Appendix — Dautremont v. County of Ventura

No. 83-818

i .

IN THE

Office - Supreme Court, Us

FILED

JAN 12 1984

L. STEVAS

SUPREME COURT OF THE UNITED STATES

October Term 1983

JOSEPH L. DAUTREMONT, JR., and

DELORES A. DAUTREMONT,

Appellants,

vs.

COUNTY OF VENTURA, a Body

Corporate and Politic,

Appellee.

ON APPEAL FROM THE COURT OF APPEAL

STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

APPENDIX TO MOTION TO DISMISS OR AFFIRM

DOROTHY L. SCHECHTER

County Counsel

County of Ventura

ANTHONY R. STRAUSS

Assistant County Counsel

(Counsel of Record)

800 South Victoria Avenue

Ventura, California 93009

Telephone: (805) 654-2588

Attorneys for Appellee

County of Ventura

—

TABLE OF CONTENTS

Page

APPENDIX A - ARTICLE XIII A,

CALIFORNIA CONSTITUTION ....-eeee++ Al

APPENDIX B - OPINION OF COURT OF

APPEAL OF THE STATE OF CALIFORNIA,

SECOND APPELLATE DISTRICT .....++++ B-6

APPENDIX C =- OPINION OF THE CALI-

FORNIA SUPREME COURT IN AMADOR

VALLEY JOINT UNION HIGH SCHOOL

STRICT v. STATE BOA OF

EQUALIZATION -Gebresh bebe Ob a ves ek eee

ARTICLE XIII A

Tax Limitation

SEC. 1. (a) The maximum amount of

any ad valorem tax on real property shall

not exceed one percent (1%) of the full

cash value of such property. The one

percent (1%) tax to be collected by the

counties and apportioned according to law

to the districts within the counties.

(b) The limitation provided for in

iitieteten (a) shall not apply to ad

valorem taxes or special assessments to

pay the interest and redemption charges

on any indebtedness approved by the

voters prior to the time this section

becomes effective.

SEC. 2. (a) The full cash value

means the county assessor's valuation of

real property as shown on the 1975-76 tax

bill under "full cash value" or, there-

after, the appraised value of real

A-1

property when purchased, newly construc-

ted, or a change in ownership has

occurred after the 1975 assessment. All

real property not already assessed up

to the 1975-76 full cash value may be

reassessed to reflect that valuation.

For purposes of this section, the term

"newly constructed” shall not include

real property which is reconstructed

after a disaster, as declared by the Gov-

ernor, where the fair market value of

such real property, as reconstructed, is

comparable to its fair market value prior

to the disaster.

(b) The full cash value base may

reflect from year to year the inflation-

ary rate not to exceed 2 percent for any

given year or ‘sibilant ale shown in the

consumer price index or comparable data

for the area under taxing jurisdiction,

or may be reduced to reflect substantial

A-2

iG

a

c a

— Le ea

damage, destruction or other factors

causing a decline in value.

(c) For purposes of subdivision

(a), the Legislature may provide that the

term “newly constructed" shall not in-

clude the construction or addition of any

active solar energy system.

(d) For purposes of this section,

the term “change in ownership” shall not

include the acquisition of real property

as a replacement for comparable property

if the person acquiring the real property

has been displaced from the property re-

placed by eminent domain proceedings, by

acquisition by a public entity, or gov-

ernmenta’? action which has resulted in a

judgment of inverse condemnation. The

real property acquired shall be deemed

comparable to the property replaced if

it is similar in size, utility, and func-

tion, or if it conforms to state regula-

A-3

& eas a

|

|

tions defined by the Legislature govern-

ing the relocation of persons displaced

by governmental actions. The provisions

of this subdivision shall be applied to

any property acquired after March l,

1975, but shall affect only those assess-

ements [sic.] of that property which

occur after the provisions of this sub-

division take effect.

SEC. 3. From and after the effec-

tive date of this article, any changes in

State taxes enacted for the purpose of

increasing revenues collected pursuant

thereto whether by increased rates or

changes in methods of computation must be

imposed by an Act passed by not less than

two-thirds of all members elected to each

of the two houses of the Legislature, ex-

cept that no new ad valorem taxes on real

property, or sales or transaction taxes

on the sales of real property may be

A-4

imposed.

SEC. 4. Cities, Counties and spe-

cial districts, by a two-thirds vote of

the qualified electors of such district,

may impose special taxes on such dis-

trict, 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.

SEC. 5. This article shall take

effect for the tax year beginning on July

1 following the passage of this amend-

ment, except Section 3 which shall become

effective upon the passage of this arti-

cle.

SEC. 6. If any section, part,

clause, or phrase hereof is for any rea-

son held to be invalid or unconstitution-

al, the remaining sections shall not be

affected but will remain in full force

and effect.

COURT OF APPEAL-SECOND DIST.

PILED

JUNE 23 1983

CLAY ROBBINS, JR. Clerk

Deputy Clerk

NOT TO BE PUBLISHED

IN THE COURT OF APPEAL

OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Defendant and Respondent.

JOSEPH L. DAUTREMONT, JR., ) 2d Civil

et al., ) No. 65479

)

Plaintiffs and Appellants,) (Ventura

) County

Vv. ) Super.

) Ct.No.

COUNTY OF VENTURA, ) 72963)

)

)

)

Appellants Dautremont raise the sole

issue of whether Article XIII A, section

2(a) of the California Constitution,

which requires that property be valued

for purposes of property taxation based

B-6

upon its value at time of acquisition,

violates equal protection under the law

in that it results in disparate tax

treatment between owners of similar

properties. The trial court gave judg-

ment for defendant County of Ventura.

We affirm.

STATEMENT OF FACTS

\ppellants purchased their single

family residence in the City of Simi Val-

ley, tounty of Ventura, on February 9,

1978. On June 6, 1978, the people of the

State of California adopted the initia-

tive measure known as Proposition 13 add-

ing Article XIII A to the California Con-

stitution. Section 2(a) of Article XIII

A provides that "the full cash value (to

which the 1 percent maximum tax applies)

means the County Assessor's valuation of

real property as shown on the 1975-76 tax

bill under ‘full cash value' or, there-

B-7

\

after, the appraised value of real prop-

erty when purchased, newly constructed,

or a change of ownership has occurred

after the 1975 assessment.”

Pursuant to the mandate of Article

XIII A, the Ventura County assessor.

appraised appellants’ real property for

the 1978-1979 tax year based upon its

value at time of acquisition, i.e., the

purchase price of $126,000.

Subsequent to receipt of their tax

bills for tax years 1978-1979 and 1979-

1980, appellants timely filed Application

for Changed Assessments on the grounds,

so far as ds relevant to this appeal,

that Article XIII A denied them equal

protection under both federal and state

Constitutions. Appellants testified

before the Board of Equalization that

the full cash value of their residence, :

based upon the 1975-1976 tax bill, and —

me.

‘ s

7 * Crue & © De’

: 4 AW

i) Be! eee

increased by 2 percent per year, was

$56,774.63 and $57,910.12 for the 1978-

1979 and 1979-1980 tax years respective-

ly. Appellants’ calculations were based

upon the full cash value for their prop-

erty as reflected in the 1975-76 tax

rolls increased pursuant to Article XIII

A, section 2(b). Section 2(b) provides:

"The full cash value base may reflect

from year to year the inflationary rate

not to exceed 2 percent for any given

year or reduction as shown in the con-

sumer price index or comparable data

for the area under taxing jurisdiction,

- + + " Appellants’ contention was that

their property should be taxed at the

1975 value rather than the 1978 value of

acquisition.

The Board of Equalization denied

appellants’ applications for both tax

years 1978-1979 and 1979-1980 on the

>

B-9

grounds that the constitutionality of the

ki was not within the board's jurisdic-

tion. The board sustained the property

value as enrolled by the assessor.

Appellants filed suit in small

claims court. Said suit was transferred

to superior court pursuant to Code of

Civil Procedure section 396. Trial was

held December 21, 1981. The trial court,

sitting without a jury, rendered judgment

for defendant on January 14, 1982. This

appeal followed.

ISSUE

Appellants contend that Article XIII

A of the Constitution of the State of Cal-

ifornia deprives them of equal protection

under the law, as guaranteed them by the

Constitution of the State of California

and the United States, in that it imposes

upon them a tax greatly in excess of that

imposed upon similar properties.

B-10

DISCUSSION

The trial court based its ruling on

the case of Amador Valley Joint Union

High School District v. State Board of

Equalization (1978) 22 Cal.3d 208, which

addressed the equal protection challenge.

Appellants, however, contend that (1)

Amador Valley did not closely examine

section 2(a) of Article XIII A and is

therefore distinguishable, (2) that the

“grandfather clause" rationale of Amador

Valley is not able to justify an arbi-

trary roll back date, and (3) that Arti-

cle XIII A section 2(a) as it is applied

to appellants is in conflict with Article

XIII section 1 which provides that all

property shall be taxed in proportion to

its full value.

In Amador Valley Joint Union High

School District v. State Board of

Equalization, cited supra, petitioners

B-11

therein contended that, by reason of the

“roll back" of assessed value to the

1975-1976 fiscal years, two substantially

identical homes, located "side by side"

and receiving identical governmental

services, could be assessed and taxed at

different levels depending upon their

date of acquisition and that such a dis-

parity in tax treatment constitutes an

arbitrary discrimination in violation of

the federal equal protection clause.

(Amend. XIV §1.) The California Supreme

Court, noting that although arguably pre-

mature, stated "[NJevertheless, we have

elected to treat the equal protection

issue as constituting an attack upon the

face of the article itself, because the

assessors throughout this state must be

advised whether to follow the new assess-

ment procedure. As will appear, we will

conclude that the essential demands of

B-12

equal protection are satisfied by a

rational basis underlying section 2 of

the new article." (22 Cal.3d at p. 233.)

The rational basis, the court ex-

plained, is the theory that the annual

taxes that a property owner must pay

should bear some rational relationship to

the original cost of the property, predi-

cated on the owner's free and voluntary

act of purchase rather than relate to an

unforeseen, perhaps unduly inflated, cur-

rent value. The Supreme Court found that

there is no legal requirement that prop-

erty of equal current value be taxed

equally, and that a tax law discriminates

against a certain class does not make

it arbitrary if the discrimination is

founded upon a reasonable distinction, or

difference in state policy, not in con-

flict with the federal Constitution.

B-13

Appellants herein contend that the

prior analysis of Article XIII A was not

a serious and genuine review of the equal

protection issue as to appellants and

should not be viewed as controlling. We

find this argument without merit. The

Supreme Court in Amador Valley specifi-

cally addressed the same argument made by

appellants herein that the intentional,

systematic under-valuation of property

similarly situated with other property

assessed at its full value constitutes an

improper discrimination in violation of

equal protection principles. Much of the

authority to which appellants refer for

this proposition was cited by petitioners

in Amador Valley. The court therein

stated that section 2 does not unduly

discriminate against persons who acquired

their property after 1975 "for those per-

sons are assessed and taxed in precisely

B-14

'

es

a Pike:

the same manner as those who purchased in

1975, namely, on an acquisition value

basis predicated on the owner's free and

voluntary acts of purchase. This is an

arguably reasonable basis for assess-

ment." (22 Cal.3d at p. 235.)

Appellants contend that the ration-

ale of a grandfather's clause (to prevent

existng business from suffering from

increased regulation) does not automati-

cally apply to the roll back of property

valuation as applied to private residen-

ces. The Supreme Court, however, said

only that "[{t]Jhe selection of the 1975-

1976 fiscal year as a base year, although

seemingly arbitrary, may be considered as

comparable to utilization of a “grand-

father clause" wherein a particular year

is chosen as the effective date of new

legislation in order to prevent inequit-

able results or to promote some other

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legitimate purpose. [Citations.] (22 Cal.

3d at p. 236.)

We cannot find the appellants herein

have raised arguments substantively dif-

ferent from those previously addressed

and therefore hold that Amador Valley

Joint Union High School District v. State

Board of Equalization is controlling.

We affirm the judgment of the trial

court.

NOT TO BE PUBLISHED.

STONE, P. J.

We concur:

ABBE, J.

GILBERT, J.

B~16

Marvin H. Lewis, Judge

Superior Court County of Ventura

Dorothy L. Schechter, County

Counsel, Anthony R. Strauss, Assistant

County Counsel, for Defendant and

Respondent.

Frank Anton Gunderson, for Plain-

tiffs and Appellants.

B-17

[S.F.No. 23849.Sept. 22, 1978.]

AMADOR VALLEY JOINT UNION HIGH SCHOOL

DISTRICT et al., Petitioners, v.

STATE BOARD OF EQUALIZATION et al.,

Respondents.

(S.F.No.23850.Sept. 22,1978. ]

COUNTY OF ALAMEDA et al., Petitioners, v.

STATE BOARD OF EQUALIZATION et al.,

Respondents.

[S.F.No.23855.Sept.22,1978)]

CITY AND COUNTY OF SAN FRANCISCO et abi

Petitioners, v. JOSEPH E. TINNEY, as

Tax Assessor, etc., et al., Respondents.

OPINION

RICHARDSON, J.--In these consolidated

cases, we consider multiple constitution-

al challenges to an initiative measure

Which was adopted by the voters of this

state at the June 1978 primary election.

This measure, designated on the ballot as

Proposition 13 and commonly known as the

Jarvis-Gann initiative, added the article

XIII A to the California Constitution.

C-18

Its provisions are set forth in their

entirety in the appendix to this opinion.

(See post, at p. 257.) As will be seen,

the new article changes the previous

system of real property taxation and tax

procedure by imposing important lLimita-

tions upon the assessment and taxing

powers of state and local governments.

Petitioners, and the amici support-

ing them, are varicus governmental agen-

cies and concerned citizens, each of whom

has alleged actual or potential adverse

effects resulting from the adoption and

ultimate operation of the article. (Here-

after we refer jointly to all petitioners

and their amici as petitioners, and refer

to all respondents herein and those amici

urging the validity of XIII A as respon-

dents.) (1) The issues herein presented

are of great public importance and should

be resolved promptly. Under well settled

c-19

principles petitioners, accordingly, have

properly invoked the exercise of our

original jurisdiction. (See California

Housing Finance Agency v. Elliott (1976)

17 Cal.3d 575, 580 (131 Cal.Rptr. 361,

551 P.2d 1193]; County of Sacramento v.

Hickman (1967) 66 Cal.2d 841, 845 [59

Cal.Rptr. 609, 428 P.2d 593].)

(2) We stress initially the limited

nature of our inquiry. We do not consid-

er or weigh the economic or social wisdom

or general propriety of the initiative.’

Rather, our sole function is to evaluate

article XIII A legally in the light of

established constitutional standards. We

further emphasize that we examine only

those principal, fundamental challenges

to the validity of article XIII A asa

Whole. In doing so we reaffirm and re-

adopt an analytical technique previously

used by us in adjudicating attacks upon

C-20

]

'

4

¢

-

i alee ad

i. > - ae > L kee

similar enactments, in which "Analysis of

the problems which may arise respecting

the interpretation or application of par-

ticular provisions of the act should be

deferred for future cases in which those

provisions are more directly challenged."

(County of Nevada v. MacMillen (1974) 11

Cal.3d 662, 666 [114 Cal.Rptr. 345, 522

P.2d 1345] [declaratory relief action to

determine validity of the 1973 conflict

of interest law, Gov. Code, § 3600 et

seq.].) As will appear, we have con-

cluded that, notwithstanding the exis-

tence of some unresolved uncertainties,

as to which we _ reserve judgment, the

article nevertheless survives each of the

serious and substantial constitutional

attacks made by petitioners.

(3) It is a fundamental precept of

our law that, although the legislative

power under our constitutional framework

C-21

is firmly vested in the Legislature,

“the people reserve to themselves’ the

powers of initiative and referendum."

(Cal. Const., art. IV, § 1.) It follows

from this that, “'[the] power of initia-

tive 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 [118 Cal.Rptr. 146, 529 P.2d 570,

72 A.L.R.3d 973] and cases cited; see

Associated Home Builders etc., Inc. v.

City of Livermore (1976) 18 Cal.3d 582,

591 (135 Cal.Rptr. 41, 557 P.2d 473].)

Bearing in mind the foregoing interpre-

tive aid, we briefly review the basic

provisions of article XIII A. We caution

that, save only as to the specific con-

stitutional issues resolved, our summary

description and interpretation of the

article and of the implementing legisla-

C-22

ene.

tion and regulations do not preclude sub-

sequent challenges to the specific mean-

ing or validity of those enactments.

The new article contains four dis-

tinct elements. The first imposes a limi-

tation on the tax rate applicable to real

property: "The maximum amount of any ad

valorem tax on real property shall not

exceed one percent (1%) of the full cash

value of such property ... ." (§ l,

subd. (a).) (This limitation is made

specifically inapplicable, under subd.

(b), to property taxes or special assess-

ments ‘necessary to pay prior indebtedness

approved by the voters.) The second is a

restriction on the assessed value of real

property. Section 2, subdivision (a),

provides: “The full cash value means the

County Assessors valuation of real prop-

erty as shown on the 1975-76 tax bill

under ‘full cash value,’ or thereafter,

C-23

the appraised value of real property when

purchased, newly constructed, or a change

in ownership has occurred after the 1975

assessment ... ." Subdivision (b) per-

mits a maximum 2 percent annual increase

in “the fair market value base" of real

property to reflect the inflationary rate.

The third feature limits the method

of changes in state taxes: "From and

after the effective date of this article,

any changes in State taxes enacted for

the purpose of increasing rates or

changes in methods of computation must be

imposed by an Act passed by not less than

two-thirds of all members . . . of the

Legislature, except that no new ad valor-

em taxes on real property, or sales or

transaction taxes on the sales of real

property may be imposed." (§ 3.) The

fourth element is a restriction upon

local taxes: “Cities, Counties and

C-24

special districts, by a two-thirds vote

of the qualified electors of such dis-

trict, 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."

(§ 4.) (The remaining sections relate

to the effective dates (§ 5) and sever-

ability (§ 6) of the provisions of the

new article.) |

We examine petitioners’ specific

contentions.

1. Constitutional Revision or Amend-

ment

(4a) The petitioners’ primary argu-

ment is that article XIII A represents

such a drastic and far-reaching change in

the nature and operation of our governmen-

tal structure that it must be considered

a “revision” of the state Constitution

C-25

lil

rather than a mere “amendment” thereof.

(5) As will appear, although the voters

may accomplish an amendment by the initi-

ative process, a constitutional revision

may be adopted only after the convening

of a constitutional convention and popu-

lar ratification or by legislative sub-

mission to the people. Because a revi-

sion may not be achieved through the

initiative process, petitioners' first

contention strikes at the very validity

of article XIII A in its inception and

in its entirety. Were we to conclude

that the Proposition 13 initiative con-

stituted a revision not an amendment,

that would end our inquiry; the initia-

tive would be invalid for its failure to

meet the constitutional requirements of a

revision.

The applicable constitutional pro-

visions are specific. Article XVIII

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(entitled “Amending and Revising the Con-

stitution") presently provides in full:

"SEC. 1. The Legislature by roll-

call vote entered in the journal, two-

thirds of the membership of each house

concurring, may propose an amendment or

revision of the Constitution and in the

same manner may amend or withdraw its

proposal. Each amendment shall be so pre-

pared and submitted that it can be voted

on separately.

"SEC. 2. The Legislature by roll-

call vote entered in the journal, two-

thirds of the membership of each house

concurring, may submit at a general elec-

tion the question whether to call a con-

vention to revise the Constitution. If

the majority vote yes on that question,

within 6 months the Legislature shall

provide for the convention. Delegates

to a constitutional convention shall be

C-27

voters elected from districts as nearly

equal in population as may be practic-

able.

"SEC. 3. The electors may amend the

Constitution by initiative.

"SEC. 4. A proposed amendment or re-

vision shall be submitted to the electors

and if approved by a majority of votes

thereon takes effect the day after the

election unless the measure provides

otherwise. If provisions of 2 or more

measures approved at the same election

conflict, those of the measure receiving

the highest affirmative vote shall pre-

vail." (Italics added.)

We think it significant that prior

to 1962 a constitutional revision could

be accomplished only by the elaborate

procedure of the convening of, and action

by, a constitutional convention (art.

XVIII, § 2). . This fact suggests that the

c-28

a

4

“*

Aol

x

at ee

term “revision” in section XVIII origin-

ally was intended to refer to a substan-

tial alteration of the entire Constitu-

tion, rather than to a less extensive

change in one or more of its provisions.

(6) Many years ago, in Livermore v.

Waite (1894) 102 Cal. 113, 118-119 [36

P. 424], we described the fundamental

distinction between revision and amend-

ment as follows: “The very term ‘con-

stitution’ implies an instrument of a

permanent and abiding nature, and the

provisions contained therein for its

revision indicate the will of the people

that the underlying principles upon which

it rests, as well as the _ substantial

entirety of the instrument, shall be of

a like permanent and abiding nature. On

rthe other hand, the significance of the

term ‘amendment’ implies such an addi-

tion or change within the lines of the

C-29

Original instrument as will effect an

improvement, or better carry out the pur-

pose for which it was framed."

While the Constitution itself does

not specifically distinguish between

revision and amendment, we are consider-

ably aided in an evaluation of petition-

ers' primary argument by our earlier

analysis of the issue in McFadden v.

' Jordan (1948) 32 Cal.2d 330 [196 P.2d

787] (cert. den., 336 U.S. 918 [93 L.Ed.

1080, 69 S.Ct. 640])). In McFadden, we

struck down an initiative measure which

would have added 21,000 words to our

then existing 55,000-word Constitution.

We held that the initiative was "“revisory

rather than amendatory in nature,"

because of the “far reaching and multi-

farious substance of the measure .. ."

(p. 332) which dealt with such varied

and diverse subjects as retirement pen-

C-30

ore |

sions, gambling, taxes, oleomargarine,

healing arts, civic centers, senate re-

apportionment, fish and game, and surface

mining. We noted that the proposal would

have repealed or substantially altered at

least 15 of the 25 articles itn then

comprised the Constitution. (P. 345.)

We held in McFadden that the measure

under scrutiny therein was clearly a revi-

sion, both because of its varied aspects

and because of the “substantial curtail

{[ment]" of governmental functions which

it would cause. (Pp. 345-346.) For exam-

ple, one provision would have created a

state pension commission with comprehen-

sive governmental powers to be exercised

by five named commissioners. We conclud-

ed that "The delegation of far reaching

and mixed powers to the commission, large-

ly, if not almost entirely in effect, un-

checked, places such commission substan-

C-31

tially beyond the system of checks and

balances which heretofore has character-

ized our governmental plan." (P. 348.)

In addition, although the subject of

taxation was only one of many covered by

the McFadden initiative, nevertheless we

observe that the proposed taxation amend-

ment would have accomplished, by itself,

a far more substantial change in the

state's taxation scheme than that effect-

ed by Proposition 13. The far reaching

nature of the McFadden measure is demon-

strated by the fact that it not only

would have destroyed the power of cities

and counties to tax and regulate their

own budgets and expenditures (p. 344),

but also the 2 percent gross receipts tax

proposed therein was to have been the

only tax permitted to any agency on real

or personal property, or on any business

enterprises. (Pp. 336-337.)

C-32

Finally, we stressed in McFadden

that "The proposal is offered as a single

amendment but it obviously is multifar-

ious. It does not give the people an

opportunity to express approval or 4ie-

approval severally as to each major

change suggested; rather does it, appar-

ently, have the purpose of aggregating

for the measure the favorable votes from

electors of many suasions who, wanting

strongly enough any one or more proposi-

tions offered, might grasp at that which

they want, tacitly accepting the remain-

der. Minorities favoring each proposi-

tion severally might, thus aggregated,

adopt all. Such an appeal might well be

proper in voting on a revised constitu-

tion, proposed under the safeguards pro-

vided for such a procedure, but it goes

‘beyond the legitimate scope of a single

amendatory article." (P. 346, italics

C-33

in original.)

(7) Taken together our Livermore

and McFadden decisions mandate that our

analysis in determining whether a partic-

ular constitutional enactment is a revi-

sion or an amendment must be both quanti-

tative and qualitative in nature. For

example, an enactment which is so exten-

sive in its provisions as to change

directly the “substantial entirety" of

the Constitution by the deletion or al-

teration of numerous existing provisions

may well constitute a revision thereof.

However, even a relatively simple enact-

ment may accomplish such far _ reaching

changes in the nature of our basic govern-

mental plan as to amount to a revision

also. In illustration, the parties here-

in appear to agree that an enactment

which purported to vest all judicial

power in the Legislature would amount to

C-34

a revision without regard either to the

length or complexity of the measure or

the number of existing articles or sec-

tions affected by such change.

(4b) In both its quantitative and

qualitative aspects, however, article

XIII A appears demonstrably less sweeping

than the initiative measure at issue in

McFadden. As noted above, the McFadden

measure consisted of 21,000 words and

covered many different subjects, whereas

XIII A comprises approximately 400 words

and, as we discuss more fully below, is

limited to the single subject of taxation

(with particular emphasis upon real

property taxation). Although petitioners

suggest that 8 articles and 37 sections

of the existing Constitution may be affec-

ted by the new article, our analysis

suggests that the article's quantitative

effect is less extensive.

C-35

1 lt al

Our review of petitioners’ descrip-

tion of numerous asserted changes indi-

cates that the claims may be based upon

possible errors in petitioners' interpre-

tation of the new article. For example,

they argue that at least three constitu-

tional articles will be modified by the

new requirement that the available real

property tax revenues be apportioned "to

the districts within the counties" (§ l,

subd. (a), italics added), thereby ex-

cluding those districts which encompass

more than a single county. However, im-

plementing legislation has -included such

multi-county districts within the tax

allocation scheme. (See Gov. Code, §

26912, subd. (d).) In addition, peti-

tioners assume that article XIII A will

annul or amend the various “home rule”

provisions of the state Constitution (art.

XI, §§ 3-7), an assumption we discuss

C-36

and reject below. Finally, we note that

the majority of those changes emphasized

by petitioners pertain to a single exist-

ing constitutional provision, article

XIII, which already contains 33 separate

sections dealing with the subject of tax-

ation and assessment procedure. Since

article XIII doubtless was premised upon

the assumption that local taxation would

be unrestricted by any tax rate and

assessment limitations such as those adop-

ted by XIII A, it is not surprising that

many of these sections may be said to be

affected by the new taxation scheme.

Nevertheless, we decline to hold that

article XIII A accomplished a revision of

the Constitution by reason of its quanti-

tative effect upon the existing provi-

sions of that document.

Petitioners insist, however, that

the new article also will have far reach-

C-37

ing qualitative effects upon our basic

governmental plan, in two principal par-

ticulars, namely, (1) the loss of “home

rule" and (2) the conversion of our

governmental framework from "republican"

to "democratic" form. A close analysis

of XIII A convinces us that its probable

effects are not as fundamentally disrup-

tive as petitioners suggest.

a.) Loss of home rule. (8) The

principle of home rule involves, essen-

tially, the ability of local government

(technically, chartered cities, counties,

and cities and counties) to control and

finance local affairs without undue inter-

ference by the Legislature. (See, e.g.,

Weekes v. City of Oakland (1978) 21 Cal.

3d 386, 399-400 [conc. opn.], 422-426

C[dis. opn.] [146 Cal.Rptr. 558, 579 P.2d

449], and authorities cited; Bishop v.

City of San Jose (1969) 1 Cal.3d 56, 61-

C-38

63 (81 Cal.Rptr. 465, 460 P.2d 137].)

(4c) It is undeniably true that a con-

stitutional Limitation upon prevailing

local taxation rates and assessments will

have a potentially limiting effect upon

the management and resolution of local

affairs. Reduced taxes may be expected

to generate reduced revenues, inevitably

resulting in a corresponding curtailment

of locally financed services and pro-

grams. To conclude, however, that the

mere imposition of tax limitations, per

se, accomplishes a constitutional revi-

sion would in effect bar the people from

ever achieving any local tax relief

through the initiative process. Peti-

tioners have cited to us no authorities

Which support such a broad proposition,

and our own research, disclosing only

one case, indicates a contrary rule.

(See School Dist. of City of Pontiac v.

C-39

City of Pontiac (1933) 262 Mich. 338 [247

N.W. 474, 477] [initiative measure adopt-

ing a 1 1/2 percent tax limitation on

assessed value, and requiring two-thirds

approval of electorate to increase taxes,

was a constitutional amendment, not a re-

vision]. )

Petitioners insist, however, that

article XIII A has an additional effect

beyond the mere limitation of tax reven-

ues, namely, the vesting in the Legisla-

ture of the power to allocate to local

governmental agencies the revenues de-

rived from real property taxation. It is

suggested that, by reason of the opera-

tion of section 1, subdivision (a), of

article XIII A (allocating the revenues

from the 1 percent maximum tax “according

to law"), the Legislature is thereby em-

powered, at its whim, and upon whatever

conditions it may impose, to pick and

c-40

choose among the local agencies, reward-

ing "deserving" agencies with substantial

amounts while penalizing others by re-

duced awards. Certainly nothing on the

face of the article, however, abrogates

home rule to this extent, or discloses

any intent to undermine or _ subordinate

preexisting constitutional provisions on

that subject (Cal. Const., art. XI, §$§

3-7). Indeed, present legislative imple-

mentation of article XIII A reveals that

such a result has not ensued. For sev-

eral reasons, petitioners' fears in this

connection seem illusory and illfounded.

First, it is clear that even prior

to the adoption of article XIII A, the

Constitution authorized the Legislature

to “provide maximum property tax rates

and bonding limits for local governments"

(art. XIII, § 20), to provide similar

limits for school districts (id., § 21),

C-41

and to grant exemptions from real prop-

erty taxation in favor of certain speci-

fied classes of property (id., § 4).

Thus, from the standpoint of legislative

control, the new article appears poten-

tially no more threatening to home rule

than these preexisting constitutional

limitations.

Second, wholly unlike the McFadden

initiative, article XIII A neither des-

troys nor annuls the taxing power of

local agencies. Although revenues de-

rived from real property taxes may well

be substantially reduced by reason of the

new tax rate and assessment restrictions

(§§ 1, 2), 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." (§ 4.) Although

the interpretation of the foregoing

C-42

quoted provisions is not presently be-

fore us, it seems evident that section 4

assists in preserving home rule princi-

ples by leaving to local voters the de-

cision whether or not to authorize "spe-

cial" taxes to support local programs.

Third, article XIII A does not by

its terms empower the Legislature to di-

rect or control local budgetary decisions

or program or service priorities, and we

have no reason to assume that the Legis-

letere will attempt to exercise its

powers in such a manner as to interfere

with local decision-making. Certainly,

local agencies retain the same constitu-

tional and statutory authority over muni-

cipal affairs which they possessed and

exercised prior to the adoption of the

new article. The mere fact of reduction

in local revenues does not lead us neces-

sarily to the conclusion that local

C-43

agencies have forfeited control over

allocations and disbursements of their

remaining funds.

Finally, recent implementing legis-

lation (Stats. 1978, chs. 292, 332) con-

firms the Legislature's present intention

to preserve home rule and local autonomy

respecting the allocation and expenditure

of real property tax revenues. Although

this legislation is, of course, subject

to future change and, accordingly, is not

conclusive on the point, the present

pattern of legislative implementation of

article XIII A appears to refute peti-

tioners' premise that the article neces-

sarily and inevitably has resulted or

will result in the loss of home rule.

Among other provisions, the Legislature

has enacted Government Code section 26912

which contains the formulae whereby

county auditors must allocate to various

C-44

local agencies and school districts with-

in county boundaries the revenues to be

derived from the 1 percent maximum real

property tax during the fiscal year 1978-

1979. Although these formulae are some-

what complex, in general they aim at allo-

cating these funds on a pro rata basis,

without imposing any condition whatever

regarding their ultimate use. Each

“local agency" (city, county, city and

county, and special district) is to re-

ceive a proportionate share based upon

its average property tax revenues during

the previous three fiscal years. (Gov.

Code, § 26912, sv’ ds. (a), (b)(1).-)

Similarly, each school district, county

superintendent of chants, and community

college district, is to receive a propor-

tionate share based upon the entity's

average property tax revenues for the

1977-1978 fiscal year. (Id., subd.

C-45

— 4 =

(b)(2).)

The foregoing tax allocation scheme

is evidently intended to assure that each

local agency and school district will

receive approximately the same percentage

of the total tax revenues as it had pre-

viously received. Thus, contrary to peti-

tioners' fears and assumptions, the

adoption of XIII A need not necessarily

result either in abrogation of home rule

in this state or in the delegation to the

Legislature of the power to make those

revenue and budgetary decisions formerly

left to local discretion and_ control.

(Other sections of the new legislation

contain formulae for allocating the

state's surplus tax funds. These provi-

sions do not relate to the distribution

of revenues from real property taxation

and, accordingly, they are not relevant

to our present discussion, except insofar

C-46

as the availability of these funds may

minimize the impact of the reduction in

local tax revenues.)

b.) Loss of republican form of

government. Continuing their thesis that

XIII A is a constitutional revision not

an amendment under our McFadden holding,

petitioners next maintain that the opera-

tion of the article, and particularly

section 4 thereof, will result ina

change from a "republican" form of gov-

ernment (i.e., lawmaking by elected rep-

resentatives) to a “democratic” govern-

mental plan (i.e., Lawmaking directly by

the people).

Contrary to petitioners’ assertion,

however, we are convinced that article

XIII A is more modest both in concept and

effect and does not change our basic gov-

ernmental plan. Following the adoption

of article XIII A both local and state

C-47

government will continue to function

through the traditional system of elected

representation. Other than in the lLimi-

ted area of taxation, the authority of

local government to enact appropriate

laws and regulations remains wholly unim-

paired. The requirement of section 4

that any “special taxes" must be approved

by a two-thirds vote of the "qualified

electors" restricts but does not abolish

the power of local governments in the

raising of revenue. We decline to hold

that such a "supermajority" requirement,

the two-thirds vote, standing alone and

limited to the subject of taxes, consti-

tutes a substantial constitutional revi-

sion which cannot be accomplished through

an initiative. Similar voting require-

ments in financial matters have not been

uncommon. For example, prior to the

adoption of article XIII A, our Constitu-

C-48

tion required the assent of two-thirds of

the qualified electors to incur indebted-

ness exceeding in any year the income ‘and

revenue provided for that year. (Art.

XVI, § 18.) We have, within another con-

text, previously described other examples

of constitutional provisions sanctioning

deviations from simple “majority rule."

(See Westbrook v. Mihaly (1970) 2 Cal.3d

765, 797-798, fn. 64 [87 Cal.Rptr. 839,

471 P.2d 487].)

It should be borne in mind that not-

withstanding our continuing representa-

tive and republican form of government,

the initiative process itself adds an

important element of direct, active, demo-

cratic contribution by the people. (See

In re Pfahler (1906) 150 Cal. 71, 77-78

[88 P. 270] [holding that the constitu-

tional guarantee of a republican form of

: government is inapplicable to the local

Cc-49

governmental level].) We thus conclude

that section 4 of article XIII A, and

its requirement of substantial popular

support, beyond that of a bare majority

for the approval and adoption of "spe-

cial" local taxes adds nothing novel to

the existing governmental framework of

this state.

In summary, we believe that it is

apparent that artile XIII A will result

in various substantial changes in the

operation of the former system of taxa-

tion. Yet, unlike the alterations effec-

ted by the McFadden initiative discussed

above, the article XIII A changes operate

functionally within a relatively narrow

range to accomplish a new system of taxa-

tion which may provide substantial tax

relief for our citizens. We decline to

hold that such a limited purpose cannot

be achieved directly by the people through

C-50

the inititative process. As succinctly

and graphically expressed a number of

years ago in a study of the California

procedure, ". . . the initiative is in

essence a legislative battering ram

Which may be used to tear through the

exasperating tangle of the traditional

legislative procedure and strike direct-

ly toward the desired end. Virtually

every type of interest-group has on

occasion used this instrument. It is

deficient as a means of legislation in

that it permits very little balancing of

interests or compromise, but it was

designed primarily for use in situations

where the ordinary machinery of legisla-

tion had utterly failed in this respect.

It has served, with varying degrees of

efficacy, as a vehicle for the advocacy

of action ultimately undertaken by the

representative body." (Key & Crouch, The

C-51

Initiative and the Referendum in Cal.

(1939) p. 485, italics added.)

The foregoing language, written

almost 40 years ago, seems’ remarkably

prophetic given the apparent historic

origins of article XIII A. Although we

express neither approval nor disapproval

of the article from the standpoint of

sound fiscal or social policy, we find

nothing in the Constitution's revision

and amendment provisions (art. XVIII)

Which would prevent the people of this

state from exercising their will in the

manner herein accomplished. Indeed, if

the foregoing description of the initia-

tive as a “legislative battering ram" is

accurate it would seem anomalous to

insist, as petitioners in effect do, that

the sovereign people cannot’ themselves

act directly to adopt tax relief measures

of this kind, but instead must defer to

C-52

a

the Legislature, their own representa-

tives. We conclude that article XIII A

fairly may be deemed a_ constitutional

amendment, not a revision.

2. The Single-subject Requirement

(9a) Our Constitution provides that

"An inititative measure embracing more

than one subject may not be submitted to

the electors or have any effect." (Art.

II, § 8, subd. (d).) (10a) Acknowledg-

ing that its general reference is to the

subject of taxation, petitioners nonethe-

less argue that article XIII A _ covers

many subjects and, indeed, is so sweeping

and extensive in its practical effect and

import as to encompass nearly the entire-

ty of "government." In this regard, their

argument is somewhat related to their

prior contention that article XIII A con-

stitutes a revision of the Constitution,

rather than an amendment. Accordingly,

C-53

many of our previous observations regard-

ing the revision and amendment procedures

have application to their one-subject

assertions.

The single-subject requirement of

article II was adopted in 1948, possibly

in response to the many-faceted initia-

tive measure which we invalidated in

McFadden, supra. Only a year later, in

Perry v. Jordan (1949) 34 Cal.2d 87 [207

P.2d 47], we had occasion to construe the

new constitutional provision. In Perry,

we adopted and applied the “reasonably

germane” test previously developed by

earlier decisions construing a_ similar

single-subject restriction applicable to

legislation (see Cal. Const., art. IV,

§ 9). We quoted with approval the follow-

ing language from an earlier opinion in

which we had upheld the legislative adop-

tion of the Probate Code in a_ single

C-54

enactment: "“. . .[WJe are of the view

that the [single-subject] provision is

not to receive a narrow or technical

construction in all cases, but it is to

be construed liberally to uphold proper

legislation, all parts of which are rea-

sonably germane. [Citation.] The pro-

vision was not enacted to provide means

for the overthrow of legitimate legisla-

tion. [Citation.] CW) Numerous pro-

visions, having one general object, if

fairly indicated in the title, may be

united in one act. Provisions governing

projects so related and interdependent

as to constitute a single scheme may be

properly included within a _ single act.

([Citation.] The legislature may insert

ina single act all legislation germane

to the general subject as expressed in

its title and within the field of legis-

lation suggested thereby. [Citation.]

C-55

- » + A provision which conduces to the

act, or which is auxiliary to and promo-

tive of its main purpose, or has a neces-

sary and natural connection with such

purpose is germane within the rule

cma te (Evans v. Superior Court (1932)

215 Cal. 58, 62-63 [8 P.2d 467], italics

added.)

In Perry, the challenged initiative

measure had as its general subject the

repeal of constitutional provisions gov-

erning aid to the aged and blind. We

noted that the repeal measure would have

several collateral effects, including (1)

vesting the Legislature with power to

reduce pension payments, (2) giving the

counties the responsibility of adminis-

tering pension programs, (3) imposing on

relatives liability for benefits, and (4)

raising the minimum age qualification for

benefits. (Perry v. Jordan, supra, 34

C-56

Cal.2d at pp. 93-94.) Nonetheless, and

referring to the foregoing features of

the initiative, we unanimously rejected

the single-subject challenge, observing

that "All those things obviously pertain

to any plan--single subject--of aid to

the needy aged and blind. They are mere-

ly administrative details." (Id., at p.

94.) (9b) We thus draw from Perry its

primary lesson that an initiative measure

will not violate the single-subject re-

quirement if, despite its varied colla-

teral effects, all of its parts are "rea-

sonably germane" to each other. We note

also the existence of a more restrictive

test recently proposed in the dissenting

opinion of Justice Manuel in Schmitz v.

Younger (1978) 21 Cal.3d 90, 100 [145

Cal.Rptr. 517, 577 P.2d 652], wherein he

suggested that "an initiative's provi-

sions must be functionally related in

C-57

furtherance of a common underlying pur-

pose." (10b) Our analysis of article

XIII A convinces us that the several

elements of that article satisfy either

standard in that they are both reasonably

germane to, and functionally related in

furtherance of, a common underlying pur-

pose, namely, effective real property tax

relief.

As previously noted, 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).

Although petitioners insist that these

four features constitute separate sub-

jects, we find that each of them is rea-

sonably interrelated and interdependent,

forming an interlocking “package” deemed

necessary by the initiative's framers to

Cc-58

assure effective real property tax re-

lief. Since the total real property tax

is a function of both rate and assess-

ment, sections 1 and 2 unite to assure

that both variables in the property tax

equation are subject to control. More-

over, since any tax savings resulting

from the operation of sections 1 and 2

could be withdrawn or depleted by addi-

tional or increased state or local levies

of other than property taxes, sections 3

and 4 combine to place restrictions upon

the imposition of such taxes. Although

sections 3 and 4 do not pertain solely

to the matter of property taxation, both

sections, in combination with sections l

and 2, are reasonably germane, and func-

tionally related, to the general subject

of property tax relief.

(11) Among other purposes, the sin-

gle-subject requirement was enacted to

C-59

minimize the risk of voter confusion and

deception. (Schmitz v. Younger, supra,

21 Cal.3d 90, 97 [dis. opn.].) (10c)

We may take judicial notice of the fact

that the advance publicity and public

discussion of article XIII A and its

predicted effects were massive. (Evid.

Code, § 452, subd. (g).) The measure re-

ceived as much public attention as any

other ballot proposition in recent years.

These circumstances would seem to dilute

the risk of voter confusion or deception

by reason of the inclusion of the four

principal features of the article in one

ballot proposition. Moreover, the offi-

cial voters pamphlet mailed to all regis-

tered voters contained an elaborate and

detailed explanation of the various ele-

ments of Proposition 13. (See Morris v.

Priest (1971) 14 Cal.App.3d 621, 625 [92

Cal.Rptr. 476].)

C-60

Petitioners contend, however, that

adoption of XIII A violated a_ second

important purpose underlying the single-

subject requirement, namely, to avoid

“exploiting” the initiative process by

combining in a _ single measure several

provisions which might not have commanded

majority support if considered separately.

(See McFadden v. Jordan, supra, 32 Cal.2d

330, 346.) Petitioners rely upon cases

from several other jurisdictions express-

ing this principle. For example, in

Kerby v. Luhrs (1934) 44 Ariz. 208 [36 P.

2d 549], the court struck down an initia-

tive measure which would have added to

the Arizona Constitution such diverse

provisions as (1) a new tax on copper

production, (2) a new method of valuing

public utility property, and (3) a new

state tax commission. According to the

court in Kerby, any of these provisions,

C-61

singly, could have been adopted "without

the slightest need of adopting" the

others. (P. 554.) Although each provi-

sion related to the general subject of

"taxation," the Kerby court found no

other connection between them, character-

izing the measure as “logrolling of the

worst type... ." (PRP. 555.)

Unlike the enactment condemned in

Kerby, however, the four elements of

article XIII A not only pertain to the

general subject of taxation, but also are

reasonably interdependent and functional-

ly related to each other. More impor-

tantly, no apparent “logrolling” is

involved in this case. Each of the four

basic elements of article XIII A _ was

designed to interlock with the others to

assure an effective tax relief program.

Petitioners assert that each of the

four separate elements of article XIII A

C-62

might not have been approved had each

element appeared separately on the ballot.

They speculate that various classes of

voters may have favored some, but not

all, of these elements; petitioners

would require a showing that each of the

several provisions of an initiative mea-

sure is capable of gaining approval by

the electorate, independent of the other

provisions. We are unable to accept such

a contention, concluding that petitioners’

proposed single-subject test is far too

strict, and lacks support in the author-

ities. Aside from the obvious difficulty

of ever establishing satisfactorily such

"independent voter approval," this stan-

dard would defeat many legitimate enact-

ments containing isolated, arguably

"unpopular," provisions reasonably deemed

necessary to the integrated functioning

of the enactment as a whole. We avoid

C-63

an overly strick judicial application of

the single-subject requirement, for to

do so could well frustrate legitimate

efforts by the people to accomplish inte-

grated reform measures. As we have pre-

viously observed, the initiative proced-

ure itself was specifically intended to

accomplish such kinds of reforms through

its function as a “legislative battering

ram." We should dull or blunt its force

only for reasons that are constitutional-

ly mandated, and accordingly we conclude

that article XIII A does not violate the

single-subject requirement of article II.

3. Equal Protection of the Laws

Petitioners’ equal protection argu-

ment against article XIII A is directed

at two aspects of the article. They con-

tend that (1) the "rollback" of assessed

valuation (§ 2, subd. (a)) assertedly

will result in invidious discrimination

C-64

between owners of similarly situated

property, and that (2) the two-third

voting requirement for enacting "special

taxes" by local agencies (§ 4) unduly

discriminates in favor of those voters

casting negative votes. As will appear,

we hold that neither contention has

merit.

a.) 1975-1976 Assessment Date.

(12a) As we have noted, section 2, sub-

division (a), of article XIII A provides

that "The full cash value [to which the

1 percent maximum tax applies] means the

County Assessors valuation of real prop-

erty as shown on the 1975-76 tax bill

under ‘full cash value,’ or thereafter,

the appraised value of real property when

purchased, newly constructed, or a change

in ownership has occurred after the 1975

assessment. All real property not al-

ready assessed up to the 1975-76 tax

C-65

levels may be reassessed to reflect that

valuation." (§ 2, subd. (b), permits an

annual 2 percent maximum increase on the

“fair market value base" of property, to

reflect the inflationary rate.) Peti-

tioners emphasize that, by reason of the

"rollback" of assessed value to the 1975-

1976 fiscal year, two substantially

identical homes, located "side-by-side"

and receiving identical governmental ser-

vices, could be assessed and taxed at

different levels depending upon their

date of acquisition. Such a disparity in

tax treatment, petitioners claim, consti-

tutes an arbitrary discrimination in vio-

lation of the federal equal protection

clause (Amend. XIV, § 1).

Preliminarily, we note that petition-

ers' equal protection challege, arguably,

is premature. (13) As a general rule,

courts will not reach constitutional

C-66

questions “unless absolutely necessary to

a disposition” of the case before them

(Bayside Timber Co. v. Board of Supervi-

sors (1971) 20 Cal.App.3d 1, 5-6 [97 Cal.

Rptr. 431]), and we could decline to

consider the issue in the abstract and

instead await its resolution within the

framework of an actual controversy where-

in the disparity is pivotal.

(12b) Nevertheless, we have elected

to treat the equal protection issue as

constituting an attack upon the face of

the article itself, because the assessors

throughout this state must be advised

whether to follow the new assessment pro-

cedure. As will appear, we will conclude

that the essential demands of equal pro-

tection are satisfied by a rational basis

underlying section 2 of the new article.

(14a) The general principles appli-

cable to the determination of an equal

C-67

protection challenge to state tax legis-

lation were recently summarized by the

United States Supreme Court as_ follows:

"We have long held that '‘'[wJhere taxation

is concerned and no specific federal

right, apart from equal protection, is

imperiled, the States have large leeway

in making classifications and drawing

lines which in their judgment produce

reasonable systems of taxation.' [Cita-

tion.] (15a) A state tax law is not

arbitrary although it ‘discriminate[s]

in favor of a certain class .. . if the

discrimination is founded upon a reason-

able distinction, or difference in state

policy,’ not in conflict with the Federal

Constitution. [Citation.] This princi-

ple has weathered nearly a century of

Supreme Court adjudication . .. ." (Kahn

v. Shevin (1974) 416 U.S. 351, 355-356

[40 L.Ed.2d 189, 193, 94 S.Ct. 1734].)

C-68

(14b) Consistent with the foregoing

expression of broad liberality, the high

court has recognized the wide flexibility

permitted states in the enforcement and

interpretation of their tax laws, holding

that "The latitude of discretion is not-

ably wide in the classification of prop-

erty for purposes of taxation and the

granting of partial or total exemptions

upon grounds of policy." (Royster Guano

Co. v. Virginia (1920) 253 U.S. 412, 415

[64 L.Ed. 989, 991, 40 S.Ct. 560], ital-

ics added; see Haman v. County of Hum-

boldt (1973) 8 Cal.3d 922, 925-927 [106

Cal.Rptr. 617, 506 P.2d 993].) There

exists no “iron rule of equality, pro-

hibiting the flexibility and variety that

are appropriate" to schemes of taxation.

(Allied Stores of Ohio v. Bowers (1959)

79 S.Ct. 437]; see Tax Commissioners v.

C-69

Jackson (1931) 283 U.S. 527, 537 (75

L.Ed. 1248, 1255-1256, 51 S.Ct. 540, 73

A.L.R. 1464]; Ohio Oil Co. v. Conway

(1930) 281 U.S. 146, 159 [74 L.Ed. 775,

781-782, 50 S.Ct. 310].) (15b) So long

as a system of taxation is supported by

a rational bagis, and is not palpably

arbitrary, it will be upheld despite the

absence of "'a precise, scientific uni-

formity'” of taxation. (Kahn v. Shevin,

supra, 416 U.S. at p. 356, fn. 10 [40

L.Ed.2d at pp. 193-194]; Allied Stores

of Ohio, supra, at p. 527 [3 L.Ed.2d at

p- 485]; Ohio Oil Co., supra, at pp. 159-

160 (74 L.Ed. at pp. 781-783]; see Frank-

lin Life Ins. Co. v. State Board of Equal-

ization (1965) 63 Cal.2d 222, 232-233

[45 Cal.Rptr. 869, 404 P.2d 477].)

(12c) Petitioners, in response, rely

upon a line of cases which hold, as a gen-

eral proposition, that the intentional,

C-70

systematic undervaluation of property

similarly situated with other property

assessed at its full value constitutes

an improper discrimination in violation

of equal protection principles. (E.g.,

Cumberland Coal Co. v. Board (1931) 284

U.S. 23, 28 [76 L.Ed. 146, 149-150, 52

S.Ct. 48]; Sioux City Bridge v. Dakota

County (1923) 260 U.S. 441, 445 [67 L.Ed.

340, 342-343, 43 §.Ct. 190, 28 A.L.R.

979]; see Hillsborough v. Cromwell (1946)

326 U.S. 620, 623 [90 L.Ed. 358, 363, 66

S.Ct. 445] [equal protection forbids im-

posing taxes not levied against persons

of the same class].)

The foregoing cases, however, in-

volved constitutional or statutory pro-

visions which mandated the taxation of

property on a current value basis. These

cases do not purport to confine the

States to a current value system under

C-71

equal protection principles or to state

an exception to the general rule accepted

both by the United States Supreme Court

and by us, as previously noted, that a

tax classification or disparity of tax

treatment will be sustained so long as it

is founded upon some reasonable distinc-

tion or rational basis.

By reason of section 2, subdivision

(a), of the article, except for property

acquired prior to 1975, henceforth all

real property will be assessed and taxed

at its value at date of acquisition rather

than at current value (subject, of course,

to the 2 percent maximum annual inflation-

ary increase provided for in subdivision

(b)). This “acquisition value" approach

to taxation finds reasonable support in

a theory that the annual taxes which a

property owner must pay should bear some

rational relationship to the original

C-72

cost of the property, rather than relate

to an unforeseen, perhaps unduly infla-

ted, current value. Not only does an

acquisition value system enable each

property owner to estimate with some

assurance his future tax liability, but

also the system may operate on a fairer

basis than a current value approach.

For example, a taxpayer who acquired his

property for $40,000 in 1975 henceforth

will be assessed and taxed on the basis

of that cost (assuming it represented the

then fair market value). This result is

fair and equitable in that his future

taxes may be said reasonably to reflect

the price he was originally willing and

able to pay for his property, rather than

an inflated value fixed, after acquisi-

tion, in fart on the basis of sales to

third parties over which sales he can

exercise no control. On the other hand,

Cc-73

a person who paid $80,000 for similar

property in 1977 is henceforth assessed

and taxed a higher level which reflects,

again, the price he was willing and able

to pay for that property. Seen in this

light, and contrary to petitioners'

assumption, section 2 does not’ unduly

discriminate against persons who acquired

their property after 1975, for those per-

sons are assessed and taxed in precisely

the same manner as those who purchased in

1975, namely, on an acquisition value

basis predicated on the owner's free and

voluntary acts of purchase. This is an

arguably reasonable basis for assessment.

(We leave open for future resolution ques-

tions regarding the proper application

of art. XIII A to involuntary changes in

ownership or new construction.)

In addition, the fact that two tax-

payers may pay different taxes on sub-

C-74

stantially identical property is not

wholly novel to our general taxation

scheme. For example, the computation of

a sales tax on two identical items of per-

sonalty may vary substantially, depending

upon the exact sales price and the avail-

ability of a discount. Article XIII A

introduces a roughly comparable tax sys-

tem with respect to real property, where-

by the taxes one pays are closely related

to the acquisition value of the property.

In converting from a current value

method to an acquisition value system,

the framers of article XIII A chose not

to "roll back" assessments any earlier

than the 1975-1976 fiscal year. For

assessment purposes, persons who acquired

property prior to 1975 are deemed to have

purchased it during 1975. These persons,

however, cannot complain of any unfair

tax treatment in view of the substantial

Cc-75

tax advantage they will reap from a re-

turn of their assessments from current

to 1975-1976 valuation levels. Indeed,

the adoption of a uniform acquisition

value system without some "cut off" date

reasonably might have been considered

both administratively unfeasible and in-

capable of producing adequate tax reven-

ues. The selection of the 1975-1976

fiscal year as a base year, although

seemingly arbitrary, may be considered as

comparable to utilization of a "“grand-

father" clause wherein a particular year

is chosen as the effective date of new

legislation, in order to prevent inequit-

able results or to promote some other

legitimate purpose. (See Harris v. Al-

coholic Bev. etc. Appeals Bd. (1964) 61

Cal.2d 305, 309-319 [38 Cal.Rptr. 409,

392 P.2d 1].) Similar provisions are

routinely upheld by the courts. (See,

C-76

e.g., New Orleans v. Dukes (1976) 427

U.S. 297, 305-306 [49 L.Ed.2d 511, 517-

519, 96 S.Ct. 2513]; In re Norwalk Call

(1964) 62 Cal.2d 185, 188 [41 Cal.Rptr.

666, 397 P.2d 426].)

Petitioners insist, however, that

property of equal current value must be

taxed equally, regardless of its original

cost. This proposition is demonstrably

without legal merit, for our state Con-

stitution itself expressly contemplates

the use of "a value standard other than

Sair market valwe «. - « «" (tage. BER,

§ 1, subd. (a).) Moreover, the Legisla-

ture is empowered to grant total or par-

tial exemptions from property taxation

on behalf of various classes (e.g.,

veterans, blind or disabled persons,

religious, hospital or charitable prop-

erty; see art. XIII, § 4), despite the

fact that similarly situated property may

C-77

be taxed at its full value. In addition,

homeowners receive a partial exemption

from taxation (art. XIII, § 3, subd. (k))

which is unavailable to other property

owners. As noted previously, the state

has wide discretion to grant such exemp-

tions. (Royster Guano Co. v. Virginia,

supra, 253 U.S. 412, 415 [64 L.Ed. 989,

991]).)

Finally, no compelling reason exists

for assuming that property lawfully may

be taxed only at current values, rather

than at some other value, or upon some

different basis. (16) As the United

States Supreme Court has explained, “The

State is not limited to ad valorem taxa-

tion. It may impose different specific

taxes upon different trades and profes-

sions and may vary the rate of excise

upon various products. In levying such

taxes, the State is not required to

C-78

resort to close distinctions or to main-

tain a precise, scientific uniformity

with reference to composition, use or

value." (Ohio Oil Co. v. Conway, supra,

281 U.S. 146, 159 [74 L.Ed. 775, 782].)

(12d) We cannot say that the acquisition

value approach incorporated in article

XIII A, by which a property owner's tax

liability bears a reasonable relation to

his costs of acquisition, is wholly arbi-

trary or irrational. Accordingly, the

measure under scrutiny herein meets the

demands of equal protection principles.

b.) Two-thirds Voting Requirement.

(17) Petitioners have also questioned

whether the requirement of a two-thirds

vote to approve "special" local taxes

(§ 4) denies to voters the equal protec-

tion of the laws. We may quickly dispose

of the contention. Petitioners rely

upon our decision in Westbrook v. Mihaly,

c-79

supra, 2 Cal.3d 765, wherein we held that

a two-thirds requirement for approval of

county general obligation bonds violated

federal equal protection principles. How-

ever, our Westbrook opinion was vacated

by the United States Supreme Court (Miha-

ly v. Westbrook (1971) 403 U.S. 915 [29

L.Ed.2d 692, 91 S.Ct. 2224]) and the

cause was remanded for our reconsidera-

tion in the light of Gordon v. Lance

(1971) 403 U.S. 1 [29 L.Ed.2d 273, 91

S.Ct. 1889], a case which upheld a 60

percent vote requirement primarily be-

cause no “discrete and insular minority"

was singled out for special treatment by

application of the voting requirement.

Thus, Westbrook no longer represents the

controlling law on the _ subject. (See

Coffineau v. Eu (1977) 68 Cal.App.3d 138,

143 [137 Cal.Rptr. 90].) Because persons

who vote in favor of tax measures may not

Cc-80

be deemed to represent a definite, iden-

tifiable class, equal protection princi-

ples do not forbid "debasing" their vote

by requiring a two-thirds approval of

such measures.

4. Right to Travel

(18a) Petitioners insist that the

constitutional right to travel (see

Associated Home Builders etc., Inc. v.

City of Livermore, supra, 18 Cal.3d 582,

602) is impaired by the provisions of

article XIII A. They reason that since

any “nonresidents or newly arrived resi-

dents" will have to pay greater property

taxes than “established" residents arti-

cle XIII A will deter property owners

from moving to another location, thereby

inhibiting travel.

As we have explained in discussing

petitioners’ equal protection challenge,

no penalty is imposed on the owner. (19)

Cc-81

The change from a current value system

to an acquisition value method is intend-

ed to benefit all property owners, past

and future, resident and nonresident, by

reducing inflationary increases in

assessments, by limiting tax rates, and

by permitting the taxpayer to make more

careful and accurate predictions of fu-

ture tax liability. (18b) Under the

former system, it was arguable that pro-

spective purchasers of real property

might have been deterred from purchasing

(thereby impairing their right to travel)

by reason of the unpredictable nature of

future property tax liability resulting

from unlimited inflationary pressures.

‘Certainly, travel is inhibited to no

greater extent by the new system, which

establishes a more fixed and stable mea-

sure than that imposed by the former

system of unconstrained property taxation

C-82

based on current values. Accordingly,

we hold that the right to travel is not

unconstitutionally impaired by article

XIII A.

5. Impairment of Contracts

(20) Petitioners forcefully argue

that the operation of article XIII A

inevitably will result in the default of

various contractual obligations which

were incurred by local agencies and dis-

tricts prior to the enactment of the new

article. At the least, petitioners con-

tend, the new restrictions upon the local

tax power will “depreciate” the security

on which the various obligees have relied

for repayment of public obligations held

by them. It is claimed, therefore, that

article XIII A constitutes an unlawful

impairment of contract under the federal

Constitution (art. I, § 10, cl. 1).

Petitioners observe that section l,

C-83

subdivision (b), of article XIII A, in

apparent anticipation of the argument,

contains a specific exception in favor

of those holding evidence of certain

prior indebtedness: "The limitation pro-

vided for in subdivision (a) [the 1 per-

cent maximum tax] shall not apply to ad

valorem taxes or special assessments to

pay the interest and redemption charges

on any indebtedness approved by the

voters prior to the time this’ section

becomes effective." (Italics added.)

Petitioners point, however, to certain

municipal obligations which were not

required to be approved by the voters,

including pension and health plan bene-

fits, labor and other municipal contracts,

and redevelopment agency bonds. The

latter category, particularly, involves a

special risk of impairment, according to

petitioners, for redevelopment agencies

C-84

rely exclusively upon property tax reven-

ues for the retirement of their bonds.

Redevelopment bonds are secured by

a pledge of so-called "tax increment"

revenues generated by increases in the

assessed value of the redeveloped proper-

ty. (Cal. Const., art. XVI, § 16; Health

& Saf. Code, §§ 33670, 33671; see Rede-

velopment Agency v. County of San Bernar-

dino (1978) 21 Cal.3d 255, 257-259 [145

Cal.Rptr. 886, 578 P.2d 133].) As we

explained in San Bernardino, "In essence

this section [art. XVI, § 16] provides

that if, after a redevelopment project

has been approved, the assessed valuation

of taxable property in the project increa-

ses, the taxes levied on such property in

the project area are divided between the

taxing agency and the redevelopment agen-

cy. The taxing agency receives the same

amount of money it would have realized

C-85

under the assessed valuation existing at

the time the project was approved, while

the additional money resulting from the

rise in assessed valuation is placed in

a special fund for repayment of indebted-

ness inpieven in financing the project."

(Id., at p. 259, italics omitted.)

According to petitioners, article

XIII A will have a dual adverse effect

upon redevelopment agency revenues

because both the 1 percent maximum tax

and the "rollback" of assessments to a

1975-1976 valuation will combine to re-

duce substantially tax inerement revenues.

It is further contended that the problem

thereby posed is acute, and the implica-

tions widespread. Tax increment bonds

are being used to finance 250 redevelop-

ment projects in 121 cities and 3 coun-

ties. None of these bonds was specifi-

cally approved by the voters, and thus

C-86

none of them is exempt from the 1 percent

maximum tax restriction.

There are two troublesome aspects to

petitioners’ impairment argument, involv-

ing both timing and standing. First, it

is readily apparent that petitioners’ im-

pairment of contracts argument is prema-

turely raised. Nothing on the face of

article XIII A requires local agencies to

to default either in meeting their pre-

existing contracts or in liquidating

their outstanding bonds. As we have

seen, the ultimate operation of the ar-

ticle may result in a substantial reduc-

tion in the amount of available revenues,

but as yet no direct impairment of any

contract or bond has occurred by virtue

thereof. No party to any contract or

bondholder has so contended. ab es have

noted above, courts will avoid reaching

constitutional objections when it is not

C-87

absolutely necessary to the disposition

of the case before them. (Bayside Timber

Co. v. Board of Supervisors, supra, 20

Cal.App. 3d 1, 6.)

In the present cases, despite the

reduction of revenues from property tax-

ation, doubtless many local public enti-

ties will retain sufficient funds to

meet preexisting contractual or bonded

indebtedness rather than suffer default;

allocation of surplus state funds (see

Stats. 1978, chs. 292, 332) may assist

other entities in these efforts.

As for redevelopment agencies, and

other local agencies and districts rely-

ing upon property tax revenue for the

retirement of bonds and other prior

indebtedness which have not been voter

approved, we note that the Legislature

has created the Local Agency Indebtedness

Fund to promote a public policy of pro-

C-88

tecting “the credit of the state and

local agencies by assuring that no bond

of a local agency goes into default."

(Gov. Code, § 16496, added by Stats.

1978, ch. 292, § 18, italics added.) The

new fund is designed to provide loans

with a maximum three-year term for the

purpose of preventing defaults on bonds

during the 1978-1979 fiscal year “while

local agencies are reorganizing revenue

sources which support payments on such

bonds." (Id., § 16496.5.) This legisla-

tion applies to bonds "which have not

been specifically approved and authorized

by the voters of the local agency prior

to June 6, 1978" (id., § 16497, subd.

(c)), including redevelopment bonds

secured by tax increment revenues (id.,

§ 16499, subd. (b), as amended by Stats.

1978, ch. 332, § 22). The legislation

thus fills the gap not covered by the

C-89

constitutional exemption.

Petitioners properly observe that

the new legislation does not specify from

what sources a state loan to a redevelop-

ment agency might be repaid (as tax in-

crement revenues presumably are reserved

to the bondholders). Yet, as we have

previously noted, the loans are made to

prevent bond defaults while new revenue

sources are being explored. We cannot

assume on the face of the present record

that no new revenue sources will be found

or legislatively created. Thus, for all

of the foregoing reasons, we are not

able to conclude that default of prior

contractual obligations is an inevitable

consequence of article XIII A.

Petitioners extend their impairment

argument, however, contending that’ the

new restrictions upon the local taxing

power necessarily have resulted in a

Cc-90

present “depreciation” of the security

relied upon by the various obligees for

repayment of their obligations, and that

accordingly the impairment issue is ripe

for our consideration. According to pe-

titioners, any sebaxantinl restriction

placed upon the taxing power of local

governments accomplishes an immediate un-

lawful impairment of preexisting obli-

gations, at least insofar as the dis-

charge of these obligations may depend

upon the availability of adequate tax

revenues.

The authorities on which petitioners

rely for the foregoing proposition are

not in point. There is a line of cases

holding generally that "a State may not

authorize a municipality to borrow money

and then restrict its taxing power so

that the debt cannot be repaid. ([Cita-

tions.]" (United States Trust Co. v. New

c-91

Jersey (1977) 431 U.S. 1, 24, fn. 22 [52

L.Ed. 24 92, 111, 97 S.Ct. 1505], and

cases cited, italics added.) These cases

do not suggest, however, that an unlawful

impairment occurs immediately upon impo-

sition of the tax restriction, without

regard to its ultimate effect upon the

repayment of preexisting debts. The

United States Trust Co. decision, on

which petitioners primarily rely, invol-

ved a legislative repeal of an express

covenant which had assured to bondholders

that monies pledged as security for re-

payment would not be used to subsidize

rail passenger transportation. The high

court explained that “The parties [to a

municipal contract] may rely on the con-

tinued existence of adequate statutory

remedies for enforcing their agreement,

but they are unlikely to expect that

ae)

state law will remain entirely static.

ose

a

4

Bs

Thus, a reasonable modification of stat-

utes governing contract remedies is much

less likely to upset expectations than a

law adjusting the express terms of an

agreement. In this respect, the repeal

of the 1962 covenant is seen as a serious

disruption of the bondholders’ expecta-

tions." (Id., at pp. 20-21, fn. 17 [52

L.Ed.2d at p. 108], italics added.)

Nor does the recent case of Allied

Structural Steel Co. v. Spannaus (1978)

438 U.S. 234 [57 L.Ed.2d 727, 98 S.Ct.

2716] assist petitioners, for in that

case the challenged statute expressly

modified the employees' pension rights

which previously had been fixed by con-

tract. In the present case, article XIII

A on its face neither directly repudiates

any express covenant with municipal obli-

gees nor immediately impairs any contract

right. As described by the high court

C-93

“aM

in Allied, the federal contract clause

(art. I, § 10) applies only to a "“sub-

stantial impairment of a contractual re-

lationship." (Id., at p. 244 [57 L.Ed.2d

at p. 736].) In the absence of a factual

record disclosing any present, specific

and substantial impairment of contract

attributable to the adoption of article

XIII A, we must reject petitioners’ im-

pairment of contract challenge because

it is premature.

A second defect in the impairment

argument relates to petitioners’ standing

to assert the claim. It is noteworthy

that, unlike the situation presented in

the United States Trust Co. and Allied

cases, none of the petitioners herein

are municipal obligees, bondholders or

creditors alleging an actual or potential

impairment of their rights. In this

connection, it is doubtful that petition-

C-94

aa

possess the requisite standing to assert

the invalidity of article XIII A on im-

pairment of contract grounds. (See, e.g.,

Brock v. Superior Court (1939) 12 Cal.2d

605, 613-614 [86 P.2d 805]; In re Davis

(1966) 242 Cal.App.2d 645, 666 [51

Cal.Rptr. 702]; 5 Witkin, Summary of

Cal. Law (8th ed. 1974) Constitutional

Law, § 44 et seq.) As expressed in an

earlier case, ". . . no obligation of

any contract with the appellant has been

impaired, and:in the absence of a showing

of injury on its part, it may not be

heard." (Irrigation District v. Wutchumna

W. Co. (1931) 111 Cal.App. 688, 696 [296

P. 933].)

We conclude that the challenge to

article XIII A based upon the federal

contract clause is premature and must

await a case in which the contract rights

of an obligee have been demonstrably im-

C-95

me

paired by the operation of the new ar-

ticle.

6. Initiative Title and Summary

(2la) According to petitioners, the

preelection petitions which were circula-

ted to qualify the initiative measure con-

tained a misleading title and summary.

The title, "Initiative Constitutional

Amendment-Property Tax Limitation," was

assertedly defective in its implication

that only property taxes would be affect-

ed by the measure; in fact, other forms of

state and local taxes were also involved.

(Art. XIII A,. $§ 3, 4-) Further, the

summary of the measure stated in part

that it "[La]Juthorizes specified local en-

tities to impose special taxes except

- + + (Creal property taxes]." In fact,

section 4 of the measure restricts the

imposition of such "special taxes" by

imposing a two-thirds vote requirement.

C-96

+

Maa

It is argued that each of these variances

is fatal to the constitutional validity

of the article.

Petitioners further observe that the

sample ballots distributed in Alameda and

San Diego Counties also contained the

foregoing "defects." As for other coun-

ties, the ballot materials were corrected

by court order: The title was changed

to "Tax Limitation--Initiative Constitu-

tional Amendment," and the summary was

revised to read "“[LaJuthorizes imposition

of special taxes by local government

(except on real property) by 2/3 vote of

qualified electors." According to re-

spondents, these corrections were incor-

porated into the voters pamphlet subse-

quently mailed to all registered voters.

Nevertheless, petitioners insist that the

petition signers, and certain voters in

Alameda and San Diego Counties, may have

C-97

been misled or confused by the incorrect

title and summary.

(22) Prior to the circulation of an

initiative measure, the Attorney General

is required to prepare a title and sum-

mary of its “chief purposes and points"”-

-not exceeding 100 words. (Cal. Const.,

art. II, § 10, subd. (d); Elec. Code, §$§

3502, 3503.) The Attorney General's

statement must be true and impartial,

and not argumentative or likely to create

prejudice for or against the measure.

(Elec. Code, § 3531.) The main purpose

of these requirements is to avoid mislead-

ing the public with inaccurate informa-

tion. (See Clark v. Jordan (1936) 7

Cal.2d 248, 249-250 [60 P.2d 457, 106

A.L.R. 549]; Boyd v. Jordan (1934) 1

Cal.2d 468, 471 [35 P.2d 533].) (23)

We have said, however, that the title

and summary need not contain a complete

Cc-98

catalogue or index of all of the mea-

sure's provisions and "if reasonable

minds may differ as to the sufficiency

of the title, the title ”*should be held

sufficient." (Epperson v. Jordan (1938)

12 Cal.2d 61, 66 [82 P.2d 445].) As a

general rule, the title and summary pre-

pared by the Attorney General are presum-

ed accurate, and substantial compliance

with the "chief purpose and points" pro-

vision is sufficient. (Perry v. Jordan,

supra, 34 Cal.2d 87, 94.)

(2lb) In the present case, we conc-

lude that the title and summary, though

technically imprecise, substantially com-

plied with the law, and we doubt that any

significant number of petition signers or

voters were misled thereby. We deem that

the title, stressing only the property

tax aspects of the initiative, was re-

asonably sufficient in light of the fact

c-99

that the measure was principally addres-

sed to the subject of real property tax

relief. Similarly, the original summary

was not so incomplete as to be fatally

defective, because it alerted petition

signers and voters alike to the fact that

the measure contained a provision affect-

ing the imposition of special taxes by lo-

cal agencies. The summary's omission of

any reference to the two-thirds vote re-

quirement was not critical for, as we

noted above, the initiative measure was

extensively publicized and debated, in

all of its several aspects, and a correc-

ted summary was contained in the voters

pamphlet which was mailed to all voters.

We repeat our observation of some time

ago that we ordinarily should assume

that the voters who approved a constitu-

tional amendment ". . . have voted in-

telligently upon an amendment to their

C-100

organic law, the whole text of which was

supplied each of them prior to the elec-

tion and which they must be assumed to

have duly considered . . . ." (Wright

v. Jordan (1923) 192 Cal. 704, 713 [221

P. 915].)

We conclude that the initiative

title and summary comply with existing

legal requirements.

7. Vagueness

(24a) Petitioners have noted the

existence of several words and phrases

in article XIII A which assertedly are

ambiguous or uncertain, suggesting that

in its totality the new article is so

vague as to be incapable of a rational

and uniform interpretation and implemen-

tation. For precedential authority they

rely by analogy on cases which have held

that a statute must be sufficiently clear

so as to vorovide adequate notice of pro-

Cc-101

hibited conduct. (See, e.g., People v.

Superior Court (Hartway) (1977) 19 Cal.3d

338, 345-347 [138 Cal.Rptr. 66, 562 P.2d

1315]; Bowland v. Municipal Court (1976)

18 Cal.3d 479, 491-493 [134 Cal.Rptr.

630, 556 P.2d 1081]; Morrison v. State

Board of Education (1969) 1 Cal.3d 214,

231 (82 Cal.Rptr. 175, 461 P.2d 375);

see also Perez v. Sharp (1948) 32 Cal.2d

711, 728 [198 P.2da 17].)

In the present matter, unlike the

foregoing cases, no civil or criminal

penalties are at issue. Rather, we deal

with a constitutional provision of a

kind, similar to many others, which nece-

ssarily and over a period of time will

require judicial, legislative and admini-

strative construction. This is a fairly

common procedure. (As an example, we

note the broad and uncertain language of

the various sections of art. I of the

C-102

state Constitution, declaring the rights

of the people, such as the right to be

secure against “unreasonable seizures and

searches" (§ 13).)

(25) In evaluating the contention

that, in effect, article XIII A is void

for vagueness, we are aided by several

principles of construction applicable to

constitutions generally. As was stated

in an early case, ". . . since a written

constitution is intended as and is the

mere framework according to whose general

outlines specific legislation must be

framed and modeled, and is therefore

+ + «+ mecessarily couched in general

terms or language, it is not to be inter-

preted according to narrow or supertech-

nical principles, but liberally and on

broad general lines, so that it may ac-

complish in full measure the objects of

its establishment and so carry out the

C-103

great principles of government." (Stephens

v. Chambers (1917) 34 Cal.App. 660, 663-

664 [168 P. 595].)

(26) On the specific issue of

vagueness, we have recently expressed the

concept that, in the abstract, all "en-

actments should be interpreted when pos

sible to uphold their validity [cita-

tion] and . . . courts should construe

enactments to give specific content to

terms that might otherwise be unconstitu-

tionally vague. [Citations.]" (Associ-

ated Home Builders etc., Inc. v. City of

Livermore, supra, 18 Cal.3d 582, 598.)

Significantly, in Livermore, the _ fore-

going principles were employed to uphold

an ordinance adopted by initiative.

(24b) Acknowledging as we must that

article XIII A in a number of particulars

is imprecise and ambiguous, nonetheless

we do not conclude that it is so vague

C-104

as to be unenforceable. Rather, in the

usual manner, the various uncertainties

and ambiguities may be clarified or re-

solved in accordance with several other

generally accepted rules of construction

used in interpreting similar enactments.

Thus, California courts have held that

constitutional and other enactments must

receive a liberal, practical common-sense

construction which will meet changed

conditions and the growing needs of the

people. (Los Angeles Met. Transit Author-

ity v. Public Util. Com. (1963) 59 Cal.2d

863, 869 C31 Cal.Rptr. 463, 382 P.2d

583]; see People v. Davis (1968) 68

Cal.2d 481, 483 [67 Cal.Rptr. 547, 439

P.2d 651]; Rose v. State of California

(1942) 19 Cal.2d 713, 723 [123 P.2da

505].) (27) A constitutional amendment

should be construed in accordance with

the natural and ordinary meaning of its

C-105

words. (In re Quinn (1973) 35 Cal.App.3d

473, 482 [110 Cal.Rptr. 881].) The lit-

eral language of enactments may be disre-

garded to avoid absurd results and to

fulfill the apparent intent of the fram-

ers. (See Friends of Mammoth v. Board

of Supervisors (1972) 8 Cal.3d 247, 259

[104 Cal.Rptr. 761, 502 P.2d 1049}; in

re Kernan (1966) 242 Cal.App.2d 488, 491

[51 Cal.Rptr. 515].)

(28) Most importantly, apparent

ambiguities frequently may be resolved

by the contemporaneous construction of

the Legislature or of the administrative

agencies charged with implementing the

new enactment. (See State of South

Dakota v. Brown (1978) 20 Cal.3d 765, 777

[144 Cal.Rptr. 758, 576 P.2d 473]; Asso-

ciated Home Builders etc., Inc. v. City

of Livermore, supra, 18 Cal.3d at p. 598;

Reynolds v. State Board of Equalization

C-106

(1946) 29 Cal.24 137, 140 [173 P.2da 551,

174 P.2da 4].) In addition, when, as

here, the enactment follows voter appro-

val, the ballot summary and arguments

and analysis presented to the electorate

in connection with a particular measure

may be helpful in determining the proba-

ble meaning of uncertain language. (See

Carter v. Seaboard Finance Co. (1949) 33

Cal.2d 564, 580-581 [203 P.2d 758];

People v. Ottey 1936) 5 Cal.2d 714, 723

[56 P.2a 193]; In re Quinn, supra, 35

Cal.App.3d 473, 483.)

(24c) In the instant matter we have

the advantage of both principal interpre-

tive aids, those related to the ballot

and the legislative-administrative cons-

truction. We focus primarily on the

latter. The Legislature has already pro-

ceeded to implement article XIII A by

enacting extensive legislation. (Stats.

C-107

1978, chs. 292, 332.) Administratively,

the State Board of Equalization has adop-

ted extensive regulations construing

various provisions of the new article.

(Cal. Admin. Code, tit. 18, regs. 460-

471.) These legislative and administra-

tive implementations are traditionally

accorded great weight by the courts in

construing enactments such as article

XIII A. (State of South Dakota v. Brown,

supra, at p. 777.)

We do not discuss each of article

XIII A's numerous uncertainties claimed

by petitioners, satisfied that the new

legislation and administrative regula-

tions adopted following popular approval

of article XIII A disclose that relative-

ly few such uncertainties remain. We do

not, of course, thereby suggest that

these implementing provisions necessarily

constitute, in all instances, correct

c-108

interpretations of the terms of article

XIII A. Nonetheless, these interpreta-

tions, a few of which are illustrative,

will materially assist both the _ state

and the various local agencies in placing

the new taxation scheme into operation

in a reasonably workable fashion.

First, and most importantly, the

Legislature has read the language of sec-

tion 1, subdivision (a), ("The one per-

cent (18) tax to be collected by the

counties and apportioned according to law

to the districts within the counties")

as conferring authority to legislate on

the subject and to apportion the tax

funds to the local agencies and districts.

The new legislation sets forth the appli-

cable allocation formulae (Gov. Code, §

26912) and also gives guidance on the

following matters, among many, which

petitioners had found unclear from the

c-109

face of article XIII A: (1) The new 1

percent maximum tax is to be levied by

the counties on behalf of all local

agencies and districts (Rev. & Tax.

Code, § 2235); (2) the cities and coun-

ties are deemed "districts" under section

1 of the new article and thus share in

the tax proceeds (Gov. Code, § 26912;

Rev. & Tax. Code, § 2217); (3) the 1

percent tax is a Limit on the total,

aggregate amount to be levied and appor-

tioned by all local agencies and dis-

tricts (Rev. & Tax. Code, § 2235, subd.

(b)):; (4) districts which encompass more

than a single county will receive a

share of the tax proceeds (Gov. Code, §

26912, subd. (d)), and (5) the exemption

for prior, voter-approved indebtedness

(art. XIII A, § 1, subd. (b)) includes

amounts necessary to meet annual payments

on the principal as well as the interest

C-110

on such indebtedness (Gov. Code, § 26912,

subd. (b)(3); Rev. & Tax. Code, § 2235,

subd. (a)).

In addition, the new legislation

construes or defines several of the

undefined terms used in article XIII A,

such as "full cash value" and "fair

market value" (Rev. & Tax. Code, §§ 110,

110.1) and “change in ownership" (id., §

110.6). Further, the State Board of

Equalization has adopted regulations

covering these and other subjects. (See

Cal. Admin. Code, tit. 18, ch. 1, subch.

4, regs. 460 ["full cash value” and

“fair market value"), 462 ["“change in

ownership"], 463 ["newly constructed” .

property], and 464 [application of home-

owners’ and veterans' exemptions]. )

In short, the foregoing implementing

provisions doubtless have not resolved

each and every uncertainty described

C-111

by petitioners. Furthermore, these pro-

visions remain subject to judicial chal-

lenge in subsequent cases on the basis

that they may incorrectly manifest the

intent of article XIII A. Nonetheless,

it seems undeniable that good faith ef-

forts have been made, and are presently

being made, to carry into practical

effect the collective will of a very sub-

stantial majority of our citizens, as

reflected in the adoption of that article

on June 6 of this year. Our analysis

convinces us that art ft1e XIII A is not

so vague and uncertain in its essential

terms as to render it void and inoperable.

As noted above, we decline to reach

the question whether the various interpre-

tations put forth by the Legislature and

State Board of Equalization are correct.

In a somewhat similar connection we

recently affirmed that "it seems apparent

C-112

that we cannot, and should not, attempt

to pass upon the meaning or validity of

each contested provision in every hypo-

thetical context--adjudication of these

matters must await an actual controversy,

and should proceed on a case-by-case

basis as the need arises." (County of

Nevada v. MacMillen, supra, 11 Cal.3d

662, 674.) Many, perhaps most, of the

uncertainties carefully noted by peti-

tioners may disappear if a reasonable,

common sense approach is used in the

interpretation of article XIII A, and if

appropriate weight is given to the conte-

mporaneous construction of the legisla-

tive and administrative bodies charged

with its enforcement in accordance with

well established legal precedent.

CONCLUSION

Petitioners and the amici curiae who

support them have mounted substantial and

C-113

serious legal challenges to the provi-

sions of article XIII A. In doing so

they have expressed a commendable and

sincere concern that the modifications of

the California tax system which are man-

dated by the new article will impose in-

tolerable financial hardships and admini-

strative burdens in different forms and

with varying intensity on public enti-

ties, programs, and services throughout

California. Yet, as we have recently

acknowledged, it is our solemn duty "“'to

jealously guard'" the initiative power,

it being "'one of the most precious

rights of our democratic process.'"

(Associated Home Builders etc., Inc. v.

City of Livermore, supra, 18 Cal.3d 582,

591, quoting from earlier cases.) Consis-

tent with our own precedent, in our

approach to the constitutional analysis

of article XIII A if doubts reason ably

C-114

can be resolved in favor of the use of

the initiative, we should so resolve them

(Ibid.) This we have done.

Having carefully considered them, we

have concluded that article XIII A sur-

vives each of the substantial challenges

raised by petitioners. The orders to

show cause previously issued in these

cases are discharged, and the respective

petitions are denied.

Tobriner, J., Mosk, J., Clark, J.,

Manuel, J., and Newman, J., concurred.

BIRD, C. J., Concurring and Dissenting.--

Initiatives, by their very nature are dir-

ect votes of the people and should be

given great deference by our courts.

Judges should liberally construe this

power so that the will of the people is

given full weight and authority. How-

ever, if an initiative conflicts with

tne federal Constitution, juaqee are

C-115

duty bound to hold the offending sections

unconstitutional.

When these principles are applied

to the cases before this court, it is

clear that article XIIIA is constitution-

al in all respects save one. I endorse

the majority opinion's view that there

has not been a violation of the one

subject rule, an impermissible revision

of the Constitution, or a curtailment of

the right to travel. Further, it is

correct in holding that the question of

impairment of contracts is not properly

before this court and is not ripe for

decision.

One issue remains which troubles me

deeply. As judges we must be devoted to

the preservation of the great constitu-

tional principles which history has be-

queathed to us. In article XIIIA, one

of those principles has been violated--

C-116

the equal protection clause. No one

mindful of this nation's colonial history

can seriously question the right of the

people to act to redress tax grievances.

However, our citizens also have a right

to be treated equally before the law.

The right to equality of taxation is as

basic to our democracy as is the right

to representation in matters of taxation.

Under article XIIIA property taxpayers

are not treated equally, and those sec-

tions which promote this disparity must

fall.

I

Consider these facts. John and Mary

Smith live next door to Tom and Sue Jones.

Their houses and lots are identical with

current market values of $80,000. The

Smiths bought their home in January of

1975 when the market value was $40,000.

The Joneses bought their home in 1977

C-117

atl

when the market value was $60,000. In

1977, both homes were assessed at $60,000,

and both couples paid the same amount of

property tax. However, under article

XIIIA in 1978, the Joneses will pay 150

percent of the taxes that the Smiths

will pay. Should a third couple buy the

Smiths’ home in 1978, that couple would

pay twice the taxes that the Smiths

would have paid for the same home had

they not sold it. Today, this court

holds that such disparity is not only

equitable, but that it does not violate

the equal protection clause of the Con-

stitution.

The basic problem with this position

is that it upholds the adoption of an

assessment scheme that systematically

assigns different values to property of

equal worth. By pegging some assessments

to the value of property at Yits date of

Cc-118

ee. |

ave

purchase and other assessments to the

value of property as of March 1, 1975,

article XIIIA creates an irrational tax

world where people living in homes of

identical value pay different property

taxes. Thus, instead of establishing an

assessment scheme with one basis by which

all property owners are taxed, article

XIIIA utilizes two bases, acquisition

date and 1975 market value, to impose

artificial distinctions upon equally

situated property owners. Article

XIIIA divides the property taxpaying

public into two classes, pre- and post-

1975 purchasers. Section 2(a) rewards

those owners who purchased their property

before March 1, 1975, by constitutionally

fixing their tax assessments at lower

figures than those who buy property of

similar or identical value at a later

date. This “roll back” provision confers

‘

C-119

substantial benefits upon one group of

property owners not shared by other simi-

larly situated owners. This provision

raises the ugly specter of a race for

tax savings in which the players start

at different points, weighed down by

different "handicaps."

Inequalities in state taxation have

been held to be constitutional so long as

they "rest upon some ground of difference

having a fair and substantial relation

to the object of legislation ... ."

(Royster Guano Co. v. Virginia (1920)

253 U.S. 412, 415 [64 L.Ed. 989, 990, 40

S.Ct. 560]; see also Kahn v. Shevin

(1974) 416 U.S. 351, 355-356 [40 L.Ed.2d

189, 193, 94 S.Ct. 1734]; Allied Stores

of Ohio v. Bowers (1959) 358 U.S. 522,

437]; Ohio Oil Co. v. Conway (1930) 281

U.S. 146, 159-160 [74 L.Ed. 775, 781-782,

C-120

50 S.Ct. 310].)

However, even minimal scrutiny re-

quires that the statutes of the Legis-

lature and the initiatives of the people

be defensible in terms of a shared public

good, not merely in terms of the purposes

of a special group or class of persons.

(See Tribe, American Constitutional Law

(1978) p. 995.) The law should be some-

thing more than just the handmaiden of a

special class; it must ultimately be the

servant of justice.

Respondents fail to establish the

general public benefit to be found in

giving some, but not all, individuals a

“roll back" to 1975 assessments. To be

eligible for the full "roll back," ar-

ticle XIIIA requires that an individual

have owned continuously his or her pro-

perty MS a date prior to March of

1975. This requirement makes it literally

C-121

impossible for persons purchasing pro-

perty in 1978 or thereafter to qualify

for benefits granted fully to pre-1975

owners (and less fully to 1975-1978 own-

ers). In so doing, article XIIIA trans

gresses the constitutional guarantee of

equal protection under the law.

Respondents defend the rationality

of the 1975 date by characterizing it as

a cut-off date or "grandfather" clause.

Although its arbitrariness is conceded,

they argue that it is defensible as a

matter of administrative convenience.

This contention lacks merit. It merely

acknowledges that “it is difficult to be

just, and easy to be arbitrary." (Stewart

Dry Goods Co. v. Lewis (1935) 294 U.S.

550, 560 [79 L.Ed. 1054, 1059, 55 S.Ct.

525].) Administrative convenience is

wholly inadequate to warrant preferred

C-122

treatment of a closed class of property

owners. This court has previously refus-

ed to accept administrative convenience

as a sufficient explanation of "great"

differences in tax rates among similarly

situated individuals. (Haman v. County

of Humboldt (1973) 8 Cal.3d 922, 927-928

[106 Cal.Rptr. 617, 506 P.2d 993]; cf.

Toomer v. Witsell (1948) 334 U.S. 385,

398-399 [92 L.Ed. 1460, 1472-1473, 68

S.Ct. 1157].) In Haman, this court re-

jected the dcdntention that administrative

convenience justified a 23 percent spread

in the rate at which California-register

ed and out-of-state registered fishing

vessels were taxed. Article XIIIA may

in individual cases cause a disparity in

taxes which is much greater than 23 per-

cent. This is especially true in those

cases where the effect of inflation and

appreciation on real property values has

C-123

been acute.

The fact that the former property

tax system allowed inequalities through

exemptions for charitable, religious,

nonprofit and educational institutions is

no answer to the questions raised by ar-

ticle XIIIA. Those exemptions benefit-

ted the general public since the public

received specific benefits from the ex-

empted organizations. No one has yet

established what benefits the general

public derives from the systematic under-

valuation of the property of pre-1975

purchasers, and this court should decline

to hypothesize rationales. (See Gunther,

The Supreme Court, 1971 Term--Forward:

In Search of Evolving Doctrine on a

Changing Court: A Model for a Newer

Equal Protection (1972) 86 Harv.L. Rev.

l, 33, 44-46, 47.)

C-124

II

The adoption of the acquisition date

of property as the standard for valuation

raises novel constitutional questions

never decided by the Supreme Court. In

analyzing section 2(a), this court must

decide whether it is constitutionally

permissible for a state to systematically

assign unequal assessment to properties

of concededly equal market value.

The practical effect of section 2(a)

is to undervalue property purchased at

an earlier date in comparison to _ the

assessments assigned to subsequently pur-

chased property. The extent of under-

valuation will fluctuate with the degree

of property value appreciation in a par-

ticular locality. Given the “roll back"

feature, the process inevitably starts

by substantially undervaluing prior

C-125

purchased property.

Once it is understood that article

XIIIA systematically imposes different

assessments on property of similar worth,

a long line of Supreme Court cases becomes

relevant. Those cases support the propo-

sition that a person is denied equal

protection of the law when his property

is assessed at a higher value than pro-

perty of equal worth in the same locale.

"The purpose of the equal protection

clause of the Fourteenth Amendment is to

secure every person within the State's

jurisdiction against intentional and

arbitrary discrimination, whether occa-

sioned by express terms of a statute or

by its improper execution . . . . And

it must be regarded as settled that in-

tentional systematic undervaluation by

state officials of other taxable property

in the same class contravenes the consti-

7

C-126

tutional right of one taxed upon the full

value of his property." (Sunday Lake

Iron Co. v. Wakefield (1918) 247 U.S. 350,

352-353 [62 L.Ed. 1154, 1155-1156, 38

S.Ct. 495]; see also Raymond v. Chicago

Traction Co. (1907) 207 U.S. 20, 36-37

[52 L.Ed. 78, 87-88, 28 S.Ct. 7]; Sioux

City Bridge v. Dakota County (1923) 260

U.S. 441, 445 [67 L.Ed. 340, 342-343, 43

S.Ct. 190, 28 A.L.R. 979]; ‘Cumberland

Coal Co. v. Board (1931) 284 U.S. 23, 28-

In Sioux City Bridge, supra, the Su-

preme Court held it to be a violation of

the equal protection clause to assess one

company's property at 100 percent of its

market value while other real estate in

the same district was generally assessed

at only 55 percent of the market value.

Section 2(a) of article XIIIA authorizes

the same kind of discrimination as that

C-127

condemned in Sioux City Bridge. Initial-

ly, properties purchased in earlier years

will be undervalued in comparison with

other properties (though they may be

identical in current fair market value)

purchased, constructed, or transferred in

later years. Then, as the years go by,

the skewed nature of the tax world cre-

ated by article XIIIA will become even

more pronounced as each successive gene-

ration of purchasers will have their pro-

perty overvalued in comparison to their

neighbors or predecessor owners. For

example, consider the condominium complex

where each unit, though of identical fair

market value, receives a different tax

assessment simply because purchased in a

different year. Consider the plight of

the military family required by circum-

stances to change residence periodically.

In 1979, that family may sell a house

C-128

purchased in 1975, and buy a new house of

identical current cash value. However,

their tax bill will take a quantum leap

upward, as their assessment jumps from

1975 to 1979 levels. Conversely, the

family allowed by circumstances to remain

in one house for long periods of time

will reap substantial tax benefits simply

because of the length of their residency.

Consider further the plight of the

family which "newly constructs" their

house after a natural disaster such as

fire or flood. Article XIIIA, section

2(a) penalizes them by reassessing the

value of their house to market value at

the time of the new construction. What

is the possible rationale for allowing

natural disasters to trigger an increase

in property tax obligations? Surely a

truly rational tax world would consider

C-129

2 id

7

such families for tax relief.! Finally,

consider the reassessment to current mar-

ket value mandated by section 2, subdivi-

sion (a) for "changes in ownership"

brought about by divorce or death. Did

those who voted _ so overwhelmingly for

article XIIIA's general tax relief also

intend to penalize those families who

experience such family crises?

In Cumberland Coal Co. v. Board,

supra, 284 U.S., 23, the Supreme Court

invalidated a taxing measure that ignored

differences in current market value. In

that case, the local assessors chose to

assign the same dollar value per ton to

all unmined coal in the county. However,

y

lit is noteworthy that a proposed

constitutional amendment to remedy this

anomalous situation has been adopted by

the Legislature and awaits a vote of the

people. (Sen. Const. Amend. No. 67,

Stats. 1978 (1977-1978 Reg. Sess.)

res. ch. 76, pp. ----.)

C-130

she |

it was undisputed that there existed sub-

stantial differences in value between

given tons of coal, depending on the

mining and transportation costs. The

court saw clearly the gross inequalities

that resulted, even though the same per-

centage tax was levied on all: ". .

the fact that a uniform percentage of

assigned values is used, cannot be regard-

ed as important if, in assigning the

values to which the percentage is ap-

plied, a system is deliberately adopted

which ignores differences in actual val-,

ues so that property in the same class

as that of the complaining taxpayer is

valued at the same figure (according to

the unit of valuation; as, for example,

an acre) as the property of other owners

which has an actual value admittedly

higher. Applying the same ratio to the

C~131

same assigned values, when the actual

values differ, creates the same disparity

in effect as applying a different ratio

to actual values when the latter are the

same." (Id., at p. 29 [76 L.Ed. at p.

150]).)

Article XIIIA adopts an assessment

scheme similar in effect to that condem-

ned in Cumberland Coal. The same percen-

tage (one percent) is applied to all

assessed values; but the assessed values

themselves do not accurately reflect the

respective market values of property.

This has the effect, as the court noted

in Cumberland Coal, supra, 284 U.S. at

page 29 [76 L.Ed. at p. 150], of taxing

identically situated property owners at

different percentages of the true value

of their property. If article XIIIA had

been drafted to say, "Some persons will

pay a property tax of one percent of the

C-132

true value of their property; others will

pay only a one-half of one percent tax,"

the violation of the equal protection

clause would have been obvious. Yet,

the result under article XIIIA is the

same. helen for instance, that the

market value of a home increases from

$50,000 in 1975 to $100,000 some time in

the future. A one percent tax on the

1975 value is equivalent to a onehalf

of one percent tax on the new value.

Decisions in this jurisdiction have

reiterated the principle that the equal

protection clause is violated when one

person's property is assessed at a higher

level than another person's property

which is of identical value. For example,

in Birch v. County of Orange (1921) 186

Cal. 736, 741 [200 P. 647], this court

held that a taxpayer is entitled to “the

exercise of good faith and fair consider-

C-133

ation on the part of the taxing power in

assessing his property, at the same rate

and on the same basis of valuation as

that applied to other property of like

character and similarly situated.”

The Court of Appeal recently restat-

ed this principle: “The value of proper-

ty for assessment purposes is to be deter-

mined . . . on such basis as is used in

regard to other property so as to make

all assessments as equal and fair as is

practicable. [Citations.] In order to

carry out this principle, the assessor

and the county board of equalization must

apply the same ratio to market value

uniformly within the county." (Glidden

Company v. County of Alameda (1970) 5

Cal.App.3d 371, 378 [85 Cal. Rptr. 88,

86 Cal.Rptr. 464]; see also Simms v.

County of Los Angeles (1950) 35 Cal.2d

303, 315 [217 P.2d 936]; Mahoney v. City

C-134

of San Diego (1926) 198 Cal. 388, 397,

404 [245 P. 189]; Metropolitan Stevedore

Co. v. County of Los Angeles (1972) 29

Cal.App.3d 565, 572 [105 Cal.Rptr. 595];

City of Los Angeles v. County of Inyo

(1959) 167 Cal.App.2d 736, 740 [335 P.2d

166]; Rancho Santa Margarita v. San Diego

Co. (1932) 126 Cal.App. 186, 197 [14

P.2d 588]; Birch v. County of Orange

(1927) 88 Cal.App. 82, 85 [262 P. 788].)

Thus, strong authority exists for the

conclusion that the attempt of article

XIIIA to assign different assessments to

properties of equal market value violates

the equal protection clause.

Respondents would seek to deny that

those who pay more for property are in

reality “similarly situated" with those

who paid less for property of the same

value in earlier years. The premise of

this argument is that the later purchaser

C-135

is better able to afford a high tax since

(1) he paid more for his property to begin

with and (2) he knew from the beginning

he was buying a highly assessed piece of

property.

The fact that a purchaser presently

pays $80,000 for a home which someone

else bought for $40,000 in 1975 may tell

us nothing more than that inflation has

been rampant and property values on the

rise. In fact, the higher mortgage pay-

ments that new homeowners pay as compared

to earlier purchasers forewarns us against

any cavalier assumption that later pur-

chasers are able to bear heavier taxes.

Section 2(a) mandates reassessment

to current market value not only for vol-

untary purchasers but any time there is

a “change in ownership." . Thus, as pre-

viously noted, the person who inherits

the family home or the spous@ who gains

C-136

‘

ral

‘

|

> oy

ek pe - 4 De |. ee

title to property after a divorce may

find that the assessment on the property

suddenly skyrockets for property tax pur-

poses. There is no rationality to the

jump in valuation that accompanies these

occurrences. Similarly, those persons

who must move often because of the nature

of their employment (for example, mili-

tary families) will find that section

2(a)'s mandated reassessments bear little

relation to their financial situation.

Even more perplexing is the situuation

of persons who find -that new construction

must be done to their property after a

natural disaster. Section 2(a) once more

requires reassessment to “full cash

value." The arbitrariness of article

XIIIA's assessment scheme could not be

more apparent.

Finally, the arbitrariness of the

acquisition date valuation as a tax stan-

C=-137

dard can be demonstrated by considering

the plight of the taxpayer whose property

has actually decreased in value _ since

1975. Under the previous tax system,

such a person's property tax assessment

would eventually reflect the decline in

market value. However, under article

XIIIA the assessment remains fixed at

the acquisition date value since section

2(b) allows for a reduction in assessment

only on the basis of a downward turn in

the consumer price index.

I am aware that during the past 40

years, since the end of the Lochner era

(see Lochner v. New York (1905) 198 U.S.

45 [49 L.Ed. 937, 25 S.Ct. 539]), courts

have not used the Fourteenth Amendment

“to strike down state laws .. . because

they may be unwise, improvident, or out

of harmony with a particular school of

thought." (Williamson v. Lee Optical Co.

C-138

a.

“ee

(1955) 348 U.S. 483, 488 [99 L.Ed. 563,

572, 75 8.Ct. 461].) I fully agree

that in regard to matters of economics

and tax policy, courts must defer to the

will of the people unless the challenged

enactment lacks a rational basis. How-

ever, the rational basis test was never

meant to authorize judicial tolerance of

unconstitutional classifications.

Earlier this year, this court reiter-

ated that minimal scrutiny "'require[s]

the court to conduct "a serious and

genuine judicial inquiry into the corres-

pondence between the classification and

the legislative goals."'" (Cooper v. Bray

(1978) 21 Cal.3d 841, 848 [148 Cal.Rptr.

148, 582 P.2d 604], quoting Newland v.

Board of Governors (1977) 19 Cal.3d 705,

711 [139 Cal.Rptr. 620, 566 P.2d 254],

italics original in Cooper v. Bray,

supra.) After conducting such a “serious

C-139

and genuine judicial inquiry,” many

courts have found that various classi-

fications could not survive even minimal

scrutiny under the equal protection

clause. (E.g., U.S. Dept. of Agriculture

v. Moreno (1973) 413 U.S. 528, 538 [37

L.Ed.2d 782, 790, 93 S.Ct. 2821]; Rinaldi

v. Yeager (1966) 384 U.S. 305, 309-310

D'Amico v. Board of Medical Examiners

(1974) 11 Cal.3d 1, 22-23 [112 Cal.Rptr.

786, 520 P.2ad 10]; Blumenthal v. Board

of Medical Examiners (1962) 57 Cal.2d

228, 234-235 [18 Cal. Rptr. 501, 368

P.2d 101]; Miller v. Union Bank & Trust

Co. (1936) 7 Cal.2d 31, 34-36 [59 P.2d

1024].) Some of the classifications which

were invalidated related to matters of

taxation. (E.g., WHYY v. Glassboro

(1968) 393 U.S. 117, 120 [21 L.Ed.2d

242, 245, 89 S.Ct. 286]; City of Los

C-140

Angeles v. Shell Oil Co. (1971) 4 Cal.3d

953]; County of Alameda v. City and

County of San Francisco (1971) 19

Cal.App.3d 750, 756-757 (97 Cal.Rptr.

175, 48 A.L.R.3d 332].) “The lines drawn

by section 2(a) of article XIIIA are

similar in effect to the discriminatory

categories struck down in those cases.

If a serious and genuine judicial inquiry

is made of the classifications under sec-

tion 2(a), it is clear that they violate

the equal protection clause of the Con-

stitution by treating identical or simi-

larly situated property taxpayers in an

unfair and unequal way.

IIl

This decision has not been an easy

one. The issues are close and reasonable

people may differ. Emotions run high on

this question, but as judges we must

C-141

follow the law and do what it requires.

As Justice Story wrote in Trustees of

Dartmouth College v. Woodward (1819) 17

U.S. (4 Wheat.) 250, 338 [4 L.Ed. 629,

713], “It is not for judges to listen to

‘the voice of persuasive eloquence, or

popular appeal. We have nothing to do,

but to pronounce the law as we find it;

and having done this, our justifications

must be left to the impartial judgment

of our country.”

APPENDIX

ARTICLE XIII A

"Section 1. (a) The maximum amount

of any ad valorem tax on real property

shall not exceed one percent (1%) of the

full cash value of such property. The

one percent (1%) tax to be collected by

the counties and apportioned according

to law to the districts within the coun-

C-142

ties.

"(b) The limitation provided for in

subdivision (a) shall not apply to ad

valorem taxes or special assessments to

pay the interest and redemption charges

on any indebtedness approved by the vo-

ters prior to the time this section be-

comes effective.

"Section 2. (a) The full cash

value means the County Assessors valu-

ation of real property as shown on the

1975-76 tax bill under ‘full cash value’,

or thereafter, the appraised value of the

real property when purchased, newly con-

structed, or a change in ownership has

occurred after the 1975 assessment. All

real property not already assessed up to

the 1975-76 tax levels may be reassessed

to reflect that valuation.

"“(b) The fair market value base may

reflect from year to year the inflation-

C-143

ary rate not to exceed two percent (2%)

for any given year or reduction as shown

in the consumer price index or comparable

data for the area under taxing jurisdic-

tion.

"Section 3. From and after the ef-

fective date of this article, any changes

in State taxes enacted for the purpose of

increasing revenues collected pursuant

thereto whether by increased rates or

changes in methods of computation must

be imposed by an Act passed by not less

than two-thirds of all members elected

to each of the two houses of the Legis-

lature, except that no new ad valorem

taxes on real property, or sales or

transaction taxes on the sales of real

property may be imposed.

"Section 4. Cities, Counties and

special districts, by a two-thirds vote

of the qualified electors of such dis-

C-144

trict 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.

"Section 5. This article shall take

effect for the tax year beginning on July

1 following the passage of this Amend-

ment, except Section 3 which shall become

effective upon the passage of this ar-

ticle.

"Section 6. If any section, part,

clause, or phrase hereof is for any

reason held to be invalid or unconstitu-

tional, the remaining sections shall not

be affected but will remain in full force

and effect."

C-145

bt Met

PROOF OF SERVICE BY MAIL

STATE OF CALIFORNIA )

) 88.

COUNTY OF VENTURA )

I, COLLEEN S. BOWLES, state:

That I am a citizen of the United

States, over the age of 18, employed in

the County of Ventura, and not a party

to the within action; that my business

address is Ventura County Counsel, 800

South Victoria Avenue, Ventura, Califor-

nia 93009; that on January Ll , 1984,

I served the within APPENDIX TO MOTION

TO DISMISS OR AFFIRM on the interested

parties in said action by addressing an

envelope to each, with postage fully pre-

paid, in the United States mail at Ven-

tura, California, addressed as_ follows:

FRANK ANTON GUNDERSON, ESO.

2239 Townsgate Road

Suite 202

Westlake Village, CA 91361

JOHN DE VAN DE KAMP

Attorney General

State of California

1515 K Street, Suite 51ll

Sacramento, CA 95814

CLERK TO

HONORABLE MARVIN H. LEWIS

Ventura County Superior Court

800 South Victoria Avenue

Ventura, CA 93009

ae

COURT OF APPEAL

STATE OF CALIFORNIA

Division Six

1280 Victoria Avenue

Ventura, CA 93003

CALIFORNIA SUPREME COURT

4250 State Building

San Francisco, CA 94102

I declare under penalty of perjury

that the foregoing is true and correct.

Executed on January // , 1984, at

Ventura, California.

COLLEEN S. BUYvico

COLLEEN S. BOWLES

ar. <