Howard Jarvis Taxpayers Association v. County of Yuba

HOWARD JARVIS TAXPAYERS ASSOCIATION et al., Plaintiffs and Respondents, v. COUNTY OF YUBA et al., Defendants and Appellants.

C090473

California Court of Appeals, Third District, Yuba

July 22, 2021

NOT TO BE PUBLISHED

Super Ct. No. CVPT1802127

RAYE P.J.

Defendants and appellants County of Yuba and the Yuba County Board of Supervisors (collectively, County) appeal a decision by the trial court that Measure K, a sales tax ordinance approved by a majority of voters, was not a general tax but a special tax requiring a two-thirds vote under article XIII C, section 2 of the California Constitution. Measure K added to the county code the “Public Safety/Essential Services Protection Ordinance, ” imposing a 1 percent retail sales tax in unincorporated areas of the county. Plaintiffs and respondents Howard Jarvis Taxpayers Association, Charlie Mathews and John Mistler (collectively, HJTA) successfully challenged this provision in a reverse validation and declaratory relief action alleging the ordinance was invalid because Measure K proposed a special tax requiring approval by two-thirds of the electorate.

“The essence of a special tax... is that its proceeds are earmarked or dedicated in some manner to a specific project or projects.” (Neecke v. City of Mill Valley (1995) 39 Cal.App.4th 946, 956 (Neecke); Johnson v. County of Mendocino (2018) 25 Cal.App.5th 1017, 1025 (Johnson); Gov. Code, § 53721 [“Special taxes are taxes imposed for specific purposes”].) On appeal, the County contends Measure K proposed a general tax for “[g]eneral fund services like police, fire protection, administrative and social services, and economic development....” HJTA responds that Measure K proposed a special tax for the “ ‘specified purposes' of funding county ‘public safety services' and ‘essential services.' ”

We agree with the County. The terms “public safety services” and “essential services” do not constitute earmarks for specified projects. The judgment is reversed.

FACTUAL AND PROCEDURAL BACKGROUND

On November 6, 2018, Measure K was submitted on the ballot and approved by 53 percent of voters. The ballot question was stated as follows: “YUBA COUNTY PUBLIC SAFETY/ESSENTIAL SERVICES PROTECTION MEASURE. To maintain and protect essential services such as 9-1-1 emergency medical/fire response; improving wildland fire containment; maintaining 24-hours sheriff's patrol; attracting/retaining jobs businesses, and qualified sheriff deputies; and other essential services, shall the measure to establish a 1 cent sales tax of 10 years in unincorporated Yuba County providing an estimated $4, 300, 000 annually requiring accountability, citizens' oversight/audits, and all revenue controlled locally, be adopted?”

The full text of the proposed ordinance was included in the ballot pamphlet. Section 5.60.160 of the ordinance headed the “Use of Sales Tax Proceeds” provides that “[t]he Public Safety/Essential Services Protection Ordinance will provide a secure, local revenue stream to the County that shall be used entirely to maintain and improve public safety services and essential services for the benefit of the unincorporated areas of the County. All proceeds of the tax levied and imposed hereunder shall be accounted for and paid into a public safety/essential services trust fund or account designated for use by the County for such specified purposes.”

Section 5.60.170 regarding “Accountability - Citizens' Oversight Committee” establishes a five-member committee of residents of the unincorporated areas of the county “to oversee revenues received by the County from the transactions and use taxes imposed pursuant to this ordinance, and to ensure that tax revenues are used by the County in a manner consistent with the voter approved measure adopting this ordinance.” The committee is required to “review the revenue collected pursuant to this ordinance and provide an audit report on the use of that revenue to the Board of Supervisors at least annually....”

“Impartial Analysis” by the county counsel included in the ballot materials stated that “[a]pproval of Measure K would allow the County of Yuba to impose and collect from the residents and citizens of unincorporated Yuba County a 1% retail sales tax for a period of 10 years for the purpose of providing additional funding for public safety and essential services.” “The County has expressed its intent to spend [the tax revenue] on areas of public safety and essential protection services, including 9-1-1 response wildland fire containment, 24-hour Sheriff's deputy patrols, and other essential services.”

The argument in favor of Measure K in the ballot materials stated that the tax will: “Protect/maintain fire protection services [¶] Improve the ability to react to/contain wildland fires [¶] Maintain/improve emergency response times [¶] Maintain 24-hour sheriff's patrols [¶] Attract and retain businesses to the County.” The proponents further argued that Measure K would improve response times by sheriff's deputies to 911 calls and stop gang members from selling hard drugs on the streets. The proponents also maintained that “Independent Citizen Oversight and financial audits will ensure the money is spent as promised to voters.” The proponents signing the argument in favor of Measure K included the current county sheriff, a retired county sheriff, the county district attorney, a fire protection district chief, and a wildland fire victim.

The argument against Measure K stated: “Measure K is not a sales tax for public safety. Not one dime is legally dedicated to this end. Proponents of the tax increase use public safety to garner sympathy of voters.” The argument continued: “A Citizens Advisory Panel to oversee county spending has zero authority to direct tax dollars collected.” The remainder of the argument contended that the county's budget shortfalls were attributable to “rising payroll, pension and health insurance costs of county employees and Supervisors” and the electorate's only recourse “is to stop giving politicians money where we can.”

There was no rebuttal argument to the argument in favor of Measure K. The rebuttal to the argument against the measure listed a series of “facts”: the state had endangered county residents by cutting funding to prosecute crimes; an independent report warned that without Measure K “ ‘essential law enforcement services are in jeopardy' ” and response times to emergency calls are “ ‘in excess of 19 minutes, 90% of the time' ”; the local economy suffers if the county is not safe; and Measure K is fiscally responsible because “[f]unding can only be spent locally on vital services like public safety.” Proponents signing the rebuttal included a volunteer firefighter, a children's advocate, an economic development and local business advocate, a victim's rights advocate, and a taxpayer advocate and lifelong county resident. They urged: “Vote Yes on K - keep our communities safe, support volunteer firefighters, improve our local economy and make sure a sheriff's deputy, medical responder or firefighter can show up when you call!”

On December 21, 2018, HJTA filed a reverse validation action and a complaint for declaratory and injunctive relief contending the ordinance adopted by Measure K was invalid. The complaint named as defendants the County and the California Department of Tax and Fee Administration (CDTFA), the state agency that administers sales taxes. On February 19, 2019, the County answered the complaint. On the same day, the CDTFA filed a demurrer. On February 21, 2019, HJTA filed a motion for preliminary injunction. On April 24, 2019, the trial court sustained the demurrer and dismissed CDTFA. On March 26, 2019, the court denied HJTA's motion for preliminary injunction.

The parties submitted briefs on the merits to the trial court. On August 27, 2019, the trial court heard oral argument and took the matter under submission.

On September 9, 2019, the court issued a statement of decision concluding that “Measure K proposed a special tax.”

In the statement of decision, the court examined the question put to voters in the ballot materials and determined that it “clearly asks whether the voters are in favor of a tax to fund public safety services, giving specific examples. Public safety and essential services are made equivalent in status and meaning by this text.” The court also quoted section 5.60.160, the “Use of Sales Tax Proceeds” provision of the ordinance. The court found that the “ordinary and common meaning of these two portions of the ballot is that the tax revenue is dedicated to specific purposes only and not for general government purposes. In fact, at no place in the ballot is the voter plainly informed that the revenue can be used for any and all purposes.”

The trial court also cited the impartial analysis from county counsel, which the court said “unequivocally equates essential services to public safety.” Further, the court noted that “the arguments in favor of the measure authored by public safety officials overwhelmingly advocate for public safety needs.”

With respect to “economic development” included in “essential services, ” the court reasoned that “Measure K gives examples of what are traditional public safety/essential services and includes economic development (job and business attraction/retention) as an essential service. Economic development is essential to the existence of all other government services and is undoubtedly benefitted by more public safety services.”

In addition, the court noted that Measure K provides that tax revenues would be “ ‘accounted for and paid into a public safety services and essential services trust fund entirely' for ‘such specified purposes.' ” “This language assures voters that...