Last week, the California Supreme Court denied a petition to review an important appellate decision that could pave the way for approval of local special taxes put forth by voter initiative with a simple majority vote instead of what was previously interpreted to be a two-thirds vote requirement.
CSDA shared the statewide implications of this case with our members via e-News in July, after the First District Court of Appeal in City and County of San Francisco v. All Persons Interested in the Matter of Proposition C ruled that the two-thirds voter approval requirement for local special taxes enacted by Proposition 218, a 1996 state ballot measure, applies only to taxes proposed by a government body – such as a special district board of directors – and not to initiatives placed on the ballot by citizens living within the jurisdiction. Shortly after the appellate court ruling was issued, a petition for review of the decision was filed by the Howard Jarvis Taxpayers Association and other business groups arguing that Proposition 218 requires a two-thirds approval for any tax increase. However, the petition was denied on September 9 with no comment or dissenting vote from the State Supreme Court’s Justices.
The case involves a San Francisco ballot initiative, Proposition C, brought forth by a voter group seeking to raise $250 million to $300 million per year with a tax on large corporations in order to fund programs for the homeless. The ballot measure received 61% of the vote and was deemed approved by the San Francisco City Attorney based on the interpretation of another California Supreme Court decision, California Cannabis Coalition v. City of Upland, et al., which held that a voter initiative may propose a general tax at a special election – unlike general taxes proposed by local governments, which may only be presented to voters at a general election.
The Supreme Court in Upland asserted that Proposition 218 only places limitations on local governments, and not voters’ initiative power. The court ruled that the voter initiative power may only be limited when specifically declared so – which is not currently the case under Proposition 218. Otherwise, the limitations only apply to local governments, including special districts. By extension, San Francisco argued that vote threshold constraints in Proposition 218 (much like the general election requirement) also do not apply to voter initiatives, and therefore Proposition C only required a simple majority for approval, ultimately receiving 61%.
CSDA first brought the Upland case to our members’ attention in a 2017 e-News article, noting that the vote threshold question would “likely be decided by a future court case.” It appears that the recent decision in Proposition C settles the issue for the time being, until such time another appellate court reaches a different conclusion in a future case, which could return the issue to the state Supreme Court.
For questions about this decision and how it may impact special districts, contact CSDA Deputy General Counsel Mustafa Hessabi at mustafah@csda.net.