In 1978, California taxpayers staged a revolt against high taxes by approving Proposition 13, making it more difficult for government to raise taxes. The Proposition 13 tax revolt raised the bar for new taxes by requiring voter approval by at least a two-thirds vote. Proposition 13's strong approval prompted public officials to seek ways around the new law to satisfy their insatiable appetite for more money.
Nearly two decades later, Californians staged a second tax revolt to fix Proposition 13's loopholes. In 1996, voters overwhelmingly approved Proposition 218, called the "Right to Vote on Taxes Act." This constitutional amendment protects taxpayers by limiting the ways local government can increase taxes, fees and charges without taxpayer consent.
Specifically, Proposition 218 established new rules by which property owners could be charged more for government services through the creation of tax entities called "Benefit Assessment Districts," or BAD for short. Creating such districts permits government to levy additional charges on property owners within a geographical area, under specific conditions and for special purposes.
In a Proposition 218 BAD tax election, only property owners vote. Property owners have a vote based on the "special" benefits received by individual properties, as determined by the taxing agency. Votes cast by individual property owners are public information. A weighted majority of 50 percent plus one is required for passage.
Unsurprisingly, local government officials have tried creative ways to abuse this Proposition 218 funding mechanism, to avoid Proposition 13 voter approval requirements for new taxes.
One example of Proposition 218 abuse is found at the Rodeo-Hercules Fire District. The district recently conducted a Benefit Assessment District election of property owners, the results of which will be announced June 11. We believe the district's BAD tax does not meet the legal standards defined by Proposition 218 and the California Constitution. Legal experts at the Howard Jarvis Taxpayers Association agree.
Proposition 218 requires local agencies to define a specific benefit for each parcel of land subject to the BAD tax. Taxes for general government services are subject to Proposition 13's two-thirds voter requirements. Following passage of Proposition 218, the state attorney general determined that "no fee may be imposed for general governmental services including, but not limited to, police, fire, ambulance ..."
Thus, a fire district "benefit assessment" is prohibited by law. Fire districts may raise revenue through parcel taxes, subject to the two-thirds vote of registered voters, instead of a simple majority of the impacted property owners with a BAD tax. Abuse of Proposition 218 benefit assessment districts undermines the will of the voters and sets a dangerous precedent for the future.
Most local agency attempts to create improper BAD tax districts, to fund general services, have gone down in flames (pun intended) when heard in court. One such case was brought in 2011 against the West Point Fire Protection District in Calaveras County (Concerned Citizens for Responsible Government v. West Point Fire Protection District). The appellate court ruled that West Point violated the special benefit and proportionality requirements of Proposition 218, stating:
"Such [fire] protection cannot be quantifiably pegged to a particular property, nor can one reasonably calculate the proportionate 'special benefits' accruing to any given parcel."
The court properly concluded that fire suppression provides only general, not special, benefits. Accordingly, the court found the BAD assessment was actually a tax that required two-thirds voter approval under Proposition 13.
As in the West Point case, if the Rodeo-Hercules BAD tax is approved, it will be vulnerable to legal challenge. Other agencies considering misuse of special assessments, including the East Contra Costa Fire Protection District, should expect taxpayers to fight so-called "end runs on Proposition 13" through misuse of benefit assessment districts.
Taxpayers must remain watchful for such abuses, because government demands for tax revenue know no limit.
Ken Hambrick is chairman of the Alliance of Contra Costa Taxpayers. He is a resident of Walnut Creek.