On August 3, the California Supreme Court issued a noteworthy decision for special districts that collect property-related fees and charges, such as water rates and utilities fees. The unanimous opinion in Wilde v. City of Dunsmuir held that water rate charges and utility fees are not subject to challenge by referendum because they fall within an exemption for “tax levies” and thus are not subject to referendum. The distinction between a referendum and an initiative is important: a referendum is a challenge by voters to an enactment already made by the legislative body, whereas an initiative is a legislative proposal placed on the ballot to be decided by voters. Most importantly, an initiative operates prospectively and is less disruptive to municipal finances than a referendum, which automatically suspends the resolution the moment signatures are certified until and unless the voters reject the referendum when it is later taken up at the ballot.
Following this decision, a resolution adopting a water rate plan or utility fee in accordance with the requirements of Proposition 218 is still subject to initiative but cannot be challenged by referendum.
CSDA first informed our members about this important case in June 2019, and is proud to have joined a coalition of local government associations to file an amicus brief to the Supreme Court in support of the City of Dunsmuir.
For a detailed analysis of the Wilde decision and its implications, read “The Worth of Water?” by Michael Colantuono from municipal law firm Colantuono, Highsmith & Whatley. Mr. Colantuono was an author of the amicus brief filed on behalf of CSDA and the local government coalition.
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