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).
At issue in this case is the validity of a parcel tax approved by District’s voters in June 2008. This measure, known as Measure H, imposes a tax on non-exempt residential parcels and commercial and industrial parcels less than 2,000 square feet at $120 per year. Commercial and industrial parcels greater than 2,000 square feet are taxed $0.15 per square foot but there is a maximum tax of $9,500 per year. There are two exemptions from the Measure H tax: Owners of single family residential units (1) who are 65 years of age or older and who live on the property as their principal residence, or (2) those who receive Supplemental Security Income for disability, regardless of age, who live on the property. Measure H has a severability clause that provides if a portion of the measure “is, for any reason, held to be unconstitutional, illegal or invalid, such decision shall not affect or impair the validity of the remaining portions of this measure.”
George J. Borikas asked the trial court to declare the special tax invalid but the trial court found in favor of the District. The court of appeal issued an opinion in which it concluded property classifications and differential tax burdens imposed under the provisions of Measure H exceed the taxing authority of the District under section 50079 of the Government Code. The court of appeal held that the judgment entered in favor of the District must be reversed in part. The court, however, concluded that the property classifications and differential tax burdens can be severed from Measure H and that the exemptions for senior and disabled taxpayers are permissible under the statute. The court of appeal granted a request for rehearing, and upheld its original conclusions.
Government Code section 50079 authorizes school districts to levy “qualified special taxes,” which are defined by section 50079, subdivision (b)(1) as “taxes that apply uniformly to all taxpayers or all real property within the school district, except that ‘qualified special taxes’ may include taxes that provide for an exemption from those taxes for taxpayers 65 years of age or older or for persons receiving Supplemental Security Income for a disability, regardless of age.” The court of appeal concluded that the Legislature did not include the language “taxes that apply uniformly to all taxpayers or all real property within the school district” “in order to acknowledge established equal protection principles.” Rather, the court concluded, “the language at issue was intended to be a constraint on the extent of the taxing authority delegated to local governments.”
The court recognized that it “was being called on to interpret statutory language enacted in a different economic era and in the wake of two of the most far-reaching tax constraining measures ever passed by the state electorate (Propositions 13 and 62), that the state has since faced crippling economic conditions, and that school districts and other local governmental entities are more dependent than ever on the revenues from special taxes.” The courts explained, however, that it is unable to “recalibrate the taxing power statutorily delegated to local entities; any adjustment in that regard must be made by the state Legislature.”
The court concluded that when the Legislature included the definitional language regarding qualified special taxes in section 50079, it intended the language to be that of limitation to which it made certain, limited exceptions. A qualified special tax imposed by a school district must “apply uniformly to all taxpayers or all real property within the school district” except in regard to certain senior and disabled taxpayers. The court of appeal concluded that Measure H exceeded the bounds of taxing power delegated to school districts by the Legislature in section 50079 because it imposes different tax rates on commercial/industrial properties over 2,000 square feet.
Measure H contains a severability clause so the court of appeal severed the higher tax on non-residential parcels from the rest of Measure H’s provisions. The court also held that the exemptions for some senior and disabled taxpayers do not exceed the statutory authority provided by section 50079.
Once again, the court affirmed in part and reversed in part the trial court’s judgment in favor of the District. The court of appeal directed the trial court to enter a judgment that declares “the special tax imposed by Measure H invalid to the extent it imposes a tax other than $120 per parcel, unless the parcel is exempt from the special tax under the provisions of the measure, in which case, no tax may be imposed.”
Senate Constitutional Amendment No. 3
For a discussion of the legislative response to this case, please see our Legal Alert entitled, “SCA 3 Proposes Constitutional Amendment To Lower Voter Approval Requirement For Parcel Taxes From Two-Thirds To 55 Percent For School Districts,” March 18, 2013.
If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.
P. Addison Covert, Constantine C. Baranoff or Meghan Covert Russell | 916.321.4500
Brett L. Price | 661.864.3800