HOCH, J. —
In 1996, California voters adopted Proposition 218 (as approved by voters Gen. Elec. Nov. 5, 1996, eff. Nov. 6, 1996 (Proposition 218) <https://elections.cdn.sos.ca.gov/sov/1996-general/official-declaration.pdf> [as of Nov. 14, 2018], archived at <https://perma.cc/PZ9U-ABQ6>) to add article XIII C to the California Constitution by which they expressly reserved their right to challenge local taxes, assessments, fees, and charges by initiative. (See generally Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205, 208-209 [46 Cal.Rptr.3d 73, 138 P.3d 220] (Bighorn-Desert).) This case presents the question of whether section 3 of article XIII C to the California Constitution silently repealed voters' right to challenge by referendum the same local levies for which they expressly preserved their power of initiative.
Here, the City of Dunsmuir (City) rejected a referendum measure submitted by one of its residents, Leslie T. Wilde. The City rejected the referendum even though there is no dispute Wilde gathered sufficient voter signatures to qualify the referendum for the ballot to repeal resolution 2016-02 (Resolution 2016-02) that established a new water rate master plan. The City's rejection was based on its view that its resolution establishing new water rates is not subject to referendum, but only voter initiative. Wilde filed a petition for a writ of mandate in superior court to place the referendum on the ballot. At the same time, Wilde gathered sufficient voter signatures to place an initiative on
On appeal, Wilde contends the trial court erred in refusing to order the City to place her referendum on the ballot. The City counters that the voters' rejection of her initiative measure moots the current appeal.
We conclude this appeal is not moot. The voters' rejection of Wilde's initiative water rate plan does not establish that the voters would necessarily have rejected Wilde's referendum on the City's water rate plan. Voters might be dissatisfied with both water rate plans and therefore reject the initiative and pass the referendum. On the merits, we conclude the voters' adoption of Proposition 218 did not abridge voters' right to challenge local resolutions and ordinances by referendum. We further conclude the trial court erred in finding the City's water rate plan was an administrative decision not subject to voter referendum. The resolution adopting an extensive water upgrade project funded by a new water rate plan was legislative in nature and therefore subject to voter referendum.
Accordingly, we reverse with directions to issue a peremptory writ of mandate ordering the voter registrar to place Wilde's referendum on the ballot.
FACTUAL AND PROCEDURAL HISTORY
In January 2015, the City formed an ad hoc water rate committee (Committee). The Committee held public meetings and a two-hour town hall meeting during which it assessed the City's water infrastructure needs, considered a study on the City's water rates, and proposed a six-year tiered increase in water rates. The increase was intended to fund the replacement of a 105-year-old water storage tank and a significant number of similarly aged water main sections.
Consistent with the requirements of Proposition 218, the City provided notice of the public hearing on water rate adjustments and protest ballots with which residents could file an objection. The City received only 40 protest votes at a time when 800 were required for a successful protest. Thus, Resolution 2016-02 went into effect.
Wilde's Petition for Writ of Mandate
After the resolution's adoption, Wilde gathered 145 voter signatures calling for a referendum to repeal the resolution. These signatures were verified. There is no dispute the number of voter signatures gathered by Wilde sufficed for a referendum. Nonetheless, the City's attorney informed Wilde the City refused to place the referendum on the ballot, stating: "The setting of Prop. 218 rates is an administrative act not subject to the referendum process. Also, Proposition 218 provides for initiatives ([Cal.Const., art.] XIII C, sec. 3), but not referenda."
In May 2016, Wilde filed a petition for writ of mandate to place her referendum on the ballot. The City opposed the petition. In July 2016, the trial court denied the writ petition. The trial court agreed with the City that the setting of new water rates constituted an administrative act that was not subject to referendum.
Defeat of Initiative Measure W
While Wilde's writ petition was pending in superior court, she gathered a sufficient number of signatures for an initiative to amend the City's water and sewer rate structure. The City placed Wilde's initiative on the November 8, 2016 ballot as Measure W. Measure W would have implemented a different water and sewer rate structure than that adopted by Resolution 2016-02. Measure W was rejected by the voters.
Here, the City argues this appeal is moot. The City reasons the voters' rejection of Wilde's initiative renders it impossible for us to grant Wilde any relief regarding her referendum. The City reasons the defeat of Wilde's initiative signaled the voters' endorsement of the water rates set by Resolution 2016-02. We disagree based on the differences between Wilde's initiative and her referendum.
We reject the City's mootness argument because of the different aims of Wilde's referendum and her initiative. Wilde's initiative sought to replace the City's water rate system with a different set of water rates for Dunsmuir's residents. By contrast, Wilde's referendum did not seek to replace the water rates implemented by the City's adoption of Resolution 2016-02 but instead to repeal the resolution. This means City voters could have rejected Wilde's initiative based on their dislike of the proposed new rates and could also be willing to vote for Wilde's referendum based on a concurrent dislike of the water rates established by Resolution 2016-02.
Assuming for the sake of this mootness issue that the water rates adopted by Resolution 2016-02 are subject to challenge by referendum, this court would have the ability to grant effective relief by ordering Wilde's referendum to be placed on a future ballot. (Yost v. Thomas (1984) 36 Cal.3d 561, 565 [205 Cal.Rptr. 801, 685 P.2d 1152] (Yost).) In Yost, the California Supreme Court ordered that a referendum be placed on the ballot three years after the challenged resolutions were adopted by the city council. (Id. at pp. 565, 574.) Here, the City does not contend Resolution 2016-02 has been repealed or is no longer effective. Instead, the record shows the water rate adopted by the resolution continues to increase until 2021 in order to upgrade the City's water infrastructure. Consequently, the appeal is not moot because this court has the power to grant effective relief in the form of a disposition that places Wilde's referendum on a future ballot.
Wilde contends the trial court erred in concluding that Resolution 2016-02 was not subject to voter referendum. The contention has merit.
Principles of Review
As the California Supreme Court has emphasized, constitutional "provisions must be construed liberally in favor of the people's right to exercise the reserved powers of initiative and referendum. The initiative and referendum are not rights `granted the people, but ... power[s] reserved by them. Declaring it "the duty of the courts to jealously guard this right of the people" [citation], the courts have described the initiative and referendum as articulating "one of the most precious rights of our democratic process" [citation]. "[I]t has long been our judicial policy to apply a liberal construction to this power wherever it is challenged in order that the right not be improperly annulled. If doubts can reasonably be resolved in favor of the use of this reserve power, courts will preserve it."' (Associated Home Builders etc., Inc. v. City of Livermore (1976) 18 Cal.3d 582, 591 [135 Cal.Rptr. 41, 557 P.2d 473], fn. omitted; see also Brosnahan v. Brown (1982) 32 Cal.3d 236, 241 [186 Cal.Rptr. 30, 651 P.2d 274].)" (Rossi v. Brown, supra, 9 Cal.4th at p. 695 (Rossi).)
In conducting our review of the constitutional issue in this case, we apply the de novo standard of review because the facts are not in dispute and the issue is one of law. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799 [35 Cal.Rptr.2d 418, 883 P.2d 960].)
This case turns on the effect, if any, that Proposition 218 might have had on voters' referendum powers. Consequently, we begin by delving into the context of Proposition 218. "Proposition 218 can best be understood against
At the time when voters were presented with Proposition 218, several published decisions had limited the reach of voter initiatives to challenge local tax measures. The first, Myers v. City Council of City of Pismo Beach (1966) 241 Cal.App.2d 237 [50 Cal.Rptr. 402] (Myers) held that because taxes are not subject to challenge by referendum they are also not subject to challenge by an initiative that is the functional equivalent of a referendum. (Id. at p. 243 ["A proposed initiative ordinance cannot be used as an indirect or backhanded technique to invoke the referendum process against a tax ordinance of a general law city ..."].) Dare v. Lakeport City Council (1970) 12 Cal.App.3d 864 [91 Cal.Rptr. 124] (Dare) further limited the initiative power by holding that "the initiative process does not lie with respect to statutes and ordinances `providing for tax levies.'" (Id. at p. 867, italics omitted.) And City of Woodlake v. Logan (1991) 230 Cal.App.3d 1058 [282 Cal.Rptr. 27] (City of Woodlake) reiterated the holdings of Myers and Dare by stating that "[i]t is ... not permissible to achieve a prohibited purpose by disguising as an initiative a referendum addressing exempted matters." (Woodlake, at p. 1063.)
In Rossi, supra, 9 Cal.4th 688 the California Supreme Court addressed the scope of initiative power shortly before the voters decided on Proposition 218. Rossi abrogated Myers, Dare, and City of Woodlake by holding that "the referendum provisions expressly preclude a referendum on statutes and ordinances which impose a tax, no such limitation is imposed on the people's exercise of their reserved initiative power." (Id. at p. 693.) The Rossi court explained that the "obligation to jealously guard the people's reserved right of initiative precludes the restriction on its exercise suggested by the Myers
Proposition 218 is titled the "Right to Vote on Taxes Act." (Ballot Pamp., Gen. Elec. (Nov. 5, 1996) text of Prop. 218, § 1, p. 108.) In its findings and declarations section, Proposition 218 states: "The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent." (Ibid.) Section 5 of the text of Proposition 218 declares, "The provisions of this act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent." (Id., § 5, at p. 109, italics added.)
The language added by Proposition 218 to the California Constitution as article XIII C, section 3, states: "Initiative Power for Local Taxes, Assessments, Fees and Charges. Notwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives."
Our conclusion that Proposition 218 did not negatively impact voters' referendum power is bolstered by the text, analysis, and arguments for Proposition 218 that were presented to the voters in the ballot pamphlet. (Ballot Pamp., Gen. Elec. (Nov. 5, 1996) analysis by the Legislative Analyst for Prop. 218, p. 74.) The summary of Proposition 218 provided by the Legislative Analyst in the ballot pamphlet noted that among other things, "The measure states that Californians have the power to repeal or reduce any local tax, assessment, or fee through the initiative process. This provision broadens the existing initiative powers available under the State Constitution and local charters." (Ibid.) This summary was echoed in the ballot argument made by proponents of Proposition 218, where they stated: "Proposition 218 expands your voting rights. It CONSTITUTIONALLY GUARANTEES your right to vote on taxes." (Id. at p. 77 (original capitalization) [rebuttal to argument against Prop. 218].)
Proposition 218's focus on preserving initiative rights on tax levies did not require any focus on the referendum power because taxes have never been subject to referendum. (Bighorn-Desert, supra, 39 Cal.4th at p. 212.) Insofar as Proposition 218 affected voters' rights, the initiative several times reiterated the goal of increasing voters' rights to vote on local legislation. (Ballot Pamp., Gen. Elec. (Nov. 5, 1996) text of Prop. 218, § 1, pp. 108-109.) Section 5 declared the purpose of Proposition 218 was to enhance local taxpayers' consent. (Id. at p. 109.) Conspicuously absent from the text of Proposition 218 is any language that limits voter rights. (See id. at pp. 108-109.) For this reason, the Legislative Analyst informed voters Proposition 218 "broadens the existing initiative powers" of voters. (Id. at
Having concluded Proposition 218 did not curtail the voters' referendum powers, we turn to the question of whether the resolution at issue in this case is legislative or administrative in nature.
Whether Resolution 2016-02 Set Water Rates in an Administrative Manner
Wilde contends the trial court erred in finding Resolution 2016-02 is not subject to voter referendum because it represents an administrative action. We agree.
1. Administrative Acts by Local Government
2. Resolution 2016-02
We proceed to consider whether Resolution 2016-02 prescribes a new policy or plan, or whether it administratively carries out previously determined legislative policies and plans.
The new water rates adopted in Resolution 2016-02 are not an administrative adjustment of rates according to the previously established 1994 Water Rate Master Plan. The new water rates are the product of a newly formulated set of policies that implemented a new set of choices: to replace a 105-year-old water storage tank as well as selected old water mains. In addition to these decisions to replace infrastructure, the 2015 Dunsmuir Water Master Plan also represents policy choices about how to allocate the new infrastructure costs.
Whether Resolution 2016-02 Is Not Subject to Referendum Because of the Essential Government Service Exemption
The City contends Resolution 2016-02 impinges on an essential government service that is not subject to referendum. Specifically, the City argues Wilde's "referendum proposal, relating to essential government services, is improper and would lead to uncertainty in the planning and fiscal administration of government budgets."
1. Wilde's Referendum
Wilde's petition for a referendum on Resolution 2016-02 stated, "We request the text of Resolution Number 2016-02 be entirely repealed by the Dunsmuir City Council or be submitted to a vote of the people." The petition contained no restraint on the city council that would have disallowed adoption of a different water rate master plan or revised rate allocation structure. The petition also provided the additional option of voter approval for the 2015 Dunsmuir Water Master Plan.
2. The Essential Government Service Exception
In assessing the City's attempt to invoke the essential government service exception to voters' referendum power, we begin with the California Supreme Court's guidance on this topic in four cases: Hunt v. Mayor & Council of Riverside (1948) 31 Cal.2d 619 [191 P.2d 426] (Hunt), Geiger v. Board of Supervisors (1957) 48 Cal.2d 832 [313 P.2d 545] (Geiger), Rossi, supra, 9 Cal.4th 688, and Bighorn-Desert, supra, 39 Cal.4th 205.
In Rossi, supra, 9 Cal.4th 688, the California Supreme Court again revisited the essential government services exception to the referendum power. The Rossi court reiterated that "if a tax measure were subject to referendum, the county's ability to adopt a balanced budget and raise funds for current operating expenses through taxation would be delayed and might be impossible. As a result, the county would be unable to comply with the law or to provide essential services to residents of the county." (Rossi, supra, 9 Cal.4th at p. 703.)
In Bighorn-Desert, the California Supreme Court held "that section 3 of article XIII C grants local voters a right to use the initiative power to reduce the rate that a public water district charges for domestic water." (Bighorn-Desert, supra, 39 Cal.4th at p. 209.) Nonetheless, the high court cautioned that "this new constitutional provision does not grant local voters a right to impose a voter-approval requirement on all future adjustments of water delivery charges, and that the proposed initiative at issue here was properly withheld from the ballot because it included a provision to impose such a requirement." (Ibid.) Thus, Bighorn-Desert and Rossi teach that voters cannot throw government finances into chaos by vitiating the regularly budgeted expenditures for essential government services.
3. Whether the Exception Applies to Resolution 2016-02
On the facts of this case, we conclude the essential government services exception does not bar Wilde's referendum from the ballot. Wilde's referendum was not aimed at previously existing City water rates or water delivery services. Had Wilde's referendum been placed on the ballot and passed, it would have had the effect of reverting to the City's 1994 Water Rate Master Plan. Rather than invalidating the regular expenditure of previously budgeted funds for essential government services, Wilde's referendum would have prospectively cancelled the City's newly adopted master plan to spend $15
The fact that Resolution 2016-02 includes a financial component does not insulate it from challenge by voter referendum. The resolution does not represent the ordinary working or budgeting of the City. As the City itself emphasizes in its briefing, the new water rate master plan was the product of an ad hoc group that studied the City's water infrastructure and billing rate structure. The resolution represents policy choices and marks out a different approach to the City's water infrastructure and rates. For this reason, Wilde's referendum was not subject to the exception on voter referendum powers made for measures that will undermine ongoing and essential governmental services and budgeting.
We reject the City's reliance on Citizens for Jobs & the Economy v. County of Orange (2002) 94 Cal.App.4th 1311 [115 Cal.Rptr.2d 90]. Citizens for Jobs arose out of the voters' approval of an initiative that required future electorate ratification of certain land use projects prior to their effect — even if approved by the board of supervisors. (Id. at p. 1328.) Citizens for Jobs held the initiative was "clearly beyond the power of the electorate" for several reasons, one of which was that "[i]t interferes with the essential government functions of fiscal planning and land use planning." (Id. at p. 1324.) Wilde's referendum, however, contains no prohibition on the City's future ability to study, plan, or implement a new water rate plan in the event voters approve the referendum. Wilde's referendum seeks repeal of Resolution 2016-02 without constraining the City in its ability to formulate and implement a different water rate master plan.
For the same reason, we are not persuaded by the City's reliance on City of Atascadero v. Daly (1982) 135 Cal.App.3d 466 [185 Cal.Rptr. 228]. City of Atascadero involved a proposed initiative ordinance that "would have required the City to submit any revenue-raising measure to the voters for their approval before the measure could be implemented." (Id. at p. 468.) The proposed initiative was invalidated as a voter usurpation of the power to tax and as "an unlawful attempt to impair essential governmental functions through interference with the administration of the City's fiscal powers." (Id. at p. 470.) The continuing validity of this decision is questionable after the California Supreme Court in Rossi mentioned City of Atascadero as one of the decisions in harmony with the overruled decisions in Myers, supra, 241 Cal.App.2d 237 and Dare, supra, 12 Cal.App.3d 864. (Rossi, supra, 9 Cal.4th at p. 705.) In any event, as we explained in our examination of Citizens for Jobs & the Economy v. County of Orange, supra, 94 Cal.App.4th 1311,
Because Wilde's referendum does not undermine the City's ability to provide essential government services, she is entitled to have her referendum placed on the ballot.
The judgment of dismissal of Leslie T. Wilde's petition for a writ of mandate is reversed and the case is remanded to the trial court with directions to issue a peremptory writ of mandate ordering the voter registrar to place Wilde's referendum on the ballot for the next municipal election. Leslie T. Wilde shall recover her costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
Butz, Acting P. J., and Murray, J., concurred.