Los Angeles County Transportation Commission v. Richmond

Opinion

MOSK, J.

The issue in this case is whether the Los Angeles County Transportation Commission (LACTC) may, consistent with the provisions of section 4 of article XIII A of the California Constitution, impose a “retail transaction and use tax” in Los Angeles County with the consent of a majority of the voters, but less than two-thirds of their number.

In 1976, the Legislature created LACTC in order to meet a demand for an efficient public transportation system in the Southern California region. (Pub. Util. Code, § 130301 et seq.) To finance such a system, LACTC was authorized to adopt a “retail transaction and use tax” (id., §§ 130350-130355)1 limited to one-half of one percent on the sale, storage, or use of tangible personal property in Los Angeles County (Rev. & Tax. Code, §§ 7261, 7262; Pub. Util. Code, § 130350). The tax could not be imposed, however, unless the measure received the approval of a majority of the county’s voters who voted in the election. (Id., § 130350.) Any revenues received were to be used for “public transit purposes.” (Id., § 130354.) LACTC was not authorized to levy a property tax.

On June 6, 1978, the voters approved Proposition 13 by initiative (now Cal. Const., art. XIII A). Section 4 of article XIII A provides, “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district, except ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property within such City, County or special district.”2

*200Following adoption of Proposition 13, LACTC enacted a sales tax in accordance with the requirements of the Public Utilities Code, and the voters of the county approved the measure by a 54 percent majority in November 1980. George U. Richmond, LACTC’s own executive director, refused to take steps! to implement the tax3 upon the advice of the Attorney General that the measure was not adopted in accordance with the requirements of sectipn 4 because it had not received the approval of two-thirds of the voters (64 Ops.Cal.Atty.Gen. 156 (1981)). LACTC then filed a petition for writ of mandate to compel Richmond to take the measures required of him to implement the tax. Because of the importance of the issues involved and the need for their prompt resolution, we invoked the exercise of our original jurisdiction and issued an alternative writ of mandate (Clean Air Constituency v. California State Air Resources Bd. (1974) 11 Cal.3d 801, 808 [114 Cal.Rptr. 577, 523 P.2d 617] and cases cited).

*201In Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208 [149 Cal.Rptr. 239, 583 P.2d 1281], we upheld the validity of article XIII A against a broad range of challenges to its constitutionality. We emphasized, however, that problems which might arise respecting the interpretation of particular provisions of the measure were deferred for resolution in future cases in which the application of such provisions were in issue. This case involves the application of section 4 to the sales tax enacted by LACTC and adopted by a majority of the voters of Los Angeles County. We must decide whether imposition of the tax violates the prohibition against the levy of a “special tax” by a “special district” without a two-thirds vote of the electors. We shall conclude that the tax was validly adopted by a majority vote because LACTC is not a “special district” within the meaning of section 4. As we explain below, the goal of article XIII A is real property tax relief, and a governmental body like LACTC, which does not have the power to levy a property tax, is not the type of “special district” governed by the section.

We begin with the proposition that section 4 is ambiguous in various respects. This court recognized in Amador that the language of article XIII A is “imprecise and ambiguous” in a number of particulars. Nowhere is this imprecision more evident than in the language of section 4. The first aspect of the provision which strikes a reader is that its terms are permissive rather than restrictive. That is, it authorizes local entities to adopt “special taxes” on the vote of two-thirds of the electorate, rather than prohibiting them from doing so without the concurrence of that number of voters. Nevertheless, we held in Amador that section 4 is actually a limitation on the imposition of “special taxes” because it requires a two-thirds vote for their approval. (22 Cal. 3d at p. 220. )4

The ambiguity in section 4 extends also to the terms “special taxes” and “special districts.” For the purpose of the present case, we consider only the meaning of the words “special districts,” for if that term does not encompass LACTC, the two-thirds requirement is inapplicable to *202the sales tax in issue here even if it is a “special tax” within the meaning of the section.

The term “special district” has been generally characterized as “a legally constituted governmental entity established for the purpose of carrying on specific activities within definitely defined boundaries.” (Sen. Factfinding Com. Rep. on Revenue and Taxation, Intergovernmental Fiscal Relations in Cal. (June 1965) p. 177; see also Crouch & McHenry, Cal. Government (rev. ed. 1949) p. 234; The Impact of Proposition 13 (The Jarvis-Gann Property Tax Initiative) on Local Government Programs and Services, Rep. of Assem. Com. on Local Government and Revenue and Taxation (May 1978) p. 253.)

But this broad definition has been qualified by statute in various contexts. (See, e.g., Gov. Code, §§ 53950, 54775, subd. (n).) Some statutes exclude from the definition of a “special district” “any agency which is not authorized by statute to levy a property tax rate.” (Rev. & Tax. Code, § 2215; Gov. Code, § 16271, subd. (d).)5 A large majority of entities “established for the purpose of carrying on specific activities within definitely defined boundaries” are authorized to levy a property tax to finance their operations. (See Leg. Counsel’s Analysis of Cal. District Laws (1965); The Impact of Proposition 13, op. cit. supra, p. 253 et seq.) A few, like LACTC, do not have such authority. Richmond urges that we should interpret the term “special districts” as used in section 4 to mean “any unit of local government other than a city or county that is empowered to levy a ‘special tax.’”

Before considering which of these various definitions is appropriate in the context of section 4, we examine an issue not raised by the parties but which we view as critical to our conclusion: the standard that is proper in interpreting the ambiguous language of section 4.

In Amador, we set forth the familiar rules for the construction of a constitutional provision. It should be construed “in accordance with the *203natural and ordinary meaning of its words.... The literal language .. . may be disregarded to avoid absurd results and to fulfill the apparent intent of the framers ...” and the language used must “receive a liberal, practical common-sense construction which will meet changed conditions and the growing needs of the people.” To this end, if, as here, the provision has been adopted by initiative, ambiguities may be resolved by referring to the ballot summary, the arguments and analysis presented to the electorate, and the contemporaneous construction of the Legislature. (22 Cal.3d at pp. 245-246.)

In applying these rules, we cannot overlook the nature and effect of the two-thirds vote requirement set forth in section 4. By its terms, a majority — but less than two-thirds — of the voters statewide6 has determined that in a local election involving a matter of primarily local interest, a minority of voters can preclude the majority from imposing a “special tax” confined to the taxpayers of the local entity, to finance local projects or services.

The constitutionality of the requirement for an extraordinary majority is not in question. We held in Amador (22 Cal.3d at p. 237) that this requirement of section 4 does not violate the equal protection clause of the United States Constitution. Our conclusion was based on the decision of the United States Supreme Court in Gordon v. Lance (1971) 403 U.S. 1 [29 L.Ed.2d 273, 91 S.Ct. 1889]. The ruling in Gordon resulted in overturning our decision in Westbrook v. Mihaly (1970) 2 Cal.3d 765 [87 Cal.Rptr. 839, 471 P.2d 487], in which we had concluded that article XVI, section 18, of the California Constitution, which requires that general obligation bond proposals of cities, counties, and school districts be approved by a two-thirds majority of the voters, violated equal protection of the law. The high court disagreed, reasoning that “in voting to issue bonds voters are committing, in part, the credit of infants and of generations yet unborn, and some restriction on such commitment is not an unreasonable demand.” (403 U.S. at p. 6 [29 L.Ed.2d at p. 277].) It held that if the two-thirds vote requirement did not discriminate against any identifiable class of voters, it did not violate the equal protection clause.

We are, of course, bound by this conclusion. But in resolving the meaning of the ambiguous language of section 4, it is appropriate to *204consider the substance and effect of the extraordinary majority requirement.

In Westbrook, we noted that “the inevitable result of any extraordinary majority requirement is to give to one group of voters a greater influence on the outcome of an election than to another group of comparable size but opposite conviction.” It is the functional equivalent of allowing “those citizens who opposed a measure ... to vote twice while those who favored it were limited to only one ballot.” (2 Cal.3d at p. 783.) The United States Supreme Court conceded the point in Gordon, when it stated that “any departure from strict majority rule gives disproportionate power to the minority.” (403 U.S. at p. 6 [29 L.Ed.2d at p. 276].) Moreover, as we observed in Westbrook, “a two-thirds requirement is well suited to deter the . . . action to which it applies, since it conditions such action on a degree of consensus unusual in our pluralistic society.” (2 Cal.3d at p. 792.)

We discern some significance in the fact that section 4 was adopted by the voters throughout the state, whereas the extraordinary majority requirement is imposed on local entities. In theory, a bare majority of voters in a statewide election may decide that the affirmative votes of even 65 percent of the electorate of a local entity are insufficient for adoption of a tax which substantially affects the taxpayers of the local entity. The sales tax enacted here by LACTC is of primary concern to local voters: the taxpayers of the district pay the bulk of the tax with their purchases, rather than the population of the state as a whole; the tax is adopted for the purpose of supporting programs or services for the local population; and it is the electors of the district who demonstrate by a majority vote that they are willing to increase their taxes. Yet because a majority of the voters of the state has determined that a two-thirds vote is required to adopt the tax, the will of the majority of the local voters may not prevail.

The subject of the two-thirds limitation is also of consequence. We are not here concerned with a measure that affects those fundamental rights of individuals which might be endangered in the hands of a majority. In Westbrook, we suggested that the extraordinary majority requirement for the issuance of general obligation bonds in article XVI, section 18, may have been intended to “protect property owners from the unrestrained desires of the landless for publicly financed projects.” (2 Cal.3d at p. 777.) The sales tax in the present case does not involve such a prospect, nor will it “commit . .. the credit of .. . generations *205yet unborn.” (Gordon v. Lance, supra, 403 U.S. at p. 6 [29 L.Ed.2d at p. 277].) It is a broad-based tax on consumers; it has no relation to property ownership; it does not increase the indebtedness of LACTC; and it may be repealed by the voters of the local entity by a majority vote. (Pub. Util. Code, § 130353.)

The purpose of our discussion is not to throw doubt on the constitutionality of the two-thirds vote requirement in section 4, but rather to establish the framework in which the ambiguity in the language of the provision should be resolved. In view of the fundamentally undemocratic nature of the requirement for an extraordinary majority and the matters discussed above, the language of section 4 must be strictly construed and ambiguities resolved in favor of permitting voters of cities, counties and “special districts” to enact “special taxes” by a majority rather than a two-thirds vote.

In our analysis of section 4, we begin, as we must, with the language of the provision. The exception at the end of the section provides the first indication that the “special districts” referred to are those which have the power to levy a tax on real property. The fact “special districts” are prohibited, even with the consent of two-thirds of the voters, from levying “ad valorem taxes on real property or a transaction tax or sales tax on the sale of real property” implies that the “special districts” referred to are those which may levy a tax on real property. Although this construction is not compelled, it is an appropriate interpretation of the language of the provision because ordinarily the subject matter of an exception is the same as that to which the exception applies.

The material set forth in the voter’s pamphlet also provides support for our conclusion. The description of the background and effect of Proposition 13 by the Legislative Analyst strongly suggested to the voters. that the term “special districts” in section 4 refers to entities authorized to levy a tax on real property. The analysis begins with “some basic facts” about California property taxes; the first item of information under this heading is that “[u]nder existing law cities, counties, schools and special districts are permitted to levy local property taxes.” (Ballot Pamp. Proposed Amends, to Cal. Const, with arguments to voters, Primary Elec. (June 6, 1978) p. 56.) The analysis then states that because under the Constitution certain types of local entities, including “special districts,” must receive legislative approval in order to impose “special taxes,” the ability of such districts, even with local voter approval, “to *206replace property tax losses resulting from the adoption of this initiative” would be limited. (Italics added, id. at pp. 57, 60.) In a similar passage, the analysis tells the voters that “the initiative would restrict the ability of local governments to impose new taxes in order to replace the property tax revenue losses.” (Italics added, id. at p. 60.) Since only those “special districts” which levied property taxes could “replace” the “loss” of such taxes, these statements imply that the “special districts” referred to are those which are authorized to levy a property tax.

Richmond relies on other statements in the ballot pamphlet which, without differentiating between types of local entities, declare that certain taxes by “local government” could not be imposed without a two-thirds vote.7 These passages, according to Richmond, indicate that all local entities are included in the limitation set forth in section 4. While these excerpts tend to support Richmond’s position, they do not compel the conclusion that “special districts” which are not empowered to levy a property tax are affected by section 4, in view of the clear implication to the contrary in other portions of the pamphlet.

The third prong of our inquiry in assessing the intention of the electorate is the interpretation of the term “special districts” by the Legislature following the enactment of Proposition 13.

We can derive no plain guidance from these measures. As we have seen, some statutes enacted following adoption of Proposition 13 exclude entities which do not levy property taxes from the term “special districts.” (E.g., Gov. Code, § 16271, subd. (d);8 Rev. & Tax. Code, § 2215.)9 On the other hand, section 50077 of the Government Code *207employs the term “district” without the qualifying word “special,” but it is clear from its context that it was intended to implement article XIII A. Perhaps this statute is most favorable to Richmond’s position, since it is designed to implement article XIII A (Gov. Code, § 50075) and defines a “district” broadly as “an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.” (Id., § 50077, subd. (c).) It requires a two-thirds vote of the electorate as a condition for the adoption of “special taxes” (id., § 50077, subd. (a)).

While this broad definition would appear at first blush to include LACTC, there are persuasive reasons why we should not view it as determinative of the question before us. As we have seen, Amador held that, although section 4 is cast in permissive terms, it is restrictive in nature in that it limits the right of local entities to adopt “special taxes” by requiring a two-thirds vote for their imposition. In enacting sections 50075 to 50077, the Legislature viewed section 4 as having an affirmative aspect as well, i.e., as affording “districts” a right to levy taxes by a two-thirds vote. These provisions were expressly intended as enabling legislation to fulfill the grant of power in section 4.10 Since the aim of the legislation was to broaden the rights of local entities to adopt taxes, the application of the definition contained in section 50077 to limit these rights would be unwarranted. There is nothing to indicate that the Legislature intended to withdraw from a local entity like LACTC the power to levy a tax by a majority vote if Proposition 13 did not compel such a restriction.

Richmond asserts that the limitation of “special districts” to local entities which are empowered to levy property taxes violates the spirit and intent of Proposition 13. He relies on our statement in Amador that the purpose of sections 3 and 4 of the initiative is to assure that the real property tax relief afforded by sections 1 and 2 is not “withdrawn or depleted” by the levy of other taxes. (22 Cal.3d at p. 231.) From this he argues that to allow some units of local government, like LACTC, to *208impose a “special tax” without the consent of two-thirds of the voters would “erode the effectiveness” of the real property tax relief granted by the initiative.

This argument implies that only by liberally interpreting the language of section 4 to require a two-thirds vote will the object of “effective” property tax relief be achieved. We disagree. To the extent section 4 clearly requires a particular entity to obtain the consent of two-thirds of the voters, it affords the “effective” property tax relief we discussed in Amador. Hdwever, as we discuss above, there are strong policy reasons for holding that if, as here, the intention of the voters to require a two-thirds vote is not clear, a majority is to be deemed sufficient for the valid adoption of a “special tax.”

Nor are we impressed j with a suggestion that our interpretation of section 4 could result in the wholesale avoidance of the purpose of article XIII A by the Legislature, which could reorganize existing “special districts” to remove their property-taxing power or create new ones without such power, thereby allowing them to adopt a “special tax” by majority vote. We cannot assume that the Legislature will attempt to avoid the goals of article XIII A by such a device. In any event, that problem can be dealt with if and when the issue arises. The legislation creating LACTC and granting it the power to levy only a sales tax antedated Proposition 13 by two years. Thus, there can be no claim here that the Legislature was attempting to evade the restrictions imposed by section 4.

We hold that the sales tax in issue here was validly adopted by a majority vote and that, therefore, Richmond must take appropriate steps to implement its imposition..

Let a peremptory writ of mandate issue as prayed.

Bird, C. J., and Broussard, J., concurred.

This tax will hereinafter be referred to as a sales tax.

Sections 1, 2 and 3 of article XIII A provide as follows:

“Section 1. (a) The maximum amount of any ad valorem tax on real property shall *200not 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 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 voters prior to the time this section becomes effective.
“Section 2. (a) The full ca!sh value means the county assessor’s valuation of real property 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 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 Governor, 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 inflationary rate not to exceed 2 percent for any given year or reduction as shown in the consumer price index or comparable data for the area under taxing jurisdiction, or may be reduced to reflect substantial 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 include the construction or addition of any active solar energy system. 1
“Section 3. From and after the effective 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-tflirds of all members elected to each of the two houses of the Legislature, 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 2 was amended to its present form in 1980. The changes made are not relevant to the issue before us.

The State Board of Equalization is directed by statute to collect the tax upon payment to it by LACTC of the “costs of preparation to administer” collection. (Rev. & Tax. Code, §§ 7270, 7272.) Richmond refused to reimburse the board for those costs.

Another ambiguity in the language of section 4, which we did not note in Amador, is that although the first clause of the provision refers to “Cities, Counties and special districts,” in the portion of the sentence that restricts the right to impose “special taxes” to measures which receive the approval of two-thirds of the electorate, only “such district” is referred to. However, the exception at the end of the sentence repeats the reference to all three types of entities, implying that the provision is to apply to. cities and counties as well as to special districts.

Both prior to and following the enactment of Proposition 13, section 2215 of the Revenue and Taxation Code has excluded from the definition of “special district” an “agency which is not authorized by statute to levy a property tax rate.” (Stats. 1975, ch. 486, § 4, p. 998; Stats. 1980, ch. 801, § 15, p. 2521.) Section 16271, subdivision (d), of the Government Code contains a similar provision.

Richmond argues that these definitions are relevant only to the statutory framework in which they appear. We cijte them, however, not to import any of the meanings wholesale into section 4, but to demonstrate that the broad term “special district” has been qualified in various respects so as to exclude certain types of entities.

Proposition 13 was accorded a 64.8 percent vote in the June 1978 primary election. (Statement of Vote, Compiled by Secretary of State, Primary Election June 6, 1978, p. 39.)

The summary of the measure by the Attorney General states in part, “Authorizes imposition of special taxes by local government (except on real property) by 2/3 vote of qualified electors.” (Ballot Pamp., op. cit. supra, p. 56.) Similarly, according to the Legislative Analyst the measure would “authorize local governments to impose certain nonproperty taxes if two-thirds of the voters give their approval in a local election.” (Id. at p. 56.) The argument of the proponents of the measure states that it “requires all other tax raises to be approved by the people.” (Id. at p. 58.)

Section 16271, subdivision (d), of the Government Code provides that the term “special district” does not include “any agency which is not authorized to levy a property tax rate, except the Bay Area Pollution Control District.” The provision is part of a plan to distribute state funds to local agencies following enactment of Proposition 13.

Section 2215 of the Revenue and Taxation Code defines a “special district” as “any agency of the state for the local performance of governmental or proprietary functions within limited boundaries,” but excepts from its terms those agencies which are “not authorized by statute to levy a property tax rate.” This provision is contained in chapter 3, part 4, of division 1 of the Revenue and Taxation Code. Chapter 3, is entitled “Reimbursement for Costs Mandated by the State.”

Sections 50075 and 50077 were declared by the Legislature to constitute emergency legislation. In explaining the necessity for the measure to take effect immediately, the Legislature stated that the “passage of Article XIII A of the California Constitution has limited the ability of special districts to fund necessary operations through property taxation, but makes provision for the imposition of special taxes by such districts. In order that special districts be granted the authority to impose special taxes during the 1980-81 fiscal year, it is necessary that this act take effect immediately.” (Stats. 1980, ch. 672, § 3, p. 1867.)