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Propositions 26 and 218 IMPLEMENTATION GUIDE | MAY 2019

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Propositions 26 and 218 IMPLEMENTATION GUIDE | MAY 2019 Propositions 26 and 218 IMPLEMENTATION GUIDE | MAY 2019 Copyright ©2019 League of California Cities® All rights reserved. This publication, or parts thereof, may not be reproduced in any form without the permission of the League of California Cities®. ACKNOWLEDGEMENTS The League of California Cities gratefully acknowledges the contributions of Propositions 26 and 218 Implementation Guide Committee for their hard work and dedication in drafting this guide: Impletmentation Guide Committee City Attorneys’ Department Officer Liaison Michael G. Colantuono, Chair Damien Brower, 2nd Vice President Colantuono, Highsmith & Whatley, PC City Attorney, City of Brentwood City Attorney, Auburn and Grass Valley John Bakker League of California Cities’ Staff Meyers, Nave, Riback, Silver & Wilson City Attorney, City of Dublin Patrick Whitnell, General Counsel Buck Delventhal Corrie Manning, Senior Deputy General Counsel Deputy City Attorney, City and County of San Francisco Alison Leary, Deputy General Counsel Ryan Thomas Dunn Colantuono, Highsmith & Whatley, PC Janet Leonard, Legal Services Manager Ben Fay Jarvis, Fay, Doporto & Gibson, LLP Daniel S. Hentschke Attorney at Law This publication is provided for general information only and is not offered or intended as legal advice. Adam W. Hoffman Hanson Bridgett, LLP Readers should seek the advice of an attorney when confronted with legal issues and attorneys should Mark E. Mandell Mandell Municipal Consulting perform an independent evaluation of the issues raised in these materials. Gabriel McWhirter Jarvis, Fay, Doporto & Gibson, LLP Trisha Ortiz Richards, Watson & Gershon Kelly J. Salt Best, Best & Krieger, LLP Kevin D. Siegel Burke, Williams & Sorensen, LLP Betsy Strauss Special Counsel, League of California Cities Sky Woodruff Meyers, Nave, Riback, Silver & Wilson City Attorney, El Cerrito and Larkspur Copyright © 2019 by the League of California Cities®, Sacramento, California All rights reserved. This publication, or parts thereof, may not be reproduced in any form without the League’s permission. For information, contact the League of California Cities, 1400 K Street, 4th Floor, Sacramento, CA 95814; (916) 658-8200. II LEAGUE OF CALIFORNIA CITIES: PROPOSITION 26 AND 218 IMPLEMENTATION GUIDE Contents Introduction .......................................................................................................................................................... 7 I. THE POWER TO TAX GENERALLY ......................................................................................................................... 7 A. Property Taxes and Article XIII ............................................................................................................................. 8 B. Initiative/Referendum ........................................................................................................................................... 8 II. 1978’S PROPOSITION 13: PROPERTY TAX LIMITATION AND APPROPRIATIONS LIMIT .................. 9 A. The History of Proposition 13 .............................................................................................................................. 9 B. Property Tax Limitation ......................................................................................................................................... 9 C. Proposition 4 — The Gann Appropriation Limit ................................................................................................. 9 1. Appropriation Limitation ............................................................................................................................................10 2. Unfunded mandates ..................................................................................................................................................10 D. Special Taxes ........................................................................................................................................................ 10 E. Judicial Interpretation of the New Limitations ................................................................................................. 11 F. Increased Use of Other Revenue Sources Due to the Limitation on Property Taxes ..................................... 12 1. Assessments ..............................................................................................................................................................12 2. Mello-Roos .................................................................................................................................................................12 3. Parcel Taxes ...............................................................................................................................................................12 4. Police Power Fees......................................................................................................................................................12 5. Enterprise and service fees .......................................................................................................................................13 6. Burden of proof for challenges to alternate revenue sources ..................................................................................14 G. Knox v. Orland ..................................................................................................................................................... 15 III. PROPOSITION 218 (1996) .................................................................................................................................... 16 A. Purpose & Intent .................................................................................................................................................. 16 B. Voter Approval of Taxes ...................................................................................................................................... 16 1. General Taxes .............................................................................................................................................................16 2. Special Taxes ..............................................................................................................................................................16 C. Assessment Law Changes .................................................................................................................................. 17 D. Property Related Fees and Charges ................................................................................................................... 17 E. Power to Reduce Revenues Through Initiative ................................................................................................. 17 IV. PROPOSITION 26 (2010) ...................................................................................................................................... 17 LEAGUE OF CALIFORNIA CITIES: PROPOSITION 26 AND 218 IMPLEMENTATION GUIDE 1 TABLE OF CONTENTS Taxes .......................................................................................................................................................................... 19 I. WHAT IS A TAX? ...................................................................................................................................................... 19 II. GENERAL TAXES AND SPECIAL TAXES ........................................................................................................... 20 III. VOTING REQUIREMENTS FOR SPECIAL AND GENERAL TAXES............................................................. 21 A. Impose .................................................................................................................................................................. 21 B. Extend ................................................................................................................................................................... 21 C. Increase ................................................................................................................................................................. 22 IV. THE ELECTORATE .................................................................................................................................................. 23 V. ADVISORY MEASURES ACCOMPANYING GENERAL TAXES ................................................................... 23 VI. PROCEDURES FOR ENACTING AND IMPOSING TAXES ........................................................................... 24 A. Proposition 62’s Special Procedural Requirements ......................................................................................... 24 B. Proposition 218’s Special Procedural Requirements ........................................................................................ 24 VII. OTHER LIMITATIONS ON THE POWER TO TAX ........................................................................................... 25 Assessments ..................................................................................................................................................... 27 I. DISTINGUISHING ASSESSMENTS FROM FEES AND TAXES ...................................................................... 27 II. AUTHORITY TO LEVY PROPERTY-BASED ASSESSMENTS ........................................................................ 28 III. PROPOSITION 218’S CHANGES TO PREVIOUS ASSESSMENT METHODS .......................................... 28 IV. PROPOSITION 218’S PROCEDURAL
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