Taxpayer Legal Action: A Necessary Weapon

Wednesday, December 24, 2003

Page 7

IN MY OPINION (Column)

Taxpayer Legal Action: A Necessary Weapon

By JON COUPAL

(The writer is an attorney and president of the Howard Jarvis Taxpayers Association—California’s largest taxpayer organization with offices in Los Angeles and Sacramento.)

Although supported by two-thirds of the voters in 1978, Proposition 13 was not born into a friendly world. Indeed, immediately after its passage, a massive legal effort tried to kill the new law in its cradle. That effort failed as the California Supreme Court upheld Proposition 13 against a host of constitutional attacks. Since that time, the courtrooms have been major battlefields in defending taxpayer protections.

Using law books as ammunition in the fight for taxpayer rights, we have come to appreciate the little Dutch Boy. By using his finger to plug a leaking dike he was able keep the ocean out and to save his community from destruction.

Unfortunately, it often seems that the dike holding back a crushing burden of higher taxes has more leaks than taxpayer attorneys have fingers and toes. And every time one leak is plugged energetic tax raisers begin work on creating a new way to overcome the taxpayer protections provided by Proposition 13 and Proposition 218, the Right to Vote on Taxes Act, passed in 1996.

At any given time the Howard Jarvis Taxpayers Association is involved in more than a score of legal actions. The reason for so many suits is often the result of bad advice given to government officials by their own legal counsel. Some lawyers paid by the public purse have become so energetic and creative in their efforts to punch holes in Proposition 13 you’d think that there was a bounty for violating taxpayer rights.

Rumors that there is a prize to the city administration that finds the most clever way around Proposition 13 are probably unfounded, but if there were, the city of Roseville would definitely be in the running. Prior to April 2000, the City of Roseville enacted a so-called “in-lieu franchise fee” on utility users. This “fee” (which of course was never approved by the voters) was imposed on the theory that if the city were served by privately owned utility companies, the providers would be charged such a fee and that fee would be passed on to the utility users.

After five years of litigation, Howard Jarvis Taxpayers Association lawyers finally had the illegal “in lieu franchise fee” struck. In the language of the law, there was no “nexus” or connection between the amount of the fee and any particular use-caused expense, therefore the “fee” had all the characteristics of a tax requiring voter approval.

This was the taxpayers’ second victory against the City of Roseville. HJTA had won a previously lawsuit, again representing the local taxpayer group Friends of Roseville, over an illegal effort to impose a special tax without a two-thirds vote. In short, some government entities seem to go out of their way to ignore the important protections taxpayers have secured for themselves at the ballot box.

A more recent example, similar to Roseville’s “in-lieu franchise fee” case involved the City of Lancaster. There, the City Council just deliberated over an ordinance to tag apartment owners with an annual $95 per unit security “fee,” dedicated to hiring more police. The theory was the city’s crime rate had increased in the wake of an influx of renters, and, therefore, rental property owners should pay for more cops and try to get the money back in the form of higher rents. Fortunately, legal action was not required. The proposal was laid aside after a public outcry aided and abetted by Howard Jarvis Taxpayers Association. (Sometimes, just the threat of litigation can bring compliance with taxpayer protection laws).

Both the Roseville and Lancaster situations involve local governments. But Proposition 13 extends to state taxes as well because it requires a two-thirds vote of the Legislature to raise taxes. Indeed, it was the violation of this provision that is the basis of HJTA’s lawsuit against the dreaded car tax. One reason our new Governor repealed the car tax—in addition to the fact that the tax hike was simply bad policy—was the fact that the tripling of the tax was illegal. His rollback of the tax might make our lawsuit unnecessary, but we also want to make sure this kind of illegal tax hike isn’t attempted by future governors.

Another statewide taxpayer protection found in our state constitution requires a vote for going into debt over $300,000. When Gray Davis and the Legislature tried to float $2 billion (that’s billion with a “b”) in bonds to meet the pension obligations of state employees, HJTA filed suit. It didn’t take the judge too long to figure out that HJTA was right on the law, so the bonds were invalidated. That case is on appeal.

Taxpayer advocacy groups, especially HJTA, are often best known for their initiatives. But the war against higher taxes takes a triad of weapons. During the cold war, America’s nuclear capability consisted of such a triad: sea based nuclear subs, land based ICBMs and a huge air-based bomber fleet. For HJTA, our triad consists of initiatives, political action and litigation. Without all three, we would be far less effective in preserving and defending the rights of California taxpayers.