Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2011
 

California Constitutional Provisions

Article XIII B Constitution Government Spending Limitation

Section 8

Sec. 8. Definitions. As used in this article and except as otherwise expressly provided herein:

(a) "Appropriations subject to limitation" of the state means any authorization to expend during a fiscal year the proceeds of taxes levied by or for the state, exclusive of state subventions for the use and operation of local government (other than subventions made pursuant to Section 6) and further exclusive of refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds.

(b) "Appropriations subject to limitation" of an entity of local government means any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of state subventions to that entity (other than subventions made pursuant to Section 6) exclusive of refunds of taxes.

(c) "Proceeds of taxes" shall include, but not be restricted to, all tax revenues and the proceeds to an entity of government, from (1) regulatory licenses, user charges, and user fees to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service, and (2) the investment of tax revenues. With respect to any local government, "proceeds of taxes" shall include subventions received from the state, other than pursuant to Section 6, and, with respect to the state, proceeds of taxes shall exclude such subventions.

(d) "Local government" means any city, county, city and county, school district, special district, authority, or other political subdivision of or within the state.

(e) (1) "Change in the cost of living" for the state, a school district, or a community college district means the percentage change in California per capita personal income from the preceding year.

(2) "Change in the cost of living" for an entity of local government, other than a school district or a community college district, shall be either (A) the percentage change in California per capita personal income from the preceding year, or (B) the percentage change in the local assessment roll from the preceding year for the jurisdiction due to the addition of local nonresidential new construction. Each entity of local government shall select its change in the cost of living pursuant to this paragraph annually by a recorded vote of the entity's governing body.

(f) "Change in population" of any entity of government, other than the state, a school district or a community college district shall be determined by a method prescribed by the Legislature.

"Change in population" of a school district or a community college district shall be the percentage change in the average daily attendance of the school district or community college district from the preceding fiscal year, as determined by a method prescribed by the Legislature.

"Change in population" of the state shall be determined by adding (1) the percentage change in the state's population multiplied by the percentage of the state's budget in the prior fiscal year that is expended for other than educational purposes for kindergarten and grades one to 12, inclusive, and the community colleges, and (2) the percentage change in the total statewide average daily attendance in kindergarten and grades one to 12, inclusive, and the community colleges, multiplied by the percentage of the state's budget in the prior fiscal year that is expended for educational purposes for kindergarten and grades one to 12, inclusive, and the community colleges.

Any determination of population pursuant to this subdivision, other than that measured by average daily attendance, shall be revised, as necessary, to reflect the periodic census conducted by the United States Department of Commerce, or successor department.

(g) "Debt service" means appropriations required to pay the cost of interest and redemption charges, including the funding of any reserve or sinking fund required in connection therewith, on indebtedness existing or legally authorized as of January 1, 1979, or on bonded indebtedness thereafter approved according to by a vote of the electors of the issuing entity voting in an election for that purpose.

(h) The "appropriations limit" of each entity of government for each fiscal year is that amount which total annual appropriations subject to limitation may not exceed under Sections 1 and 3. However, the "appropriations limit" of each entity of government for fiscal year 1978–79 is the total of the appropriations subject to limitation of the entity for that fiscal year. For fiscal year 1978–79, state subventions to local governments, exclusive of federal grants, are deemed to have been derived from the proceeds of state taxes.

(i) Except as otherwise provided in Section 5, "appropriations subject to limitation" do not include local agency loan funds or indebtedness funds, investment (or authorizations to invest) funds of the state, or of an entity of local government in accounts at banks or savings and loan associations or in liquid securities.

History.—The amendment of June 5, 1990, substituted "article" for "Article" after "this" in the first sentence; substituted "means" for "shall mean" after "state", deleted "of this Article" after "Section 6", added a comma after "unemployment insurance", and substituted a period for a semicolon after "insurance funds" in subdivision (a); substituted "means" for "shall mean" after "government", deleted "of this Article" after "Section 6", and substituted a period for a semicolon after "taxes" in subdivision (b); substituted "(1) for "(i)" after "from", substituted "those" for "such" after "that", substituted "that" for "such" after "by", and substituted "(2)" for "(ii)" after "and" in the first sentence, and deleted "of this Article" after "Section 6" and substituted a period for a semicolon after "subventions" in the second sentence in subdivision (c); substituted "means" for "shall mean" after " 'Local government' " and substituted a period for a semicolon after "state" in subdivision (d); added subsection number (1), added "Change in the" before " 'Cost of living' ", substituted "cost" for "Cost", substituted "for the state, a school district, or a community college district means the percentage" for "shall mean the Consumer Price Index for the United States as reported by the United States Department of Labor, or successor agency of the United States Government; provided, however, that for purposes of Section 1, the change in cost of living from the preceding year shall in no event exceed the" after "living", substituted "the" for "said" after "from", and substituted a period for a semicolon after "year" in subdivision (e)(1); added subsection (2) of subdivision (e); substituted " 'Change in population' " for " 'Population' " before "of any", added "the state, "after "other than", added "or a community college district," after "school district," and deleted ", provided that such determination shall be revised, as necessary, to reflect the periodic census conducted by the United States Department of Commerce, or successor agency of the United States Government" after "Legislature" in the first paragraph of subdivision (f); created a new second paragraph from the former second sentence of subdivision (f), and substituted " 'Change in population' " for "The population", substituted "a" for "any" after "of", added "or a community college district" after "school district", substituted "the percentage change in the" for "such school district's" after "shall be", added "of the school district . . . fiscal year," after "attendance", and substituted a period for a semicolon after "Legislature" therein; added the third and fourth paragraphs of subdivision (f); substituted "means" for "shall mean" after " 'debt service' ", added a comma after "1979", and substituted "that" for "such" after "election for" in subdivision (g); substituted "is" for "shall be" after "fiscal year", substituted "Sections" for "Section" after "under", deleted "Section" after "and", and deleted "; provided" after "3" in the first sentence, substituted "However" for "however", deleted "that" after "However," substituted "is" for "shall be" after "1978–79", substituted "the" for "such" after "limitation of" in the new second sentence, and substituted "are" for "shall be" after "grants," in the third sentence of subdivision (h); and substituted "do" for "shall" after "limitation' " in subdivision (i).

Construction.—The appropriations limit herein is based on "appropriations subject to limitation," which consists primarily of the authorization to expend during a fiscal year the "proceeds of taxes". As to local governments, limits are placed only on the authorization to expend the proceeds of taxes levied by the local government, in addition to proceeds of state subventions; no limitation is placed on the expenditure of those revenues that do not constitute "proceeds of taxes". Placer County v. Corin, 113 Cal.App.3d 443. Special assessments levied for maintaining landscaped median islands on public streets within maintenance district, assessed on a "pro-rata" rather than ad valorem basis, do not constitute "proceeds of taxes". City Council of the City of San Jose v. South, 146 Cal.App.3d 320. The increment financing in conjunction with a redevelopment agency's proposed bond issue is not an "appropriation subject to limitation" as defined in this section. Bell Community Redevelopment Agency v. Woosley, 169 Cal.App.3d 24. Subvention is required only when the costs can be recovered solely from proceeds of taxes (subdivision (c)), and pursuant to Health and Safety Code Section 33678, a redevelopment agency's tax increment may not be deemed to be the proceeds of taxes within the meaning of Article XIII B of the California Constitution. City of El Monte v. Commission on State Mandates, 83 Cal.App.4th 266.