The Protections Of Propositions 218 And 26
Local governments often mislabel taxes as service fees or employ artifices to exploit taxpayers’ money. Taxes and fees are often not being used as promised or intended, but instead placed in a “general fund” and spent on general government services unrelated to the service provided.
At Benink & Slavens, LLP, our mission is to expose illegal fees and taxes and hold local governments accountable to the ratepayers they serve. The people of California enacted Propositions 218 and 26 to ensure that local government agencies could no longer charge excessive fees and taxes without voter consent.
Understanding The Thrust Of Proposition 218
Proposition 218, the Right to Vote on Taxes Act, was passed by California voters in 1996. Its purpose was to tighten loopholes that local governments had exploited post-Proposition 13. It provides a number of protections that are enshrined in our state Constitution in Article XIII C and Article XIII D. These include:
Voter Approval Of Taxes
No local government – city, town, county or special district – may pass a tax without voter approval (Article XIII C, Section 2). General taxes, which are used for general governmental purposes, require majority approval of the electorate. Special taxes, which are used for special purposes, require two-thirds approval of the electorate.
Property assessments must be supported by a detailed engineer’s report that demonstrates how the properties burdened by the assessments are specifically benefited above and beyond the benefits bestowed on the public at large (Article XIII D, Section 4). Property owners paying the assessment must vote in favor of the assessment. Votes are weighted based on each property owner’s financial obligation.
Property-Related Fees And Charges
Water, sewer, and trash fees and charges are considered property-related because they are imposed as an incident of property ownership. Such fees may not exceed the cost of providing the property service, meaning government utilities may not make a profit. Revenues received cannot be used for nonutility purposes or for future services. And rates must be equitable based on the cost of providing service to each property owner [Article XIII D, Section 6(b)]. Before imposing new or increased property-related fees, the local agency must mail written notice and hold a public hearing. If a majority of property owners protest, the local agency may not pass the fees (Article XIII D, Section 6(a)).
The Protections Of Proposition 26
Proposition 26, passed in 2010, provides further protections for taxpayers. It makes any levy, charge or exaction by any state or local agency a tax, by default [Article XIII A, Section 3 (state) and Article XIII C, Section 1 (local)]. The government has to prove that the fee or charge fits into an exception (i.e., is not a tax). One of the exceptions that has been hotly litigated is whether fees for government services exceed the cost of providing the service. Many government-owned utilities embed amounts to fund transfers to the government’s general fund. Courts have grappled with complex issues arising from these practices, including how the availability of non-rate revenues (i.e., wholesale revenues) impact the analysis.
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You Can Fight City Hall. We Can Help.
Attorneys Eric Benink and Vince Slavens have 30 years of experience representing the rights of taxpayers. We understand how bureaucratic and convoluted some of these processes are. With our decades of experience and focused legal knowledge, we have built a history of success and are ready to take on complex violations of the law by overreaching local governmental entities. Call 619-369-3076 and talk to us about what is going on in your area. You can also reach out via email and we will get in touch with you.