CORRECTION: Alliance San Diego is a community organization advocating for voters. It is not associated with the hospitality industry. It sued to block Measure C on due-process grounds.
SAN DIEGO (Legal Newsline) - Amendments to the California constitution that limited property tax increases and require a two-thirds majority to pass special taxes don’t apply to voter initiatives, an appeals court ruled, rejecting challenges to a San Diego ordinance raising occupancy taxes.
California voters passed Proposition 13 in 1978 limiting property-tax increases to 2% a year. As written into the state constitution, Prop. 13 also says “any special tax imposed by a local government entity be approved by two-thirds of the qualified electors.”
San Diego voters passed Measure C in March 2020 with 65.24% of the vote, raising taxes on overnight lodgings in several districts as much as 3.25%. The ballot said the measure “requires a two-thirds vote for approval,” and city staff drafted a resolution stating the measure had failed. But by April 2021 three appeals courts had decided only a simple majority vote is required to pass a special tax if it is proposed by a citizens’ initiative.
After a year’s delay, on April 6, 2021, the San Diego City Council passed a resolution stating Measure C had passed. Alliance San Diego, a community organization, sued to block the ordinance in June 2021, arguing the delay violated the due process rights of voters. A trial court suspended the ordinance, ruling that San Diego had improperly changed the rules after the election and a two-thirds vote was required.
California’s Fourth District Court of Appeal reversed that decision in an Aug. 11 opinion. California enshrined the principle of citizen initiatives in its constitution in 2011, the court noted.
“Viewing the initiative power as a power reserved by the people, courts liberally construe this right,” the appeals court said.
The California Supreme Court in 1978 found Prop. 13 “fundamentally undemocratic” because it gave voters opposed to a local tax increase effectively double the vote of those who supported it. The court ruled cities could raise “special taxes” by a simple majority vote, not the two-thirds specified in Prop. 13. The court later applied the same reasoning to an initiative raising tobacco taxes and cannabis.
“There was no evidence voters intended to limit their own power to raise taxes because Proposition 13 was directed at politicians and aimed to restore government to the people,” the appeals court said. “The official Proposition 13 ballot materials did not indicate any intention to limit citizens’ ability to raise local taxes by initiative and to adopt the initiatives by majority vote.”
Another amendment passed after a statewide initiative, Article XIII C, section 2, says: “No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”
“Article XIII C does not include the voting electorate,” the appeals court ruled.