties) to “depublish” the Court of Appeal’s decision which, if granted, would have precluded the case from being cited as legal precedent in similar lawsuits around the state.[10] Despite the best efforts by the state’s top lawyers and water experts to depublish the groundbreaking ruling, the California Supreme Court’s decision to keep it published means the Court of Appeal decision can continue to be cited as precedent throughout California in other lawsuits involving the legality of tiered water rates charged by other local governments.[11]

See also[edit]

References[edit]

  1. ^ Coupal & Cohen. "Water Rates Under Prop. 218". Howard Jarvis Taxpayers Association. 
  2. ^ "Propositions". Howard Jarvis Taxpayers Association. 
  3. ^ Wilson, Yumi (5 October 1996). "PAGE ONE Tax Revolt Revisits State Ballot". San Francisco Chronicle. Retrieved 21 April 2015. 
  4. ^ Lucas, Greg (6 November 1996). "Surprise win for anti-tax 218". San Francisco Chronicle. Retrieved 21 April 2015. 
  5. ^ Votes: 5,202,429 (56.55%) in favor; 3,996,702 (43.45%) against. See Statement of the Vote, page xiii.
  6. ^ [http://www.hastingslawjournal.org/wp-content/uploads/Gray-65.6.pdf Paying for Water in California ,65 Hastings L.J. 1603 (2014)}
  7. ^ Bighorn-Desert View Water Agency v. Verjil, 138 P.3d 220, 225 (Cal. 2006); Richmond v. Shasta Comm. Svcs. Dist., 83 P.3d 518, 528 (Cal. 2004)
  8. ^ Egelko, Bob (20 April 2015). "Appeals court rejects higher water rates for big users". San Francisco Chronicle. Retrieved 21 April 2015. 
  9. ^ Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano No. G048969
  10. ^ "Supreme Court Denies Request to Depublish Capistrano Ruling". Association of California Water Agencies. July 22, 2015. 
  11. ^ "California Supreme Court says Capistrano tiered water rate ruling will remain published, keeping precedent for future legal battles". Orange County Register. July 22, 2015. 

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