Laws, Regulations & Annotations
Property Taxes Law Guide – Revision 2016
California Constitutional Provisions
Article XIII B Constitution Government Spending Limitation
Sec. 6. State subvention of funds. (a) Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State shall provide a subvention of funds to reimburse that local government for the costs of the program or increased level of service, except that the Legislature may, but need not, provide a subvention of funds for the following mandates:
(1) Legislative mandates requested by the local agency affected;
(2) Legislation defining a new crime or changing an existing definition of a crime; or
(3) Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975.
(4) Legislative mandates contained in statutes within the scope of paragraph (7) of subdivision (b) of Section 3 of Article I.
(b) (1) Except as provided in paragraph (2), for the 2005–06 fiscal year and every subsequent fiscal year, for a mandate for which the costs of a local government claimant have been determined in a preceding fiscal year to be payable by the State pursuant to, the Legislature shall either appropriate, in the annual Budget Act, the full payable amount that has not been previously paid, or suspend the operation of the mandate for the fiscal year for which the annual Budget Act is applicable in a manner prescribed by .
(2) Payable claims for costs incurred prior to the 2004–05 fiscal year that have not been paid prior to the 2005–06 fiscal year may be paid over a term of years, as prescribed by .
(3) Ad valorem property tax revenues shall not be used to reimburse a local government for the costs of a new program or higher level of service.
(4) This subdivision applies to a mandate only as it affects a city, county, city and county, or special district.
(5) This subdivision shall not apply to a requirement to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree, or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employment and that constitutes a mandate subject to this section.
(c) A mandated new program or higher level of service includes a transfer by the Legislature from the State to cities, counties, cities and counties, or special districts of complete or partial financial responsibility for a required program for which the State previously had complete or partial financial responsibility.
History.—The amendment of November 2, 2004, added subdivisions (b) and (c). The amendment of June 3, 2014, (Proposition 42) added paragraph (4) to subdivision (a).
Construction.—The purpose of this section is to preclude the State from shifting financial responsibility for carrying out governmental functions to local agencies, which are ill-equipped to assume increased financial responsibilities because of the taxing and spending limitations imposed by Articles XIII A and XIII B of the California Constitution. San Diego County v. State of California, 15 Cal.4th 68; Department of Finance v. Commission of State Mandates, 30 Cal.4th 727. The goal of Articles XIII A and XIII B of the California Constitution is to protect California residents from excessive taxation and government spending. A central purpose of this section of Article XIII B is to prevent the State's transfer of the cost of government from itself to the local level. Redevelopment Agency v. Commission on State Mandates, 55 Cal.App.4th 976. Proper construction of provision that reimbursement of local governments was required for any "new program or higher level of service" mandated by the state, but permissive for legislative mandates enacted prior to January 1, 1975, effective on July 1, 1980, was, for legislative mandates enacted between January 1, 1975, and July 1, 1980, that reimbursement was required but did not have to begin until the statute's effective date. City of Sacramento v. State of California, 156 Cal.App.3d 182. Local governments are not entitled to reimbursement for all increased costs mandated by state , only for those costs resulting from a new program or an increased level of service imposed upon them by the state. City of Richmond v. Commission on State Mandates, 64 Cal.App.4th 1190. A 1995 amendment to Penal Code Section 13519, which required local enforcement officers to receive domestic violence training, did not result in a reimbursable state-mandated program within the meaning of this Section. Training was already required, and the amendment did not mandate a "higher level of service". Los Angeles County v. Commission on State Mandates, 110 Cal.App.4th 1176. Costs incurred in providing state-mandated increases in unemployment insurance benefits but not reimbursed cannot be recaptured by judicial action. This section does not authorize courts to act if the Legislature fails to appropriate funds, and to order the Legislature to appropriate funds would constitute an unful judicial usurpation of the Legislature's exclusive power and discretion to appropriate state money. City of Sacramento v. California State Legislature, 187 Cal.App.3d 393. A "new program", for purposes of determining whether the program is subject to subvention under this section, is one which carries out the governmental function of providing services to the public, or s which, to implement a state policy, impose unique requirements on local governments and do not apply generally to all residents and entities in the state. Thus, costs incurred in providing state-mandated increases in workers' compensation benefits are not reimbursable under this section since workers' compensation is not a program administered by local agencies to provide service to the public. Los Angeles County v. State of California, 43 Cal.3d 46. Costs incurred as the result of increased employer contribution rates to the Public Employees' Retirement System, attributable to transfers of reserve funds to a special temporary benefits fund pursuant to an act of the Legislature, are not reimbursable under this section. Bearing costs of employment is not a "service" that the city is required by state to provide in its governmental function. City of Anaheim v. State of California, 189 Cal.App.3d 1478. Legislation defining a new crime or changing the definition of an existing crime is expressly excluded from the operation of this section by subdivision (b) thereof. Contra Costa County v. State of California, 177 Cal.App.3d 62. Statute authorizing counties to seek reimbursement from cities and other local entities for costs of booking into county jails persons who had been arrested by employees of the cities and the other entities does not establish a new program or higher level of service and does not shift costs so as to constitute a state "mandate" within the meaning of this section. City of San Jose v. State of California, 45 Cal.App.4th 1802. Legislation requiring local redevelopment agencies to contribute to a local Educational Revenue Augmentation Fund (ERAF) did not constitute a reimbursable state mandate under this section. A utilization of local property taxes in support of schools and community colleges was not a new program imposed by the state. Rather, the legislation was, in part, an exercise of the Legislature's authority to apportion property tax revenues. City of El Monte v. Commission on State Mandates, 83 Cal.App.4th 266. Statutes requiring school site councils and advisory committees for certain educational programs to provide notice of meetings and to post agendas for those meetings do not constitute a reimbursable state mandate. The claimants could not show that they were legally compelled to incur notice and agenda costs. Department of Finance v. Commission on State Mandates, 30 Cal.4th 727.
State executive orders requiring provision of protective clothing and equipment to county fire fighters constitute the type of "new program" that is subject to subvention. Fire protection is a peculiarly governmental function; and the orders manifested a state policy, imposed unique requirements on local governments, and applied only to those involved in fire fighting. Carmel Valley Fire Protection District v. State of California, 190 Cal.App.3d 521. A school district was entitled to reimbursement pursuant to this section for expenditures related to its efforts to alleviate racial and ethnic segregation in its schools, since an executive order, in the form of State Department of Education regulations, required a higher level of service and constituted a state mandate. The requirements of the order went beyond constitutional and case requirements in that they required specific actions to alleviate segregation. Long Beach Unified School District v. State of California, 225 Cal.App.3d 155. To the extent the state implemented the 1975 amendments to the federal Education of the Handicapped Act by freely choosing to impose new programs or higher levels of service upon local school districts, the costs therefor were state mandated and subject to subvention under this section. Hayes v. Commission on State Mandates, 11 Cal.App.4th 1564. The Legislature's 1982 exclusion of medically indigent adults from the Medi-Cal program resulted in the transfer of responsibility for providing health care for such persons to counties and, thereby, mandated a reimbursable new program under this section. Although the counties had originally shared Medi-Cal costs with the State, in 1979 the State permanently assumed the counties' share and, therefore, the subsequent shifting of the entire cost of health care for medically indigent adults to the counties in 1982 constituted a new program. Furthermore, the counties did not have discretion to deny eligibility or provision of services but instead were obligated by State to provide a minimal standard of health care to persons whose eligibility was established by statute. San Diego County v. State of California, 15 Cal.4th 68. A school district was entitled to reimbursement pursuant to this section for all costs incurred in carrying out the state mandate on mandatory expulsions since the mandatory expulsion of a student for possession of a firearm is a state mandate that does not implement a federal mandate, and no exception to the constitutional reimbursement requirement was applicable. Further, costs incurred in complying with state-mandated procedures for conducting discretionary student expulsions were reimbursable to the extent those procedures exceeded federal due process requirements. San Diego Unified School District v. Commission on State Mandates, 99 Cal.App.4th 1270.
In a class action by a city on behalf of all local governments in the state against the state, in which it was alleged that Stats. 1978, Ch. 2, extending mandatory coverage under the state's unemployment insurance to include state and local governments and nonprofit corporations, mandated a new program or higher level of service on local agencies for which reimbursement by the state was required under Article XIII B, the trial court did not err in granting summary judgment for the state on the ground that the local costs of providing such coverage were not subject to subvention under Article XIII B or parallel statutes. The state had not compelled provision of new or increased "service to the public" at the local level, nor had it imposed a state policy "uniquely" on local governments. City of Sacramento v. State of California, 50 Cal.3d 51. The requirements of Penal Code Section 987.9, funding by court for defense preparation for indigent defendants in capital cases, are not state mandated since, even in the absence of statute, counties would be responsible for providing services under federal constitutional guarantees. And even assuming that the provisions of the statute constitute a new program, it does not necessarily mean that the program is a state mandate. If a local entity has alternatives under the statutes other than the mandated contribution, that contribution does not constitute a state mandate. Los Angeles County v. Commission on State Mandates, 32 Cal.App.4th 805. State is not required by this section to reimburse county for costs incurred in implementing the Hazardous Materials Release Response Plans and Inventory Act (Health & Safety Code, Section 25500 et seq.) where county had the authority to charge fees to pay for the program. State is not required to reimburse water districts for costs incurred as the result of a statewide regulatory amendment which increases the level of purity required when reclaimed wastewater is used for certain types of irrigation, where the water districts have the authority (Water Code Section 35470) to levy fees to pay for the program. Connell v. Superior Court, 59 Cal.App.4th 382. Government Code Section 17556(d), which provides that costs are not state-mandated if agency has authority to levy charge or fee sufficient to pay for program, is constitutional. Fresno County v. State of California, 53 Cal.3d 482.
Government Code Section 17556(d), which provided that a cost was not mandated by the state where a local agency or school district has authority to levy fees sufficient to pay for a mandated program, did not conflict with this section, since nothing in the constitutional provision precluded the Legislature from enlarging the exceptions consistent with the initiative's purpose, and the ballot material available to the voters indicated that user fees were not within the scope of the initiative. San Bernardino County v. State of California, 227 Cal.App.3d 1115. Administrative procedures established by the Legislature in Government Code Section 17500 et seq., which are available only to local agencies and school districts directly affected by a state mandate, are the exclusive means by which the state's obligations under this section are to be determined and enforced. Because the right involved is given by the Constitution to local agencies and school districts, not individuals either as taxpayers or as recipients of government benefits and services, the statutory scheme adequately implements the section and, as enacted, does not encompass individuals. Kin v. State of California, 54 Cal.3d 326.
School districts seeking reimbursement for costs of a state mandated desegregation program waived their nonstatutory remedy for reimbursement of their costs incurred after the Legislature deleted funds in a claims bill to pay for the costs, since their statutory cause of action under Government Code Section 17612 accrued on that date and they could have avoided the imposition of state-mandated costs at any time after that cause of action accrued by timely use of the statutory remedy. Berkeley Unified School District v. State of California, 33 Cal.App.4th 350.
Judicial review.—The question of whether a is a state-mandated program or higher level of service under this section is a question of that is reviewed de novo. City of Richmond v. Commission on State Mandates, 64 Cal.App.4th 1190.
Legislative Counsel's analysis.—The Legislature has authorized the Commission on State Mandates, subject to judicial review, to determine what constitutes a state mandate. The initial determination by Legislature Counsel in a bill analysis is not binding on the Commission. City of Richmond v. Commission on State Mandates, 64 Cal.App.4th 1190; San Diego Unified School District v. Commission on State Mandates, 99 Cal.App.4th 1270.
Educational Revenue Augmentation Funds.—The 1992 legislation which reduced property taxes previously allocated to local governments and simultaneously placed an equal amount of property tax revenues into Educational Revenue Augmentation Funds (ERAF's) for distribution to school districts did not entitle counties to reimbursement under this section, since the legislation did not amount to the imposition of a state-mandated program or higher level of service. The legislation did not result in increased actual expenditures, and this section is expressly concerned with "costs" incurred by local government as a result of state-mandated programs. No duty of subvention is triggered where the local agency is not required to expend its tax proceeds.
Also, Proposition 98, which amended Article XVI, Section 8 of the Constitution to provide a minimum level of funding for schools, conferred no right of subvention on counties so as to require reimbursement under this section. It merely provides the formula for determining the minimum to be appropriated every budget year. Proposition 98 does not appropriate funds or result in some mandated county program or higher level of service that the counties had not previously supported through property tax allocations. The power to appropriate funds was left in the hands of the Legislature. Sonoma County v. Commission on State Mandates, 84 Cal.App.4th 1264.
Tax revenues.—Although this section does not expressly discuss the source of funds used by an agency to fund a program, the historical and contextual context of the section demonstrates that it applies only to costs recovered solely from tax revenues, which revenues do not include tax increment financing. Redevelopment Agency v. Commission on State Mandates, 55 Cal.App.4th 976.
No exception for Regional Water Boards.—The California Courts of Appeal held that Government Code section 17516, subdivision (c) is unconstitutional to the extent it exempts Regional Water Boards from the constitutional state mandate subvention requirement and to the extent it excludes "any order . . . issued by . . . any regional water . . . board pursuant to Division 7 (commencing with Section 13000) of the Water Code" from the definition of "'[e]xecutive order.'. The court held that subdivision (c)'s creation of an exception for Regional Water Boards, which are state agencies, contravenes the plain, unequivocal, and all-inclusive reference to "any state agency" in this section. Thus, counties or cities obligated by the Regional Water Quality Control Board to inspect industrial, commercial and construction water treatment facilities and to install and maintain trash receptacles at transit stops are entitled to have their "test claims" reviewed by the Commission on State Mandates to ascertain whether these two obligations in question constitute federal or state mandates, and, thus, whether the cities or counties are entitled to state reimbursement. County of Los Angeles v. Commission on State Mandates, 150 Cal.App.4th 898.