Howard Jarvis Taxpayers Ass'n v. Amador Water Agency

36 Cal.App.5th 279

250 Cal.Rptr.3d 171

HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Appellants,

v.AMADOR WATER AGENCY et al., Defendants and Respondents.

C082079

Court of Appeal, Third District, California.

Filed June 14, 2019

As Modified on Denial of Rehearing July 9, 2019

Howard Jarvis Taxpayers Foundation, Jonathan M. Coupal, Sacramento, Trevor A. Grimm, Los Angeles, Timothy A. Bittle, Sacramento, and Brittany A. Sitzer for Plaintiffs and Appellants.

Churchwell White, Steven G. Churchwell, Nubia I. Goldstein, and Embert P. Madison, Jr., Sacramento; Bartkiewicz, Kronick & Shanahan, Joshua M. Horowitz, Sacramento, and Andrew J. Ramos, Walnut Creek, for Defendants and Respondents.

Daniel S. Hentschke, Oceanside; Best Best & Krieger, and Kelly J. Salt, San Diego, for Association of California Water Agencies, California Association of Sanitation Agencies, California Special Districts Association, California State Association of Counties, and League of California Cities as Amici Curiae on behalf of Defendants and Respondents.

The Metropolitan Water District of Southern California, Marcia Scully, Heather C. Beatty, and Patricia J. Quilizapa, Irvine, for The Metropolitan Water District of Southern California as Amicus Curiae on behalf of Defendants and Respondents.

HULL, J.

Citizens submitted a referendum petition to challenge Amador Water Agency's Board Resolution No. 2015-19, adopting new water service rates for Agency customers. ( Cal. Const., art. II, § 9 [voters have referendum power to approve or reject state statutes except, e.g., tax levies]; Cal. Const., art. II, § 11 [referendum power may be exercised by city and county electors under procedures provided by Legislature]; Water Code App., § 95-3.8 [water agency has power to fix and collect rates and charges for its services]; Water Code App., § 95-7.3 [water agency electors have initiative and referendum powers as to agency enactments].)

The Clerk of the Agency rejected the referendum petition and refused to place it on an election ballot, on the grounds that (1) the petition was "confusing," and (2) the rate change, while subject to challenge by initiative, is not subject to referendum. ( Elec. Code, §§ 9114, 9144 - 9146 [upon presentation of valid referendum petition, board shall repeal ordinance or submit it to voters at an election].)

Appellants Howard Jarvis Taxpayers Association, Charlotte Asher, and Laura Boggs appeal from the trial court's denial of their petition for a peremptory writ of mandate ( Code Civ. Proc., § 1085 ) against Amador Water Agency, its Clerk, and its Board of Directors (collectively "the Agency"). Appellants argue (1) the Clerk exceeded her ministerial duties by declaring the petition confusing, and (2) referendum is an appropriate avenue to challenge the new water rates.

Because we must avoid deciding constitutional issues if other dispositive grounds are available ( Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220, 230, 45 Cal.Rptr.2d 207, 902 P.2d 225 ), we first address the Clerk's finding that the petition was confusing. We conclude she exceeded the scope of her ministerial duty and should have certified the referendum petition as adequate.

As to the constitutional question, we allowed amici curiae briefing to be filed in favor of the Agency by Metropolitan Water District of Southern California and a joint brief by Association of California Water Agencies, California Association of Sanitation Agencies, California Special Districts Association, California State Association of Counties, and League of California Cities.

We conclude the Resolution is not subject to referendum. We reached a different conclusion in a different case currently under California Supreme Court review. ( Wilde v. City of Dunsmuir (2018) 29 Cal.App.5th 158, review granted Jan. 30, 2019, S252915.)

Under the general constitutional referendum provision, adopted by voters and the Legislature in 1911: "The referendum is the power of the electors to approve or reject statutes or parts of statutes except urgency statutes, statutes calling elections, and statutes providing for tax levies or appropriations for usual current expenses of the State. " ( Cal. Const., art. II, § 9, subd. (a), italics added, hereafter art. II, § 9 ; Rossi v. Brown (1995) 9 Cal.4th 688, 697, fn. 3, 38 Cal.Rptr.2d 363, 889 P.2d 557 ( Rossi ) [1911 adoption].) "One of the reasons, if not the chief reason, why the Constitution excepts from the referendum power acts of the Legislature providing for tax levies or appropriations for the usual current expenses of the state is to prevent disruption of its operations by interference with the administration of its fiscal powers and policies." ( Geiger v. Board of Supervisors of Butte County (1957) 48 Cal.2d 832, 839-840, 313 P.2d 545 ( Geiger ).)

This general referendum exception ( art. II, § 9 ) also applies to local taxes by local legislative enactment. ( Cal. Const., art. 2, § 11 [Legislature may provide procedures for exercise of referendum powers by city or county electors]; Geiger, supra , 48 Cal.2d at p. 836, 313 P.2d 545 [exception from referendum for state taxes applies to local taxes].) The statutory right to referendum ( Water Code App., § 95-7.3 ) cannot afford broader rights than the constitutional provision. ( Geiger , at p. 837, 313 P.2d 545.)

While constitutional law since the 1978 passage of Proposition 13 has sharpened distinctions between "taxes" and other exactions (assessments, fees or charges) in the context of property taxes and property-related fees, those distinctions do not necessarily govern the interpretation of the general referendum provision ( art. II, § 9 ) -- which dates back to 1911 ( Perry v. Brown (2011) 52 Cal.4th 1116, 1139-1140, 134 Cal.Rptr.3d 499, 265 P.3d 1002 ) -- because the meaning of a word in one constitutional provision may differ from the same word in a different constitutional provision. ( Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205, 213-217, 46 Cal.Rptr.3d 73, 138 P.3d 220 ( Bighorn ) ["the words ‘fee’ and ‘charge,’ which appear in both articles [XIII C and XIII D], may well have been intended to have a narrower, more restrictive meaning in article XIII D"].)

At the time the voters and Legislature adopted the general referendum provision in 1911 ( Rossi, supra , 9 Cal.4th at p. 697, fn. 3, 38 Cal.Rptr.2d 363, 889 P.2d 557 ), the word "tax" generally had an inclusive definition that included exactions for assessments, fees or charges, including user fees for government services, even where they conferred a special benefit on payors that was not conferred on other citizens. (E.g., Yosemite Lumber Co. v. Industrial Acc. Commission of Cal. (1922) 187 Cal. 774, 783, 204 P. 226 [act exacting from employers a sum to be used for workers' compensation is in reality a tax under the definition that a tax "includes every charge upon persons or property, imposed by or under the authority of the legislature, for public purposes"]; Los Angeles County Flood Control Dist. v. Hamilton (1917) 177 Cal. 119, 128, 169 P. 1028 ["In its broad meaning the word [‘tax’] includes both general taxes and special assessments"].) We presume voters and legislators were aware of the inclusive use of the term "tax" at the time the general constitutional provision was adopted. ( Santos v. Brown (2015) 238 Cal.App.4th 398, 410, 189 Cal.Rptr.3d 234 ( Santos ).)

We accordingly conclude the term "tax" in the general referendum provision ( art. II, § 9 ) encompasses water service fees. Since the water fees were never subject to referendum, we do not address the Agency's arguments that the post-Proposition-13 passage of Proposition 218 (Cal. Const., arts. XIII C, XIII D) implicitly repealed a pre-existing right to challenge fees by referendum.

Our conclusion that the Agency's water user fees are "taxes" within the meaning of the general referendum provision does not mean they are taxes for other constitutional purposes. Such fees are not "taxes" for purposes of Proposition 13 or its progeny (Propositions 62, 218, and 26). (Cal. Const., art. XIII C [voter approval for local tax levies], art. XIII D [property-related fee reform].) Article XIII C, section 1, subdivision (e), expressly excludes from the term "tax" any charges for special benefits, products, or services provided directly to payors that are not provided to those not charged. Article XIII D also expressly distinguishes between taxes and assessments, fees and charges, including user fees for property-related services. ( Cal. Const., art. XIII D, §§ 2, 3, 6 ; see also, Bighorn, supra , 39 Cal.4th at p. 217, 46 Cal.Rptr.3d 73, 138 P.3d 220 [Proposition 218 allows use of the initiative power to challenge water delivery charges, which are fees or charges rather than taxes].) Our decision in this appeal has no effect on those principles.

In reaching our conclusion that the Resolution is not subject to referendum, we are mindful of our duty to construe constitutional powers liberally in favor of the people's right to exercise the reserved powers of initiative and referendum. ( Rossi, supra , 9 Cal.4th 688 at p. 695, 38 Cal.Rptr.2d 363, 889 P.2d 557.) "The initiative and referendum are not rights ‘granted the people, but ... power[s] reserved by them. Declaring it "the duty of the courts to jealously guard this right of the people" [citation], the courts have described the initiative and referendum as articulating "one of the most precious rights of our democratic process" [citation]. "[I]t has long been our judicial policy to apply a liberal construction to this power wherever it is challenged in order that the right not be improperly annulled. If doubts can reasonably be resolved in favor of the use of this reserve power, courts will preserve it." ’ [Citations.]" ( Ibid. )

We are also mindful that we must not adopt a construction of the general referendum provision that would conflict with or impede other constitutional...