Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Rider v. County of San Diego . . . (1991)

The Imposition of a Sales Tax by the San Diego County Regional Justice Facility Financing Agency After Approval of the Tax by a Simple Majority of the Voters Violated Proposition 13

In 1987 the Legislature passed an act creating the San Diego County Regional Justice Facility Financing Agency. The Agency was charged with adopting a tax ordinance imposing a supplemental sales tax of one-half of 1 percent throughout San Diego County for the purpose of financing the construction of justice facilities. At an election held in June 1988, the County's voters approved the tax ordinance by 50.8 percent. The plaintiffs challenged the validity of the tax, asserting that it violated the supermajority requirements of Proposition 13 for special taxes imposed by special districts.

The Supreme Court held that a "special district" includes any local taxing agency created to raise funds for city or county purposes to replace revenues lost by reason of Proposition 13. Since the Agency was created to raise funds for county purposes and thereby circumvent Proposition 13, it was a special district.

The court further held that the sales tax was a "special tax" which it defined as a tax levied to fund a specific governmental project or program, such as the construction and financing of the County's justice facilities.

Since the Agency was a special district and the sales tax it imposed was a special tax, the imposition of the tax violated Proposition 13 which requires approval of the tax by at least two-thirds of the voters. Rider v. County of San Diego (1991) 1 Cal.4th 1.