RIVERSIDE – The California Supreme Court agreed to review a petition filed by Howard Jarvis Taxpayers Association (HJTA) on behalf of the city of Upland after a court of appeals in the 4th District, Division 2, ruled in favor of a petition filed by California Cannabis Coalition (CCC) to be exempt from Proposition 218, which grants taxpayers the right to vote on new taxes.
The lower court's ruling was made on March 18 and not only concluded that the exemption's scope included a general election timeline for indicating the most taxpayer-friendly candidates before introducing new taxes, but the entire Proposition 218. This decision, many critics and taxpayer advocates argue, allows for a loophole that would sidestep the requirement in the state's constitution to allow voters a chance to preview new tax proposals during the general election period for local governments.
CCC wanted to legalize medical marijuana dispensaries in the city of Upland so it circulated a petition that proposed an initiative to allow each dispensary to pay the city a yearly tax in the amount of $75,000. It received enough signatures to qualify its initiative for a special election, but Proposition 218 requires those new tax proposals to be identified at general elections for the city council candidates. The Right to Vote on Taxes Act was passed in 1996 in the legislature after Proposition 218 was proposed and subsequently adopted.
Meriem Hubbard is a principal attorney for the Pacific Legal Foundation. She pointed out the complexities of and political responsiveness to tax law in California.
"I do not know how many, if any, direct challenges have been brought to Prop. 218," Hubbard told the Northern California Record in an email. "It was adopted by the taxpayers in order to stop the imposition of special taxes and assessments after Proposition 13 was adopted. Proposition 26 was adopted after Prop. 218 to allow the people to vote on levies, charges or exactions. In other words, government kept changing the names of new 'taxes' in order to avoid the provisions of the preceding propositions."
Hubbard said taxpayers responded to heavy government taxation with Proposition 13 so voters could have a say in new proposed taxes. All kinds of taxpayers, regardless of political preferences, will be watching this case as it unfolds.
"There have certainly been many cases where property owners or groups dealing with tax issues (such as the Howard Jarvis folks) have sued governmental entities on the basis that new charges are subject to voter approval. Of course, the government will argue that there is some special exception. In 1973, California voters started what has been called the 'California Tax Revolt' (with Proposition 13), because they were being taxed on all sorts of things, without any say in the matter. All of these propositions allow the voters to decide on tax increases and new taxes."
HJTA is very concerned that this decision from the appeals court will leave a loophole for abuse by not allowing citizens to vote on the new proposed taxes, so much so in fact that the group is paying all legal fees out of pocket to represent the city of Upland in the case. Hubbard said the loophole is tough to depict to the average taxpayer within the context of the law.
"The loophole is a bit difficult to frame in layman terms," she said. "But the short answer is that the loophole will give local entities a way to avoid a taxpayer vote in some instances."
HJTA used the example of a city abusing the power of a simple petition to raise money for something like pay raises, and instructing city employees to organize to petition. If it collects enough signatures, 10 percent of the voting population, the initiative can be acted upon by the local municipality's city council after being verified at the Registrar of Voters. It also says the very fact the highest court agreed to look at the case means it is significant since the court only accepts a small amount of cases for review.
The Pacific Legal Foundation also approves of the court's decision to take a look.
"We are delighted that the court will review it. Pacific Legal Foundation will file a brief in support of the petitioners (city of Upland, represented by the Howard Jarvis folks)," said Hubbard.
Jones & Mayer, James R. Touchstone and Krista MacNevin Jee were the defense attorneys representing the city of Upland for the case the lower court ruled over in March. Roger Jon Diamond represented CCC.