Laws, Regulations & Annotations
Property Taxes Law Guide – Revision 2017
California Constitutional Provisions
Article XIII A Tax Limitation
Sec. 3. Changes in state taxes. (a) Any change in state statute which results in any taxpayer paying a higher tax must be imposed by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature, except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property may be imposed.
(b) As used in this section, "tax" means any levy, charge, or exaction of any kind imposed by the State, except the following:
(1) A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the State of conferring the benefit or granting the privilege to the payor.
(2) A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the State of providing the service or product to the payor.
(3) A charge imposed for the reasonable regulatory costs to the State incident to issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof.
(4) A charge imposed for entrance to or use of state property, or the purchase, rental, or lease of state property, except charges governed by Section 15 of Article XI.
(5) A fine, penalty, or other monetary charge imposed by the judicial branch of government or the State, as a result of a violation of law.
(c) Any tax adopted after January 1, 2010, but prior to the effective date of this act, that was not adopted in compliance with the requirements of this section is void 12 months after the effective date of this act unless the tax is reenacted by the Legislature and signed into law by the Governor in compliance with the requirements of this section. (d) The State bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity.
History.—The amendment of November 2, 2010 (Proposition 26), designated the former first paragraph as subdivision (a) and substituted "Any change in state statute which results in any taxpayer paying a higher tax" for "From and after the effective date of this article, any changes in State taxes enacted for the purpose of increasing revenues collected pursuant thereto whether by increased rates or changes in methods of computation" before "must be" and substituted "act" for "Act" after "by an" in the first sentence therein and added subdivision (b), (c) and (d).
Note.—Section 1 of Proposition 26, in effect November 3, 2010, provided the following Findings and Declarations of Purpose:
The people of the State of California find and declare that:
(a) Since the people overwhelmingly approved Proposition 13 in 1978, the Constitution of the State of California has required that increases in state taxes be adopted by not less than two-thirds of the members elected to each house of the Legislature.
(b) Since the enactment of Proposition 218 in 1996, the Constitution of the State of California has required that increases in local taxes be approved by the voters.
(c) Despite these limitations, California taxes have continued to escalate. Rates for state personal income taxes, state and local sales and use taxes, and a myriad of state and local business taxes are at all-time highs. Californians are taxed at one of the highest levels of any state in the nation.
(d) Recently, the Legislature added another $12 billion in new taxes to be paid by drivers, shoppers, and anyone who earns an income.
(e) This escalation in taxation does not account for the recent phenomenon whereby the Legislature and local governments have disguised new taxes as "fees" in order to extract even more revenue from California taxpayers without having to abide by these constitutional voting requirements. Fees couched as "regulatory" but which exceed the reasonable costs of actual regulation or are simply imposed to raise revenue for a new program and are not part of any licensing or permitting program are actually taxes and should be subject to the limitations applicable to the imposition of taxes.
(f) In order to ensure the effectiveness of these constitutional limitations, this measure also defines a "tax" for state and local purposes so that neither the Legislature nor local governments can circumvent these restrictions on increasing taxes by simply defining new or expanded taxes as "fees."
Construction.—As used in Article XIII A, an ad valorem tax is any source of revenue derived from applying a property tax rate to the assessed value of property. Heckendorn v. City of San Marino, 42 Cal.3d 481. The supplemental assessment provisions of Revenue and Taxation Code Sections 75.10 and 75.11 only affect the time at which existing real property taxes are calculated and imposed and thus, they do not impose new ad valorem taxes in violation of this section. Shafer v. State Board of Equalization, 174 Cal.App.3d 423.
Adoption of Property Tax Rule 474, which provides a rebuttable presumption for the assessment of petroleum refinery property as a single appraisal unit, does not exceed the rulemaking authority of the California State Board of Equalization because the rule is consistent with applicable constitutional and statutory provisions (California Constitution Article XIII, Section 1, Article XIII A, Section 2, subdivision (b); Revenue and Taxation Code Sections 51, 110); moreover, the rule is consistent with the existing practice of defining the appraisal unit as the collection of assets normally bought and sold as a single unit. Western States Petroleum Association v. Board of Equalization (2013) 57 Cal.4th 401.