Sacramento Municipal Utility District v. County of Sonoma

—The County of Sonoma (the County) appeals from a judgment invalidating its tax on public entities that generate electricity from geothermal steam in the County. It contends that the constitutional exemption from property taxes for public property does not prohibit a tax on the use of public property. The Sacramento Municipal Utility District (SMUD) contends that the narrowly drawn tax attempts to do indirectly what cannot be done directly—impose a property tax on SMUD.

The tax was expressly designed to apply only to entities exempt from property taxes and thereby reduce the loss of property tax revenue from public entities. As an obvious substitute for the proscribed property tax, the County’s tax precisely frustrates the California Constitution’s grant of a property tax exemption to public property. Therefore, we affirm this aspect of tiie judgment.

The County also challenges the trial court’s award of prejudgment interest to SMUD at tiie rate of 10 percent. The County contends that the interest rate on any refund to SMUD should be 7 percent. We agree that the 10 percent rate was incorrect. However, the proper rate of interest is the 9 percent rate provided by Revenue…