Rider v. County of San Diego explained

Litigants:Rider v. County of San Diego
Arguedate:October 9
Argueyear:1991
Decidedate:December 19
Decideyear:1991
Fullname:RICHARD J. RIDER et al., Plaintiffs and Respondents, v. COUNTY OF SAN DIEGO et al., Defendants and Appellants.
Citations: (1991)
2 Cal. Rptr. 2d 490
1 Cal. 4th 1 (1991)
Majority:Lucas
Joinmajority:Arabian, Baxter, George
Concurrence:George
Joinconcurrence:Panelli
Dissent:Mosk
Joindissent:Kennard
Lawsapplied:Cal. Const., art. 18 § 4 (Proposition 13)

Rider v. County of San Diego, 820 P.2d 1000 (Cal. 1991) was a California Supreme Court case where the court ruled that a sales tax in San Diego County, California, to fund courthouses and jails was invalid, because it failed to reach a two-thirds voter approval as required by Proposition 13.

Background

In 1978, California voters passed Proposition 13, an amendment (article XIII-A) to the California Constitution that limited the ways that state and local governments could create new taxes. Specifically, section 4 of article XIII-A required the approval of two thirds of voters for "special taxes" proposed by cities, counties, and entities called "special districts."

Seeking additional funding for jails and courthouses, the San Diego County Board of Supervisors in 1985 sought to create a county fund for managing and operating such facilities. However, in the November 1986 election, only 51 percent of county voters approved the fund, well short of a two-thirds requirement for passage as required by Proposition 13. Subsequently, the California State Legislature passed the San Diego County Regional Justice Facility Financing Act in 1987, which was introduced by Assemblymember Larry Stirling (Republican of San Diego),[1] that created the seven-member San Diego County Regional Justice Facility Financing Agency, an agency responsible for creating Proposition A,[2] a sales tax of 0.5 percent in San Diego County that would fund the construction of courthouses and jails.[3] In June 1988, the sales tax won with 50.8 percent approval of county voters. The San Diego County sales tax rose to 7 percent.[4]

Procedural history

Following the June 1988 election, three San Diego County taxpayers filed a lawsuit that challenged the legality of the tax and alleged that the sales tax violated the requirements of a supermajority vote to pass taxes from Proposition 13 (1978) and Proposition 62 (1986).[5] [6] The plaintiffs were Libertarian Party members Richard J. Rider and Pat Wright, and United Taxpayers of San Diego executive vice president Steven Currie.News: Sales-tax rise for jails, courts targeted by suit. Himaka. Mitch. San Diego Union. July 7, 1988. June 10, 2024. Newslibrary. B-3.

Judge Gordon Burkhart of the Riverside County Superior Court ruled in the plaintiffs' favor on March 23, 1989.[7] The judge ruled that the sales tax was a "special tax" as defined by Proposition 13 because the tax was not for general use but specifically for judicial facilities.[8]

However, on September 4, 1990, the California Court of Appeal overturned the superior court decision.[9] The appeals court ruled that because the Regional Justice Facility Financing Agency was not empowered to pass property taxes, that agency was not a "special district" as defined by Proposition 13.

The Supreme Court of California heard the case on October 9, 1991.[10] By that month, San Diego County raised over $320 million from the sales tax but was unable to spend the money pending the outcome of the Rider case.[11]

Decision

The California Supreme Court issued the 5–2 decision ruling against the sales tax on December 19, 1991, saying that any entity that is "essentially controlled" by a county or city must follow the two-thirds requirement for special taxes.[12] Chief Justice Malcolm Lucas wrote the majority opinion, joined by Justices Armand Arabian, Marvin R. Baxter, and Ronald M. George. The justices wrote in their majority opinion:

Additionally, Justice George wrote a separate, concurring opinion writing in part:

Giving separate dissents were Justices Stanley Mosk and Joyce L. Kennard. Mosk gave the opinion that the majority opinion broke away from past precedent. Kennard wrote that the San Diego agency that proposed the sales tax "is not a special district subject to the provisions of section 4 of article XIII A of the California Constitution and that the majority's interpretation of the phrase "special taxes" is overbroad."

Aftermath

By the day of the California Supreme Court decision, San Diego County had collected $316 million towards the Proposition A tax.[13]

Nearly a week after the court decision, the San Diego County Board of Supervisors voted on December 30, 1991, to continue collecting the Proposition A sales tax, and Chief Justice Lucas signed an order denying a request by the Libertarian Party to stop collection of the sales tax.[2] In January 1992, a Los Angeles Times poll found that 68 percent of San Diego city residents believed that a sales tax was needed to improve jails and courthouses and that 64 percent supported allowing the county to restore the sales tax.[14]

On February 13, 1992, the California Supreme Court declined to review this decision. As a result, Proposition A was abolished, and the sales tax rate in San Diego County dropped from 8.25 to 7.75 percent.[15]

Then on December 23, 1992, the California Fourth District Court of Appeal unanimously ruled that over $380 million in Proposition A taxes could be refunded to San Diego County taxpayers but rejected an argument to issue refunds through reducing sales taxes by half a cent.[16] The refund process was considered confusing and unenforceable, as there was no mechanism to compel merchants to issue sales tax refunds to consumers, for instance.[17]

The California Supreme Court ruled again on Proposition A on March 25, 1993, declining to hear a petition challenging the Proposition A refund process.[17] Later that year, the California Legislature passed a bill to facilitate a rebate of this sales tax to county taxpayers, by both reducing the county sales tax by $0.0075 effective April 1994 and issuing direct tax refunds from the state for documented purchases of $5,000 or more made between January 1, 1989, and February 13, 1992. Governor Pete Wilson signed the bill into law on October 11, 1993.[18]

Rider says that this case reduced taxes by $3.5 billion in San Diego County and $14 billion statewide.[19]

References

Works cited
Notes

Notes and References

  1. News: Horstman. Barry M.. Abrahamson. Alan. Supervisors Criticized for Mishandling Prop. A. Los Angeles Times. December 20, 1991. August 9, 2020.
  2. Web site: Officials' Vote Keeps Prop. A Tax Issue Alive. Bernstein. Leonard. Los Angeles Times. December 31, 1991. August 8, 2020.
  3. Rider v. County of San Diego . 820 . P.2nd . 1000 . Supreme Court of California . December 19, 1991 . https://www.courtlistener.com/opinion/1386094/rider-v-county-of-san-diego/ . August 8, 2020 . In 1987, in express recognition of the County's need for improved courtrooms and jails, the Legislature passed an act [...] creating the San Diego County Regional Justice Facility Financing Agency [...] [that] was charged with adopting a tax ordinance imposing a supplemental sales tax of one-half of 1 percent throughout the County for the purpose of financing the construction of justice facilities. [...] The act provided for a countywide election held for the purpose of approving the tax ordinance by simple majority vote. [...] The act also provided that the Agency possesses no tax power other than the foregoing sales tax..
  4. News: Passage of Jail Tax Praised, but Prop. B Loss Brings Dismay . Warren. Jenifer. Los Angeles Times. June 9, 1988. August 9, 2020.
  5. Rider v. County of San Diego . 820 . P.2nd . 1000 . Supreme Court of California . December 19, 1991 . https://www.courtlistener.com/opinion/1386094/rider-v-county-of-san-diego/ . August 8, 2020 . At an election held in June 1988, the County's voters approved the tax ordinance by a bare (50.8 percent) majority vote. Plaintiffs, being County taxpayers, filed the present suit to challenge the validity of the tax. [...] In addition to their arguments under Proposition 13, plaintiffs/taxpayers contended that the Agency's tax is an invalid "special tax" under the supermajority voter approval provisions of Proposition 62, a statutory initiative measure adopted in 1986..
  6. Web site: Transactions and Use Tax Court Decisions: Rider v. County of San Diego... (1991). California Department of Tax and Fee Administration. Business Taxes Law Guide - Revision 2022. May 22, 2022.
  7. News: Judge Overturns S.D. Tax for Jails . Horstman. Barry M.. Los Angeles Times. March 23, 1989. August 9, 2020.
  8. Rider v. County of San Diego . 820 . P.2nd . 1000 . Supreme Court of California . December 19, 1991 . https://www.courtlistener.com/opinion/1386094/rider-v-county-of-san-diego/ . August 8, 2020 . Having found that the Agency was created to circumvent Proposition 13, and that the Agency is properly deemed a "special district" under section 4, the trial court further found that the Agency's proposed sales tax is a "special tax" under that section because the tax proceeds were not to be spent for general County purposes but for the special and limited purposes of constructing and operating the County's justice facilities..
  9. News: Appeals Court Finds S.D. Tax for Jails Legal . Abrahamson. Alan. Los Angeles Times. September 5, 1990. August 9, 2020.
  10. Web site: Rider v. County of San Diego. Supreme Court of California Resources, Stanford Law School. August 8, 2020.
  11. Web site: California awaits high court stance on sales tax in San Diego County. . The Bond Buyer. August 8, 2020. October 28, 1991.
  12. News: Abrahamson. Alan. Hager. Philip. San Diego County Sales Tax Hike Overturned. Los Angeles Times. December 20, 1991. August 9, 2020. The court majority said that any taxing agency that is "essentially controlled" by a city or county must comply with the rigid two-thirds rule of Proposition 13 when it comes to raising special taxes--those levied for a limited use, not for "general governmental purposes.".
  13. News: Justices strike down jail tax . Wolf. Leslie. Evening Tribune. San Diego. December 19, 1991. A-1. June 15, 2024. Newslibrary.
  14. News: Poll Finds San Diegans Support Outlawed Jail Tax. Horstman. Barry M.. Los Angeles Times. January 15, 1992. August 9, 2020.
  15. News: Coping With a Headache on Valentine's Day. Gaw. Jonathan. Los Angeles Times. February 15, 1992. August 9, 2020.
  16. News: Court backs refunding of illegal 1/2 cent of sales tax. Hearn. Lorie. San Diego Union-Tribune. December 25, 1992. B-1. June 15, 2024. Newslibrary.
  17. News: Hearn. Lorie. High court ends long battle over sales tax . San Diego Union-Tribune. March 26, 1993. B-1. June 15, 2024. Newslibrary.
  18. News: Wilkie. Dana. Tax rollback set to repay Prop. A levy. San Diego Union-Tribune. B-1, B-2. October 12, 1993. June 15, 2024. Newslibrary.
  19. Web site: Richard Rider - the San Diego Union-Tribune.