Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2012
 

California Constitutional Provisions

Article XIII C Voter Approval for Local Tax Levies


ARTICLE XIII C Voter Approval for Local Tax Levies

[Sections 1 through 3 adopted November 5, 1996.]

Section 1. Definitions. As used in this article:

(a) "General tax" means any tax imposed for general governmental purposes.

(b) "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity.

(c) "Special district" means an agency of the State, formed pursuant to general or a special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies.

(d) "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.

(e) As used in this article, "tax" means any levy, charge, or exaction of any kind imposed by a local government, except the following:

(1) A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.

(2) A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.

(3) A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.

(4) A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property.

(5) A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law.

(6) A charge imposed as a condition of property development.

(7) Assessments and property-related fees imposed in accordance with the provisions of Article XIII D.

The local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity.

History.—The amendment of November 2, 2010 (Proposition 26), added subdivision (e).

Note.—Section 1 of Proposition 26, in effect November 3, 2010, provided the following Findings and Declarations of Purpose:

The people of the State of California find and declare that:

(a) Since the people overwhelmingly approved Proposition 13 in 1978, the Constitution of the State of California has required that increases in state taxes be adopted by not less than two-thirds of the members elected to each house of the Legislature.

(b) Since the enactment of Proposition 218 in 1996, the Constitution of the State of California has required that increases in local taxes be approved by the voters.

(c) Despite these limitations, California taxes have continued to escalate. Rates for state personal income taxes, state and local sales and use taxes, and a myriad of state and local business taxes are at all-time highs. Californians are taxed at one of the highest levels of any state in the nation.

(d) Recently, the Legislature added another $12 billion in new taxes to be paid by drivers, shoppers, and anyone who earns an income.

(e) This escalation in taxation does not account for the recent phenomenon whereby the Legislature and local governments have disguised new taxes as "fees" in order to extract even more revenue from California taxpayers without having to abide by these constitutional voting requirements. Fees couched as "regulatory" but which exceed the reasonable costs of actual regulation or are simply imposed to raise revenue for a new program and are not part of any licensing or permitting program are actually taxes and should be subject to the limitations applicable to the imposition of taxes.

(f) In order to ensure the effectiveness of these constitutional limitations, this measure also defines a "tax" for state and local purposes so that neither the Legislature nor local governments can circumvent these restrictions on increasing taxes by simply defining new or expanded taxes as "fees."

Construction.—Domestic water delivery through a pipeline is a property-related service within the meaning of Articles XIII D and XIII C, Section 3. Thus, once a property owner or resident has paid the connection charges and has become a customer of a public water agency, all charges for water delivery incurred thereafter are charges for a property-related service, whether the charge is calculated on the basis of consumption or is imposed as a fixed monthly fee. Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205. Under this article, a tax constitutes a general tax only when its revenue is placed into a general fund and is available for expenditure for any governmental purpose(s). A tax constitutes a special tax whenever the expenditure of its revenue is limited to specific purposes. Howard Jarvis Taxpayers Association v. City of Roseville, 106 Cal.App.4th 1178. All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. The two types of taxes are distinguished by the purposes for which they were imposed, not the activity or rights on which they are imposed. Therefore, the specification of the purposes for the tax is important in determining whether a tax is special or general. Neilson v. City of California City, 133 Cal.App.4th 1296.

General Tax.—A fee levied upon residential property owners engaged in the rental of their properties, and imposed for the primary purpose of recovering the cost of collecting and administering a general tax levied on those same property owners, was itself a general tax. Weisblat v. City of San Diego, 176 Cal. App. 4th 1022.

Special tax.—A city's business improvement district assessment imposed on businesses by a city ordinance pursuant to the Parking and Business Improvement Area Law of 1989, Streets and Highways Code Section 36500 et. seq., is not a special tax within the meaning of Article XIII C and Article XIII D. Howard Jarvis Taxpayers' Assn. v. City of San Diego, 72 Cal.App.4th 230. Police, fire, and parks and recreation services can be "specific purposes" when specified to voters, and not necessarily "general governmental purposes." Neilson v. City of California City, 133 Cal.App.4th 1296.

Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and distributing supplemental water for use, while not a tax or assessment, is a property-related fee or charge "imposed . . . as an incident of property ownership," and, thus, subject to constitutional preconditions for the imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.

Back to top


Sec. 2. Local government tax limitation. Notwithstanding any other provision of this Constitution. (a) All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes.

(b) No local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.

(c) Any general tax imposed, extended, or increased, without voter approval, by any local government on or after January 1, 1995, and prior to the effective date of this article, shall continue to be imposed only if approved by a majority vote of the voters voting in an election on the issue of the imposition, which election shall be held within two years of the effective date of this article and in compliance with subdivision (b).

(d) No local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved.

Construction.—A tax measure proposing to ratify an existing city utility user's tax was ineffective, since it constituted a special tax requiring approval by two-thirds of the voters but received only majority approval. Howard Jarvis Taxpayers Association v. City of Roseville, 106 Cal.App.4th 1178. A fee levied upon residential property owners engaged in the rental of their properties, and imposed for the primary purpose of recovering the cost of collecting and administering a general tax levied on those same property owners, was itself a general tax, and was void because it was not approved by a majority vote of the municipal electorate. Weisblat v. City of San Diego, 176 Cal. App. 4th 1022.

Changes in methods of calculating taxes.—A city's increased cell phone service tax, which changed the way the tax was calculated, violated Proposition 218 because the city failed to submit the increase to the voters before implementing the new tax. A local government's methodology cannot evolve. Proposition 218 does not allow a fluctuating local government tax even if the fluctuation is due to expanding constitutional boundaries. AB Cellular LA, LLC v. City of Los Angeles, 150 Cal.App.4th 747.

Payment of money judgments.—The initiative limitations on taxing and spending contained in Article XIII A, Article XIII B, and Article XIII C do not preclude judicial enforcement by writ of mandate of a judgment imposing inverse condemnation liability, an obligation imposed by statutory . Payment of such a judgment does not implement a municipal "purpose" within the meaning of the Articles' provisions; rather, such payment acts solely to vindicate the constitutional rights of the landowner. F & L Farm Co. v. City Council of the City of Lindsay, 65 Cal.App.4th 1345. This article prohibits a county from levying property taxes in excess of 1 percent to pay a money judgment under Harbors and Navigation Code Section 6361 and Government Code Sections 970 through 971. Although Section 6361 authorizes a board of supervisors to levy a special tax sufficient to meet a port district's annual estimate of the amount of money it will need "for all purposes," that statute has been superseded by the statutes implementing Proposition 13 insofar as they are inconsistent. Formulae for the distribution of tax funds to local agencies and districts have been enacted by the Legislature (Rev. & Tax. Code, Sec. 93 et seq.), and a district can no longer expect a county to levy taxes to raise whatever sum the district budget calls for. (Disapproving F & L Farm Co. v. City Council, 65 Cal.App.4th 1345 to the extent it holds to the contrary.) Ventura Group Ventures, Inc. v. Ventura Port District, 24 Cal.4th 1089.

Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and distributing supplemental water for use, while not a tax or assessment, is a property-related fee or charge "imposed . . . as an incident of property ownership," and, thus, subject to constitutional preconditions for the imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.

Sec. 3. Initiative power for local taxes, assessments, fees, and charges. Notwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives.

Construction.—This section applies to assessments, fees, and charges and not just to special and general taxes. Any levy that is ordinarily understood to be a fee or charge under Article XIII D, including all of the property-related fees and charges subject to Article XIII D, are also considered a "fee" or "charge" under this section. Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205.

Commodity charges.—Domestic water delivery through a pipeline is a property-related service within the meaning of Articles XIII D and XIII C, Section 3. Thus, under this section, an initiative may be used to reduce water delivery charges. However, this section does not authorize initiative measures that impose voter-approval requirements for future increases in fees or charges. Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205.

Back to top