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In My Opinion
How Property Owners Can Block New Fees
By Jon Coupal
San Diego’s proposed trash fee is currently a hot topic for city property owners as city leaders plan community meetings over the next several weeks to explain the fee and to hear from taxpayers. But everyone concerned with this issue must understand that the ability of any local government in California to impose or increase a “property related fee” is governed by provisions of the Right to Vote on Taxes Act, which California voters enacted by approving Proposition 218 in 1996.
City taxpayers probably recall that Measure B, authorizing the imposition of a trash collection fee, was approved by San Diego voters in 2022. But how Proposition 218 relates to Measure B and the city’s new proposal compels a review of both local history as well as the legal implications of imposing that fee.
More than 100 years ago, San Diego voters approved the “People’s Ordinance,” which provided for trash collection for San Diego’s single-family homes without a separate fee.
Although it also allowed for trash collection fees, none were ever proposed. The ordinance was amended on a few occasions but, for the most part, owners of single-family homes continued to receive trash collection paid out of the city’s general fund.
Measure B sought to authorize, for the first time, trash fees for those who were previously covered by the People’s Ordinance. The 2022 ballot material set forth a Fiscal Impact Statement which projected that the fee for the current level of service would range from $23 to $29 per month per customer.
Measure B passed with less than 50.5% of the vote.
To be clear, Measure B was not the approval of a trash fee and, fortunately, no one has contended as such. It was only an authorization for the city to propose a rate structure for trash collection. So, if San Diego decides to propose a trash fee, how does it comply with Proposition 218?
First, the passage of Proposition 218 was a response to several court-created loopholes in Proposition 13, the iconic tax reduction measure approved by voters in 1978. While not prohibiting new local government revenue, Proposition 218 imposes significant voter and property owner approval requirements for new and increased taxes and fees.
In addition to more stringent voter approval requirements for special and general taxes, new property owner approval procedures for so-called “benefit assessments,” Proposition 218 also governs “property related fees,” including trash pickup fees. To impose a new or increased property-related fee, Proposition 218 has a “cost of service” requirement which restricts both the use of the funds as well as the amount of the fee for each property owner or fee payor. These include:
1. Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service.
2. Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed.
3. The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.
4. No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question.
5. No fee or charge may be imposed for general governmental services.
The first two requirements prohibit the practice of siphoning off fee revenue to supplement a city’s general fund. However, “cost of service” may also include reasonable overhead expenses as well as other items on a service bill which are necessary to provide service to a particular service user.
In addition to the substantive “cost of service” requirement, Proposition 218 also requires a specific property owner approval process. Local governments must also:
• Mail information regarding the proposed fee to every property owner.
• Hold a hearing at least 45 days after the mailing.
• Reject the proposed fee if written protests are presented by a majority of the affected property owners.
If San Diego decides to proceed with the trash fee, it can expect to receive many questions from homeowners, including why the amount of the fee currently being discussed is much higher than that envisioned just a few years ago.
The city can also expect taxpayers to scrutinize the entirety of city spending, which is always a legitimate question whenever any new exaction is being proposed.
Finally, the city can expect that both local and statewide taxpayer organizations will be following this issue very closely.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.