Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Hoogasian Flowers, Inc. v. State Board of Equalization . . . (1994)

Sales Tax Imposed by School District Held Invalid

In 1991, the Legislature passed the Educational Financing Act, authorizing the San Francisco Unified School District and the San Francisco Community College District to create the Educational Financing Authority (EFA), for the general purpose of providing financial assistance to each school district within the city and county. The Act authorized the EFA to impose a sales tax by an ordinance approved by majority vote. Such an ordinance was approved by a majority (but less than two-thirds) of the qualified electors voting.

Plaintiffs asserted that the tax was unconstitutional under Article XIII A, section 4 of the California Constitution (Proposition 13), which requires that special taxes by special districts be approved by two-thirds of the qualified electors voting on the measure. The court of appeal held that school districts are special districts within the meaning of Proposition 13, and that a taxing agency such as the EFA, created and controlled by school districts, is a special district. The court of appeal also held that the tax at issue was a special tax. Therefore, the EFA needed two-thirds voter approval before imposing a one-quarter of one percent transactions and use tax. Since the tax did not get such a supermajority vote, the tax imposed was invalid. Hoogasian Flowers, Inc. v. State Board of Equalization (1994)
23 Cal.App.4th 1264.