Rider v. County of San Diego

1991 California Supreme Court case

Rider v. County of San Diego

Supreme Court of California

Argued October 9, 1991
Decided December 19, 1991
Full case name| RICHARD J. RIDER et al., Plaintiffs and Respondents, v. COUNTY OF SAN DIEGO et al., Defendants and Appellants.
Citation(s)| 820 P.2d 1000 (1991)
2 Cal. Rptr. 2d 490
1 Cal. 4th 1 (1991)
Court membership
Chief Justice| Malcolm Lucas
Associate Justices| Armand Arabian, Marvin R. Baxter, Ronald M. George, Joyce L. Kennard, Stanley Mosk, Edward A. Panelli
Case opinions
Majority| Lucas, joined by Arabian, Baxter, George
Concurrence| George, joined by Panelli
Dissent| Mosk, joined by Kennard
Laws applied
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

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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."[1]

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.[2] 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),[3] that created the seven-member San Diego County Regional Justice Facility Financing Agency, an agency responsible for creating Proposition A,[4] a sales tax of 0.5 percent in San Diego County that would fund the construction of courthouses and jails.[2][5] In June 1988, the sales tax won with 50.8 percent approval of county voters.[6] The San Diego County sales tax rose to 7 percent.[7]

## Procedural history

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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).[6][8] The plaintiffs were Libertarian Party members Richard J. Rider and Pat Wright, and United Taxpayers of San Diego executive vice president Steven Currie.[9]

Judge Gordon Burkhart of the Riverside County Superior Court ruled in the plaintiffs' favor on March 23, 1989.[10] 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.[2][11]

However, on September 4, 1990, the California Court of Appeal overturned the superior court decision.[12] 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.[2]

The Supreme Court of California heard the case on October 9, 1991.[13] 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.[14]

## Decision

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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.[15] 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:

> We are sympathetic to the plight of local government in attempting to deal with the ever-increasing demands for revenue in the post-Proposition 13 period, and we are especially reluctant to interfere with sorely needed projects for new and improved courtrooms, criminal detention facilities, and other justice facilities. Yet Proposition 13 and its limitations on local taxation are constitutional mandates of the people which we are sworn to uphold and enforce. Any modification of these mandates must come from the people who, by constitutional amendment, may adopt such changes by a simple majority vote.[16]

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

> ... basing our decision on nonconstitutional grounds not only would be more consistent with well-established principles of judicial restraint, but would avoid the necessity of placing a new "gloss" on the meaning of the term "special district" as interpreted in prior decisions of this court construing Proposition 13.[16]

Giving separate dissents were Justices Stanley Mosk and Joyce L. Kennard. Mosk gave the opinion that the majority opinion broke away from past precedent.[16] 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."[16]

## Aftermath

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By the day of the California Supreme Court decision, San Diego County had collected $316 million towards the Proposition A tax.[17]

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.[4] 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.[18]

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.[19]

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.[20] 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.[21]

The California Supreme Court ruled again on Proposition A on March 25, 1993, declining to hear a petition challenging the Proposition A refund process.[21] 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.[22]

Rider says that this case reduced taxes by $3.5 billion in San Diego County and $14 billion statewide.[23]

## References

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Works cited

* Stahr, William A. (1992), "Rider v. County of San Diego: Special Districts and Special Taxes under Proposition 13", San Diego Law Review, 29 (4): 829–859, retrieved August 8, 2020

Notes

1. ^ Stahr 1992, pp. 829–831
2. ^ a b c d Stahr 1992, pp. 831–832
3. ^ Horstman, Barry M.; Abrahamson, Alan (December 20, 1991). "Supervisors Criticized for Mishandling Prop. A". Los Angeles Times. Retrieved August 9, 2020.
4. ^ a b Bernstein, Leonard (December 31, 1991). "Officials' Vote Keeps Prop. A Tax Issue Alive". Los Angeles Times. Retrieved August 8, 2020.
5. ^ Rider v. County of San Diego, 820 P.2nd 1000 (Supreme Court of California December 19, 1991) ("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.").
6. ^ a b Rider v. County of San Diego, 820 P.2nd 1000 (Supreme Court of California December 19, 1991) ("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.").
7. ^ Warren, Jenifer (June 9, 1988). "Passage of Jail Tax Praised, but Prop. B Loss Brings Dismay". Los Angeles Times. Retrieved August 9, 2020.
8. ^ "Transactions and Use Tax Court Decisions: Rider v. County of San Diego... (1991)". Business Taxes Law Guide - Revision 2022. California Department of Tax and Fee Administration. Retrieved May 22, 2022.
9. ^ Himaka, Mitch (July 7, 1988). "Sales-tax rise for jails, courts targeted by suit". San Diego Union. p. B-3. Retrieved June 10, 2024 - via Newslibrary.
10. ^ Horstman, Barry M. (March 23, 1989). "Judge Overturns S.D. Tax for Jails". Los Angeles Times. Retrieved August 9, 2020.
11. ^ Rider v. County of San Diego, 820 P.2nd 1000 (Supreme Court of California December 19, 1991) ("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.").
12. ^ Abrahamson, Alan (September 5, 1990). "Appeals Court Finds S.D. Tax for Jails Legal". Los Angeles Times. Retrieved August 9, 2020.
13. ^ "Rider v. County of San Diego". Supreme Court of California Resources, Stanford Law School. Retrieved August 8, 2020.
14. ^ "California awaits high court stance on sales tax in San Diego County". The Bond Buyer. October 28, 1991. Retrieved August 8, 2020.
15. ^ Abrahamson, Alan; Hager, Philip (December 20, 1991). "San Diego County Sales Tax Hike Overturned". Los Angeles Times. Retrieved 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.""
16. ^ a b c d Rider v. County of San Diego, 820 P.2nd 1000 (Supreme Court of California December 19, 1991).
17. ^ Wolf, Leslie (December 19, 1991). "Justices strike down jail tax". Evening Tribune. San Diego. p. A-1. Retrieved June 15, 2024 - via Newslibrary.
18. ^ Horstman, Barry M. (January 15, 1992). "Poll Finds San Diegans Support Outlawed Jail Tax". Los Angeles Times. Retrieved August 9, 2020.
19. ^ Gaw, Jonathan (February 15, 1992). "Coping With a Headache on Valentine's Day". Los Angeles Times. Retrieved August 9, 2020.
20. ^ Hearn, Lorie (December 25, 1992). "Court backs refunding of illegal 1/2 cent of sales tax". San Diego Union-Tribune. p. B-1. Retrieved June 15, 2024 - via Newslibrary.
21. ^ a b Hearn, Lorie (March 26, 1993). "High court ends long battle over sales tax". San Diego Union-Tribune. p. B-1. Retrieved June 15, 2024 - via Newslibrary.
22. ^ Wilkie, Dana (October 12, 1993). "Tax rollback set to repay Prop. A levy". San Diego Union-Tribune. pp. B-1, B-2. Retrieved June 15, 2024 - via Newslibrary.
23. ^ "Richard Rider - the San Diego Union-Tribune".