Court of Appeal Upholds Invalidation of Parcel Tax That Differentially Taxes Commercial and Residential Property; Legislature Introduces SCA 3 To Ease Parcel Tax Restrictions

The court of appeal recently upheld its previous ruling that a parcel tax approved by Alameda Unified School District (“District”) voters violates the Government Code’s restriction that special taxes apply “uniformly to all taxpayers or all real property within the” district. On rehearing, the court of appeal upheld its previous ruling that the property classifications and differential tax burdens imposed pursuant to the voter-approved measure exceed the taxing authority of the District under section 50079 of the Government Code. The court held that the special tax imposed by the measure is invalid to the extent it imposes a different tax rate on commercial property versus residential property. (Borikas v. Alameda Unified School District (--- Cal.Rptr.3d ----, Cal.App. 1 Dist., March 6, 2013).

In response to the restrictive court of appeal decision in Borikas, legislators have introduced a bill that would ease the requirements for a school district seeking to pass a parcel tax. SCA 3 seeks to amend the California Constitution relating to taxation by amending Section 4 of Article XIIIA, adding Section 4.5 to Article XIIIA, amending Section 2 of Article XIIIC, and amending Section 3 of Article XIIID, and would reduce the voted approval needed for parcel taxes from the current two-thirds to 55 percent. The Constitutional amendment would help school districts that have been subjected to years of continued funding cuts.

Read KMTG's Legal Alert on Borikas v. Alameda Unified School District here.

Read KMTG's Legal Alert on SCA 3 here.

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Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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