Appeals court says water districts not entitled to grants because they can levy taxes for state mandated projects

By Sandra Lane | Oct 11, 2018

SACRAMENTO – The California Third District Court of Appeal recently ruled that water districts are not prevented from levying fees in order to provide state mandated services not funded by the state.

In the appeal court decision filed Oct. 1, Justice Andrea Lynn Hoch said, “Our conclusion that Proposition 218 does not undermine the statutory authority of the water districts to levy fees to pay for the costs of complying with the Conservation Act obviates the need to consider whether the Commission on State Mandates erred in dismissing the test claims of Richvale (the Richvale Irrigation District) and Biggs (the Biggs-West Gridley Water District) on grounds Richvale and Biggs are not eligible for subvention because they do not receive tax revenues.” 

The judge said that Richvale and Biggs, along with other water districts, have statutory authority to impose or increase water fees under Water Code section 35470 in order to comply with the conservation act.

This appeal was filed by six water districts to determine under what circumstances a water district may be able to obtain a subvention (grant) for unfunded state mandates. The question posed was whether the passage of Proposition 218 prevented water districts from assessing fees for services mandated by the state, but not funded by the state. Hoch’s ruling said that water districts had the right to levy fees. 

As explained in the court’s ruling, “the water districts argue that Proposition 218 removed their prerogative to impose fees because any new fees may be defeated by a majority of their water customers filing written protests. The districts also challenge the commission’s ruling, saying it lacked jurisdiction to consider reimbursement claims by Richvale and Biggs because those two districts have not shown they collect any taxes.”

“We conclude Proposition 218 does not undermine the authority of water districts to levy fees," the ruling said. "Proposition 218 was intended to address only the imposition of taxes. Thus, the commission properly denied the reimbursement claims at issue in this case because the water districts continue to have legal authority to levy fees even if that authority is subject to majority protest of water district customers. We further conclude the commission properly rejected the claims for subvention by Richvale and Biggs. Both water districts have authority to levy fees even though these districts profess not to be able to collect taxes.  Accordingly, we affirm.”

Appellants included Paradise Irrigation District (Paradise), South Feather Water & Power Agency (South Feather), Richvale, Biggs, Oakdale Irrigation District (Oakdale) and Glenn-Colusa Irrigation District (Glenn-Colusa).

In conclusion, Hoch said, “The judgment is affirmed. Respondent Commission on State Mandates and real parties Department of Finance and Department of Water Resources shall recover their costs, if any, on appeal."

Justices Vance W. Ray and Judge M. Kathleen Butz concurred with Hoch’s ruling.

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