Howard Jarvis Taxpayers Ass'n v. County of Orange

Proposition 13 amended the California Constitution by prohibiting the imposition of ad valorem property taxes in excess of 1 percent of the cash value of property. It contains an exception allowing excess taxes or special assessments “to pay the interest and redemption charges on any ... [1] (1) [indebtedness approved by the voters prior to July 1, 1978.” (Cal. Const., art. XIII A, § 1, subd. (b)(1).) The issue in this case is whether passage of a new city charter by the voters of real party in interest City of Huntington Beach (City) in July 1978 constitutes prior voter approval of excess taxation for retirement benefits added after 1978. That charter (1) mandates City’s participation in “a retirement system”; (2) gives the city council discretion to “establish such reasonable compensation and fringe benefits as are appropriate [for City employees] by ordinance or resolution”; and (3) expressly provides for an excess tax “sufficient to meet all obligations of the City for the retirement system in which the City participates.” We agree with the trial court that excess taxation for the added retirement benefits violates Proposition 13 and affirm the judgment.

FACTS

The…

I respectfully dissent. I believe our Supreme Court’s exegesis of the application of Proposition 13 to long-term city obligations in Carman v. Alvord (1982) 31 Cal.3d 318 [ 182 Cal.Rptr. 506 , 644 P.2d 192 ] should inform the analysis of Huntington Beach’s retirement benefits in this case. Since I am unconvinced by my colleagues’ attempt to distinguish Carman , I have no choice but to dissent.

In Carman v. Alvord, supra, 31 Cal.3d 318 (Carmen), our Supreme Court held that a city’s future obligations under its pension plan constituted the type of “indebtedness approved by the voters” which qualifies as an exception to the property tax limitation of Proposition 13. In Carman , the voters of the City of San Gabriel had approved the city’s participation in PERS in 1948, and empowered the city to “ ‘levy and collect annually, as contemplated in [the statewide statute], a special tax sufficient to raise the amount estimated by [the City] council to be required to meet the obligations of said City to said retirement system.’ ” (Id. at p. 322.) In the wake of California’s passage of Proposition 13, a taxpayer brought a class action alleging that the city’s continued levy of an excess tax…

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Steven L. Mayer, San Francisco; Gail Hutton, City Attorney, and Scott F. Field, Assistant City Attorney, for Real Party in Interest and Appellant.

Trevor A. Grimm, Los Angeles, Jonathan M. Coupal, Sacramento, and Timothy A. Bittle, for Plaintiffs and Respondents.

No appearance for Defendants.

RYLAARSDAM, J.

Proposition 13 amended the California Constitution by prohibiting the imposition of ad valorem property taxes in excess of one percent of the cash value of property. It contains an exception allowing excess taxes or special assessments "to pay the interest and redemption charges on any ... [¶] (1) [indebtedness approved by the voters prior to July 1, 1978." (Cal. Const., art. XIII A, § 1, subd. (b)(1).) The issue in this case is whether passage of a new city charter by the voters of real party in interest City of Huntington Beach (City) in July 1978 constitutes prior voter approval of excess taxation for retirement benefits added after 1978. That charter (1) mandates City's participation in "a retirement system"; (2) gives the city council discretion to "establish such reasonable compensation and fringe benefits as are…