Sacramento Mun. Utility Dist. v. County of Solano

Revenue and Taxation Code section 7284 (section 7284) authorizes the board of supervisors of any county to “license, for revenue and regulation, and fix the license tax upon, every kind of lawful business transacted in the unincorporated area of the county . . . .” In this appeal we conclude that the performance of a governmental function by a public agency does not constitute the transaction of business within the meaning of section 7284 so as to authorize the licensing and taxation of that activity.

I

Sacramento Municipal Utility District (SMUD) is established under the Municipal Utility District Act (Pub. Util. Code, § 11501 et seq.) to provide utility services within a district which includes all of Sacramento County and adjacent portions of Placer County. Under the Municipal Utility District Act, SMUD is authorized to “acquire, construct, own, operate, control, or use, within or without, or partly within or partly without, the district, works or parts of works for supplying the inhabitants of the district and public agencies therein, or some of them, with light, water, power, heat, transportation, telephone service, or other means of communication, or means for the…