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Solimar Research

Supreme Court Hoists Jarvis On Its Own Petard

William Fulton on
Aug 30, 2017

Four years ago, the California Supreme Court poked a big hole in the California Environmental Quality Act when it held that local elected officials could approve a project without any CEQA analysis if an initiative to approve the project had qualified for the ballot. The so-called “Tuolomne Tactic” was a big-blow to old-fashioned populist NIMBYism in California, using a supposedly populist tool.

That's how both Inglewood and Carson got their NFL stadiums approved so fast. More recently, developers have tried the tactic to approve a logistics center in Moreno Valley and a shopping center in Carlsbad (though that approval was overturned by a referendum).

Now the Court has used the same populist tool to poke a hole in old-fashion populist tax activism, saying that the initiative process isn’t subject to Proposition 26, the 1996 ballot measure that sought to restrain tax increases by subjecting them to a vote. And, ironically, the Supreme Court’s ruling used Proposition 26’s own language to create a possible loophole that would permit taxes to be raised in a locality without a vote – if the tax increase is brought forth via initiative. It’s a blow to the Howard Jarvis Taxpayers Association – and maybe the organization’s fault as well.

It’s the same interplay with the Elections Code that we saw in the Tuolomne case. Because Elections Code 9212 permits local elected officials to simply enact an initiative rather than put in on the ballot, taxes could be raised without any vote at all under certain circumstances since Proposition 13 doesn’t apply.

The ruling also holds out the possibility that a special tax increase brought forth by initiative could pass with a simple majority vote rather than the two-thirds vote called for under Proposition 13. Indeed, this is almost certainly the reason that the Chargers football team joined the case on an amicus basis. Before they left San Diego for Los Angeles, the Chargers were looking at all options for financing a new football stadium and were struggling to make a deal with the city.

The majority ruling of the Supreme Court – written by Justice Tino Cuellar, a recent Brown appointee – rests on what seems, at least to me, to be a weird interpretation of California’s constitutional provisions on initiative and referendum: The idea the voters and the local government are two different things. The argument appears to be that when the voters step into the shoes of the elected officials, they are some how not acting as the local government.

The whole point of the initiative process is to allow voters to step into the shoes of elected officials (the state legislature, county boards of supervisors, and city councils) and enact legislation that has exactly the same legally binding power. If voters in San Diego approve an increase in the hotel tax to pay for the new Chargers stadium, isn't that exactly the same thing as if the San Diego City Council or San Diego County Board of Supervisors approving such a tax?

Well, no, according to the California Supreme Court. An initiative isn’t an action undertaken by the local government, which is not the “municipal corporation and body politic” (as dissenter Justice Leondra Kruger argued) but an array of elected officials and bureaucrats occupying City Hall. “A contrary conclusion,” wrote Cuellar for the majority, “would require an unreasonably broad construction of the term ‘local government’ at the expense of the people’s constitutional right to direct democracy, undermining our longstanding and consistent view that courts should protect and liberally construe it.”

And here is where the Howard Jarvis Taxpayers Association – which unsuccessfully sought to defend Upland in the case – got hoisted on its own petard, as it were. Exhibit A in Cuellar’s argument is the plain language of Proposition 218 itself – language which seems to suggest that citizens, especially taxpayers, are separate from the government. Proposition 218 itself says: “This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers.”

For decades, the Howard Jarvis group and other taxpayer organizations have argued that the government has gotten out of control – that it is a kind of “deep state” that must be reigned in by voters, because government has gone off on its own as a separate, largely unaccountable entity. Now, at last, the Supreme Court – in an opinion written by a Latino appointee of Jerry Brown – has agreed. Even though the initiative process is set up so voters step into the shoes of elected officials to enact legislation, somehow or other those voters are a different entity than the elected officials.

And the loser is the Howard Jarvis Taxpayers Association. Because the end result of all this litigation is that you can use the initiative process to pass a tax without a vote or with a simple majority vote instead of the two-thirds supermajority the Jarvis people love.

You can see advocates for transportation, open space, and affordable housing jumping on this one all over the state. Transportation agencies, for example, have struggled for decades with passing or renewing their half-cent sales taxes because they need a two-thirds vote. A simple majority would be so much easier. But it also takes the bat out of the hands of elected officials acting in their official capacity - and probably creates a legal mess as to how involved those elected officials can get in drafting the initiative. Could a county transportation commission, for example, draft a wish list of transportation projects to be funded by a tax - and then let a group of prominent citizens place it on the ballot via initiative? Yikes. A typical California problem.

Meanwhile, if what you want to do is raise taxes and then build something with the money, life keeps getting easier. If you go the initiative route, you can raise taxes without the two-thirds vote that those pesky right-wingers like – even without a vote at all -- and then build the project without a CEQA analysis that those pesky left-wingers like. Whether anybody thinks all this is worth doing for anything other than a football stadium remains to be seen. 

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