The Proposition 62 requirement that a tax measure receive two-thirds approval by a City Council before going to voters does not apply to charter law cities, the First District Court of Appeal has ruled. Proposition 62, the "Right to Vote on Taxes Act" that state voters approved in 1986, cannot override a charter city's "core constitutional authority over the conduct of its local elections," the court ruled. The decision is the latest in a growing string of appellate court decisions regarding Proposition 62, which proponents said would close loopholes in Proposition 13 (see CP&DR Legal Digest, July 2001, October 1999, December 1995). In March 1998, the City Council in San Leandro, a city in Alameda County just south of Oakland, voted 4-3 to place on the ballot a 3% "business license fee" based on a business's gross receipts from the sale of concealable firearms and ammunition. Three months later, the majority of San Leandro voters approved the levy, known as Measure H. In July 1998, Traders Sports and several other gun dealers sued the city, alleging that the city violated Proposition 62, which requires a two-thirds vote by the legislative body for a tax measure to appear on the local ballot. The gun dealers also made a number of other arguments. Alameda County Superior Court Judge James Richman ruled for the city. On appeal, the gun dealers limited their arguments to three areas: Measure H violated Proposition 62; the levy is actually an impermissible fee that is not related to the provision of any city service; the levy violated equal protection rights. In the longer, published portion of its opinion, the First District addressed only the Proposition 62 questions. At issue was Government Code § 53724, subdivision (b). The city argued that the state constitution's home rule doctrine gives charter cities the right to adopt ordinances that conflict with general state law as long as the subject of the local ordinance is a "municipal affair" and not of "statewide concern." The city charter and municipal code say that a majority vote of the city council is sufficient to place a measure on the ballot. The gun dealers argued that when approving Proposition 62, voters were acting in an area of statewide concern. They further noted that Proposition 62, as codified in Government Code § 53720, specifically says that it applies to chartered cities and counties. The unanimous three-judge appellate panel sided squarely with the city. The state constitution "directly grants to charter cities the power and authority to legislate in four ‘core areas' that are by definition ‘municipal affairs,'" Judge Ignazio Ruvolo wrote, citing Johnson v. Bradley, (1992) 4 Cal.4th 389. The conduct of city elections is one of those four core areas. Thus, "a statute purporting to define the number of votes required for putting a local tax measure on the ballot contravenes this explicit constitutional grant of authority to charter cities, such as San Leandro, over the conduct of its municipal elections," Ruvolo wrote. The court said that Proposition 62's specific inclusion of charter cities could not stand. "[The state] Supreme Court has made it abundantly clear that even if a statute purports to apply to all municipalities throughout the state, including charter cities, it is not necessarily a general law if it does not relate to a matter of statewide concern," Ruvolo wrote, again citing Johnson. Ruvolo pointed to two other cases where courts have upheld real estate transfer taxes imposed by charter cities, even though Proposition 62 explicitly prohibited such taxes. Fielder v. City of Los Angeles, (1993) 14 Cal.App. 4th 137; Fisher v. County of Alameda, (1993) 20 Cal.App. 4th 120. The judge further noted the official analysis of Proposition 62 in the voters' handbook said that the initiative could not apply to charter cities. Moreover, the court ruled, the main goal of Proposition 62 was met: voters decided on a proposed tax increase. In the unpublished portion of the ruling, the court held that Measure H was indeed a business tax, not a fee. The levy is based on gross receipts and a business must pay it to obtain a required business license. The revenue is not earmarked for any particular fund or service. Measure H is "purely a revenue-raising measure (a tax), and not a regulatory measure (a fee)," Ruvolo wrote. The city attorney's referring to the levy as a "fee" in his ballot analysis was not enough to overturn the measure. Also in the unpublished part of the ruling, the court rejected equal protection arguments. The court held that the city treated all members of the class — gun dealers — equally. And the city could legitimately place those gun dealers in a class because of their relationship to the costs associated with the proliferation of firearms in the community, the court ruled. The Case: Traders Sports, Inc. v. City of San Leandro, No. A092448, 01 C.D.O.S. 9143, 2001 DJDAR 11409. Filed October 24, 2001. The Lawyers: For Traders Sports: James Leonard Crew, (925) 831-0834. For the city: Andrea Saltzman, Meyers, Nave, Riback, Silver & Wilson, (510) 351-4300.