Laws, Regulations & Annotations
Property Taxes Law Guide – Revision 2016
California Constitutional Provisions
Article XIII C Voter Approval for Local Tax Levies
(a) "General tax" means any tax imposed for general governmental purposes.
(b) "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity.
(c) "Special district" means an agency of the State, formed pursuant to general law or a special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies.
(d) "Special tax" means any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund.
(e) As used in this article, "tax" means any levy, charge, or exaction of any kind imposed by a local government, 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 local government of conferring the benefit or granting the privilege.
(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 local government of providing the service or product.
(3) A charge imposed for the reasonable regulatory costs to a local government for 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 local government property, or the purchase, rental, or lease of local government property.
(5) A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law.
(6) A charge imposed as a condition of property development.
(7) Assessments and property-related fees imposed in accordance with the provisions of Article XIII D.
The local government 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), added subdivision (e).
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.—Domestic water delivery through a pipeline is a property-related service within the meaning of Articles XIII D and XIII C, Section 3. Thus, once a property owner or resident has paid the connection charges and has become a customer of a public water agency, all charges for water delivery incurred thereafter are charges for a property-related service, whether the charge is calculated on the basis of consumption or is imposed as a fixed monthly fee. Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205. Under this article, a tax constitutes a general tax only when its revenue is placed into a general fund and is available for expenditure for any governmental purpose(s). A tax constitutes a special tax whenever the expenditure of its revenue is limited to specific purposes. Howard Jarvis Taxpayers Association v. City of Roseville, 106 Cal.App.4th 1178. All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. The two types of taxes are distinguished by the purposes for which they were imposed, not the activity or rights on which they are imposed. Therefore, the specification of the purposes for the tax is important in determining whether a tax is special or general. Neilson v. City of California City, 133 Cal.App.4th 1296.
General Tax.—A fee levied upon residential property owners engaged in the rental of their properties, and imposed for the primary purpose of recovering the cost of collecting and administering a general tax levied on those same property owners, was itself a general tax. Weisblat v. City of San Diego, 176 Cal. App. 4th 1022.
Special tax.—A city's business improvement district assessment imposed on businesses by a city ordinance pursuant to the Parking and Business Improvement Area Law of 1989, Streets and Highways Code Section 36500 et. seq., is not a special tax within the meaning of Article XIII C and Article XIII D. Howard Jarvis Taxpayers' Assn. v. City of San Diego, 72 Cal.App.4th 230. Police, fire, and parks and recreation services can be "specific purposes" when specified to voters, and not necessarily "general governmental purposes." Neilson v. City of California City, 133 Cal.App.4th 1296.
Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and distributing supplemental water for use, while not a tax or assessment, is a property-related fee or charge "imposed . . . as an incident of property ownership," and, thus, subject to constitutional preconditions for the imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.