Santa Barbara County Taxpayers Ass'n v. County of Santa Barbara

Article XIII B of the California Constitution, also known as Proposition 4, limits the amount of tax revenues a government entity may spend. Section 5 states, in pertinent part: “Each entity of government may establish . . . retirement . . . funds .... Contributions to any such fund . . . shall . . . constitute appropriations subject to limitation . . -”

Here we conclude that the section means what it says, and that a county may not exclude from its annual appropriations contributions to its employees’ retirement fund.

Facts

Beginning in 1985, the County of Santa Barbara had recalculated its 1978-1979 base year appropriations limit forward to reflect the exclusion of the county’s contributions to the retirement fund. The Santa Barbara County Taxpayers Association (TPA) et al. filed suit for injunctive and declaratory relief and mandate, challenging the county board of supervisors’ (county) exclusion of those contributions from its appropriations to the 1986-1987 fiscal year budget. The trial court held that section 5 applies only to retirement systems created after January 1, 1979, and that contributions to the retirement system constitute excludable debt service…