Los Angeles County Transportation Commission v. Richmond

RICHARDSON, J.

I respectfully dissent.

Article XIII A, section 4 of the California Constitution provides: “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district, except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County or special district.”

The majority concludes that this constitutional limitation does not bar a retail transaction and use tax (sales tax) which is to be operative throughout Los Angeles County and which was approved by only 54 percent of its voters. The majority’s reason is that the entity initiating the tax, Los Angeles County Transportation Commission (LACTC), is not a “special district” within the purview of section 4. Accordingly, the majority would sustain the tax “even if it is a ‘special tax’ within the meaning of the section.” (Ante, p. 202.)

I do not agree and conclude, to the contrary, that the ordinance is invalid both because the tax it purports to enact is a “special tax” and *210 because it has been adopted by a “special district” without the approval of two-thirds of the qualified voters thereof, in violation of article XIII A, section 4.

In reaching its conclusion that LACTC is not a “special district,” the majority has applied a new rule of “strict construction” of constitutional language. (Ante, p. 205.) The primary feature of this new interpretive rule appears to be that any ambiguities in the constitutional provision before us must be resolved in favor of allowing local government to evade the clear two-thirds voter approval requirement by which the people chose to limit additional or increased tax levies by such government. Beyond labelling the constitutional restriction as “fundamentally undemocratic” (ibi d.), the majority cites no authority for applying such a rule of strict construction within this context. I have found no such authority. To the contrary, both the United States Supreme Court (Gordon v. Lance (1971) 403 U.S. 1, 7 [ 29 L.Ed.2d 273, 277 , 91 S.Ct. 1889 ]) and our own court (Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208, 237 [ 149 Cal.Rptr. 239 , 583 P.2d 1281 ]) have fully upheld, against equal protection challenges, the so-called “super-majority” voter approval requirement. (Ante, pp. 203-204.) Whether or not it is financially wise to do so, the people, through their Constitution, have a legal right to so limit the revenue powers of local government.

With due deference to my colleagues, I believe that the patent inconsistencies of the majority’s analysis suggest that the new rule has been adopted more as a means to an end than to vindicate any principle, democratic or otherwise. In my view, neither the adoption of a new rule of strict construction within this context, nor its application which obscures LACTC’s identity as a “special district” within the constitutional meaning, is legally sound.

In Amador, we described the appropriate principles of constitutional construction within the specific context of article XIII A. Contrary to the novel suggestion of the present majority that the constitutional language be strictly construed, in Amador we declared that a constitution ‘“is not to be interpreted according to narrow or super-technical principles, but liberally and on broad general lines, so that it may accomplish in full measure the objects of its establishment and so carry out the great principles of government.’ (Stephens v. Chambers (1917) 34 Cal. App. 660 , 663-664 .. . . ” (22 Cal.3d at pp. 244-245, italics added.) We further observed: “California courts have held that constitutional and *211 other enactments must receive a liberal, practical common-sense construction which will meet changed conditions and the growing needs of the people. [Citations.] A constitutional amendment should be construed in accordance with the natural and ordinary meaning of its words. [Citation.]” (Id., at p. 245, italics added.) Indeed, even “the literal language of enactments, may be disregarded to avoid absurd results and to fulfill the apparent intent of the framers. [Citations.]” (Ibid.)

In addition to affirming the foregoing general principles of constitutional construction in Amador, we also specifically examined their application to the adoption of article XIII A by the people under their powers of initiative and referendum. Noting the constitutional reservation of such powers to the people so that they may alter or reform government when the public good may require (Cal. Const., art. IV, § 1), we concluded, therefore, that “‘“[the] power of initiative must be liberally construed ... to promote the democratic process.”’ (San Diego Bldg. Contractors Assn. v. City Council (1974) 13 Cal.3d 205, 210 , fn. 3 ....)” ( 22 Cal.3d at p. 219 , italics added; accord Board of Supervisors v. Lonergan (1980) 27 Cal.3d 855, 863 [ 167 Cal.Rptr. 820 , 616 P.2d 802 ]; see Kaiser v. Hopkins (1936) 6 Cal.2d 537, 538 [ 58 P.2d 1278 ].)

It is these long established rules of constitutional interpretation, I submit, rather than the majority’s newly fashioned rule of “strict construction,” which should control our analysis here. Expressed most succinctly, our primary goal in interpreting constitutional language is “to give full effect to the framers’ objective .. . . ” (Mills v. County of Trinity (1980) 108 Cal.App.3d 656, 660 [ 166 Cal.Rptr. 674 ].)

What, then, was the objective of the framers of article XIII A?

In Amador we stressed that “article XIII A consists of four major elements, a real property tax rate limitation (§ 1), a real property assessment limitation (§ 2), a restriction on state taxes (§ 3), and a restriction on local taxes (§ 4).” ( 22 Cal.3d at p. 231 , italics in original.) We concluded that these four elements formed “an interlocking ‘package’ deemed necessary by the initiative’s framers to assure effective real property tax relief. .. . [S]ince any tax savings resulting from the operation of sections 1 and 2 could be withdrawn or depleted by additional or increased state or local levies other than property taxes, sections 3 and 4 combine to place restrictions upon the imposition of such taxes.” (Ibid., italics added.)

*212 Acknowledging that the limitations of sections 1 and 2 could well substantially reduce revenues from real property taxes by reason of their new tax rate and assessment restrictions, we also noted, however, that “local agencies retain full authority to impose ‘special taxes’ (other than certain real property taxes) if approved by a two-thirds vote of the ‘qualified electors'” ( 22 Cal.3d at p. 226 , italics added). We further observed that “it seems evident that section 4 assists in preserving home rule principles by leaving to local voters the decision whether or not to authorize ‘special’ taxes tó support local programs.” (Ibid., italics in original.)

Thus, while we did not specifically define in Amador either “special districts” or “special taxes” as those terms are used in section 4, we clearly identified the objective of the framers of article XIII A as seeking “to assure effective real property tax relief.” (Amador, supra, 22 Cal. 3d at p. 231 .) Further, our analysis of the interrelationship of the four constitutional sections also clearly described the means selected by the authors of article XIII A to obtain the relief sought, namely, by the imposition through sections 3 and 4 of the amendment of a two-thirds majority approval requirement on “additional or increased state or local levies” in order to prevent the withdrawal or depletion of the reduction, in real property taxes mandated by sections 1 and 2 thereof. (Ibid.) The gains to the taxpayers obtained by sections 1 and 2 were protected from dilution by sections 3 and 4.

We nowhere suggested in Amador, on the other hand, that it was only those state or local agencies otherwise empowered to levy real property taxes which were barred by the amendment from frustrating the objective of property tax relief. The majority frankly acknowledges that such a construction “is not compelled.” (Ante, p. 205.) I agree. Nonetheless, the majority finds that interpretation “appropriate.” (Ibid.) Its construction seems to me very dubious. No such interpretative refinement is suggested by the language of article XIII A and, in my view, the majority errs in attempting to find some exception to the general restriction of section 4.

The majority’s claim that LACTC’s sales tax is not a “replacement” for real property taxes because LACTC has never previously had authority to impose real property taxes is not reasonable. LACTC cannot deny that the improvement of public transportation in Los Angeles County is a proper function of government which could well be funded by receipts from a real property tax imposed by the county. (See Sol *213 vang Mun. Improvement Dist. v. Board of Supervisors (1980) 112 Cal.App.3d 545, 552 [ 169 Cal.Rptr. 391 ].) The fact that the Legislature has elected to create a separate commission to improve public transportation does not change the functional nature of the public service being rendered. Nor does the legislative action either permit or require us to ignore the obvious replacement role which LACTC’s sales tax can, and doubtless will, play as a substitute for a real property tax.

What the majority opinion really tells us is that the constitutional restrictions of article XIII A, section 4, can be readily and completely avoided by the simple creation of a district which is geographically precisely coterminous with a county, but which lacks its real property taxing power. In this connection, I believe the majority is exceedingly naive when it insists that the Legislature will not be importuned successfully by other local entities to grant to them similarly easy escapes from the fiscal constraints of article XIII A. (Ante, p. 208.) I think such appeals are not only probable, but certain, and in large numbers. The majority has cut a hole in the financial fence which the people in their Constitution have erected around their government. Governmental entities may be expected, instinctively, to pour through the opening seeking the creation of similar revenue-generating entities in myriad forms which will be limited only by their ingenuity. “We are not to ‘shut our minds’ as judges to truths that ‘all others can see and understand.’” (McGovern v. City of New York (1923) 234 N.Y. 377, 392 [ 138 N.E. 26 , 25 A.L.R. 1442 ].)

Further, the majority’s conclusion that LACTC is not a “special district” subject to the limitations of section 4 is also expressly contradicted by enabling legislation which was enacted for the specific purpose of implementing article XIII A. (See Gov. Code, §§ 50075, 50077.) Such “contemporaneous construction of the Legislature” may, of course, be helpful in resolving apparent ambiguities in constitutional language. (See Amador, supra, 22 Cal.3d at p. 245 .) The statutory language is controlling on the point. In an obvious attempt to comply with the constitutional directive of this amendment, the Legislature provided for the adoption of “special taxes” by “any city, county, or district” upon the approval of two-thirds of those voting on such proposal. (Gov. Code, § 50077, subd. (a).) The Legislature further defined the word “district” to mean “an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.” (Id., § 50077, subd. (c).) LACTC fits this definition exactly. While the statutory language omits *214 the adjective “special,” the unmistakably articulated legislative purpose of the statute to give effect to the constitutional mandate (see id., § 50075) clearly indicates to me that the definition provided conforms to the Legislature’s view, at least, of the constitutional command. Significantly, the majority does not disagree. (See ante, p. 207.)

Equally important to a conclusion that LACTC is a “special district” within the purview of section 4 is the apparent comprehensive nature of the taxing limitation imposed by article XIII A. The two-thirds voter approval requirement has been constitutionally ordained not only for tax increases instituted by counties, cities and special districts (§ 4), but also for tax increases implemented by the state Legislature itself (§ 3). To recognize an otherwise undefined residual category of local governmental agencies, “nonspecial districts” as it were, which are free to impose new or increased taxes without the two-thirds voter approval requirement is anomalous at best. At worst, such a construction would create a loophole which would be fatal to the rule itself, thereby permitting the most flagrant flouting of the people’s will by the creation of multiple “nonspecial districts” which could levy taxes willy nilly without restraint, oblivious to the constitutional command and subversive of its clear objectives.

As with the Legislature and the majority (ante, p. 207), I fully acknowledge the affirmative feature of section 4 which confers upon “districts” a right to levy taxe¿ by a two-thirds vote. Unlike the majority, however, I also accept the Legislature’s foregoing definition of such districts and do not understand how, in reason, the definition describing those districts as state agencies formed for “the local performance of governmental or proprietary functions” can be read to exclude LACTC. Indeed, being neither county nor city, if LACTC is not a “special district” within the meaning of section 4, I must ask my colleagues: Where is its constitutional authority to levy any taxes at all?

Although the majority opinion does not reach the issue, my conclusion that LACTC is a “special district” within the meaning of section 4 requires a determination whether the sales tax in question is a “special tax” to which the two-thirds majority vote requirement is applicable.

I return to the overall objective of article XIII A described by the framers as assuring “effective real property tax relief” and their attempt to achieve that objective by prohibiting local imposition of substitute taxes unless approved by two-thirds of the electorate which is to be *215 taxed. (See Amador, supra, 22 Cal.3d at p. 231; see also County of Fresno v. Malmstrom (1979) 94 Cal.App.3d 974, 983 [ 156 Cal.Rptr. 777 ] [“Section 4 of [art. XIII A] is aimed at limiting local governments’ ability to replace funds reduced by other sections of the article by shifting to other types of taxes.”].)

There is a direct relationship between the objective of article XIII A and the definition of “special taxes,” the adoption of which is limited by section 4. Without disavowing our identification of that objective in Amador — and the majority does not suggest such disavowal — it is apparent that the broadest possible definition of “special taxes” would best serve that objective of tax relief. But it is not necessary within the context of this case to probe the definitional limits of “special taxes.” It is patently obvious that the constitutional phrase must encompass the tax adopted by LACTC. The purpose of the tax in question is to generate within the geographical boundaries of Los Angeles County revenues for the improvement of public transit within that locale. Such a tax is a substitute for those revenues which could otherwise have been generated by real property taxes imposed by Los Angeles County itself but for the restrictions of article XIII A. To be consistent with the constitutional limitation which concededly would bar the county from imposing the new tax on its citizens without the approval of two-thirds of the county’s voters, we should similarly bar the county’s surrogate, LACTC, from accomplishing the same objective without the constitutionally requisite approval.

The foregoing interpretation of the constitutional language seems to me equally supported by the analysis of article XIII A which was offered to the voters by the Legislative Analyst at the time the constitutional amendment was adopted. (We have heretofore approved recourse to such materials for the purpose of determining the “probable meaning of uncertain language” contained in such measures. ( Amador, supra, 22 Cal.3d 208, 246; see Lonergan, supra, 27 Cal.3d 855, 866 ; Carter v. Seaboard Finance Co. (1949) 33 Cal.2d 564, 580-581 [ 203 P.2d 758 ]; Carter v. Com. on Qualifications, etc. (1939) 14 Cal.2d 179, 185 [ 93 P.2d 140 ].)

With regard to section 4, the voters were told that although “The initiative permits local governments to raise additional revenues ... [, ii]cw taxes would also have to be approved by two-thirds of the local voters. Thus the initiative would restrict the ability of local governments to impose new taxes in order to replace the property tax revenue losses.” *216 (Ballot Pamp., Primary Elec. (June 6, 1978) p. 60.) Further, the proponents of the initiative specifically summarized its intended effects as follows; “Limits property tax to 1% of market value, requires two-thirds vote of both houses of the legislature to raise any other taxes, limits yearly market value tax raises to 2% per year, and requires all other tax raises to be approved by the people.” (Id., at p. 58, italics added.) Notably, none of the various arguments for or against adoption of the initiative denied that such would be the effect of its passage.

Arguably, the analysis need not be pressed further than to conclude that LACTC’s sales tax is included within the “special tax” category of section 4. LACTC’s argument to the contrary, however, involves a consideration of alternative definitions of the constitutional phrase.

It is noteworthy that heretofore the term “special taxes” has not acquired an established meaning, but has received a variety of interpretations within different contexts. No case has attempted a comprehensive definition of the term! as used in section 4. (See Trent Meredith, Inc. v. City of Oxnard (1981) 114 Cal.App.3d 317, 323 [ 170 Cal.Rptr. 685 ].)

In County of Fresno v. Malmstrom, supra, 94 Cal.App.3d 974 , for example, the court opined; “A ‘special tax’ is a tax collected and earmarked for a special purpóse, rather than being deposited in a general fund. [Citations]” (P. 983.) The LACTC tax before us obviously would be included within such a formulation, and so barred because lacking the two-thirds voter approval mandated by section 4. However, it does not appear that the Malmstrom court intended to provide a comprehensive meaning of the term “special taxes.” Rather, that court sought only to distinguish the “special assessment” before it from a “special tax,” whatever the latter might be. (Id., at p. 984; see Trent Meredith, Inc., supra, 114 Cal.App.3d at p. 323 .) More significantly, the ease with which the constitutional restriction on such a “special tax” could be evaded by simply depositing the revenues generated therefrom into a general fund, and making the fund subject to the implementation of the specific purpose which motivated the tax, would render the adoption of such a definition inappropriate to implement the broader purpose of “effective” tax relief.

Similarly, there is no basis for concluding that section 4’s two-thirds voter approval requirement for “special taxes” was meant to be limited to: (1) “real property taxes,” most, if not all, of which would appear to *217 be barred expressly by section 4 (but see Trent Meredith, Inc., supra, 114 Cal.App.3d at pp. 325, 328); (2) “special assessments” or regulatory fees, which are exacted in reasonable proportion to the cost of a specific governmental service benefiting the payor, and are not taxes at all (see Gov. Code, § 50076; Solvang Mun. Improvement Dist. v. Board of Supervisors, supra, 112 Cal.App.3d at pp. 552-553; Mills, supra, 108 Cal.App.3d at pp. 659, 663; Malmstrom, supra, 94 Cal.App.3d at p. 984 ; City of Saratoga v. Huff (1972) 24 Cal.App.3d 978, 986-987 [ 101 Cal.Rptr. 32 , 102 Cal.Rptr. 376 ]); (3) taxes imposed on specific entities or activities (see City of Oceanside v. Pacific Tel. & Tel. Co. (1955) 134 Cal.App.2d 361, 370 [ 285 P.2d 704 ]); or (4) taxes imposed upon taxpayers which are exempt from “ordinary” taxes (see County of Ventura v. Channel Islands State Bank (1967) 251 Cal.App.2d 240, 246 [ 59 Cal.Rptr. 404 ]). There is no suggestion in the language or history of article XIII A that adoption of any of these specific and limited meanings of the term “special taxes” was contemplated by the framers of the provision or the voters who adopted it. Nor, in my view, would the far-reaching purposes of article XIII A be served by construing that term in so restrictive a fashion.

Also, there is an overriding reason for interpreting the term “special taxes” in a broad and comprehensive manner. As we stressed in Amador, the “super-majority” two-thirds vote requirement for “special taxes” is defensible largely as the preserver of home rule principles. ( 22 Cal.3d 208 , 226-228.) Confining to a narrow category the taxes to which that requirement is applicable would seriously undermine those principles.

Although I do not consider it necessary to so conclude for the purposes of this action, it is arguable under the taxing scheme embodied in article XIII A, that “special taxes” are now the only new or increased taxes which cities, counties and special districts are empowered to impose to replace lost real property tax revenues. There is no provision for the adoption of other, “nonspecial” taxes by a lesser majority; and we cannot assume that the drafters or adopters of the amendment sought to emasculate local government by not only requiring approval of any such “replacement” taxes by a two-thirds majority of the electorate, but also restricting the nature of such permissible taxes to some undefined, narrow category. In short, I do not view it as necessary to the effectuation of the constitutional amendment here under review, and more particularly of section 4 thereof, to give to the undefined term “special taxes” a meaning so restrictive as to undercut the very premise of that *218 amendment — namely, that any revenues over and above the 1 percent real property ad valorem táx authorized by section 1 could be generated under section 4 by local government’s imposition of such new or increased taxes as two-thirds of the electorate to be affected would agree were necessary or desirable.

LACTC argues, however, that a broad definition of the term “special taxes” would ignore the ordinary meaning of the word “special,” as pertaining to the “unusual” or “extraordinary,” contrary to an established rule of construction. (See Fields v. Eu (1976) 18 Cal.3d 322, 327 [ 134 Cal.Rptr. 367 , 556 P.2d 729 ].) Yet, it is apparent that this word has a number of “ordinary” meanings, not only the one designated by LACTC; and among these are “extra” and “additional.” Under such circumstance an equally well settled rule would appear to be of greater assistance to our interpretive efforts. “It is a cardinal rule of construction that words or phrases are not to be viewed in isolation; instead, each is to be read in the context of the other provisions of the Constitution bearing on the same subject. [Citation.] The goal, of course, is to harmonize all related provisions if it is reasonably possible to do so without distorting their apparent meaning, and in so doing to give effect to the scheme as a whole. [Citations.] Strained interpretation, or construction leading to unreasonable or impractical results, is to be avoided. [Citations.]” (Id., supra, at p. 328.)

In my view, the most natural “ordinary” meaning of the term “special taxes” within the context of article XIII A includes the kind of substitutional or replacement tax adopted by LACTC which serves to offset the reduction of real property taxes enforced by sections 1 and 2 of the amendment. Whatever the ultimate reach of the constitutional prohibition, it would seem clear that the other literal meanings given to the phrase “special taxes” in other specific contexts which we have discussed should be rejected here “to avoid absurd results and to fulfill the apparent intent of the framers. [Citations.]” (Amador, supra, 22 Cal.3d at p. 245 .)

I do not read article XIII A as contemplating the existence of any vestigial species of “nonspecial taxes” which local government may impose to counteract the tax savings intended by the framers of the amendment without the approval of two-thirds of the electorate affected. Neither can I identify within the amendment a purpose to create a privileged class of “nonspecial districts” which remain unrestricted thereby. In my opinion, the recognition and preservation of such cate *219 gories cannot reasonably be reconciled with the “underlying purpose and chief aim” of article XIII A of the Constitution, to wit, “effective real property tax relief.” (See Lonergan, supra, 27 Cal.3d 855, 863 ; Amador, supra, 22 Cal.3d 208 , 218, 220, 224, 230, 231, 243.)

Focusing not upon LACTC’s characterization of itself or of its tax, but rather upon the function of government which it proposes to accomplish with the revenues from that tax, I conclude that LACTC’s sales tax is constitutionally deficient. It is a “special tax” imposed by a “special district.” Because it was not approved by “two-thirds vote of the qualified electors of such district.. .,” it violated article XIII A, section 4 of the California Constitution.