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August 31, 2017

Argument Preview: California Cannabis Coalition et al. v. City of Upland

by · May 26, 2017

[Cross-posted from SCOCAblog]

The California constitution subjects tax increases proposed by a local government to vote at a general election, but does this requirement also apply to an initiative measure proposed by the people themselves? The particular provision of the California constitution at issue, Article XIIIC, section 2(b), added by Proposition 218 in 1996, does not indicate whether or not it also applies to initiative measures. The Court of Appeal decision[1] under review in this case found that this provision did not govern initiative measures. Therefore, under this reasoning, initiative measures do not need to be submitted to a vote at a general election.

Viewed from 20,000 feet, one can see there are two plausible ways to approach the absence of clear instruction as to whether initiative measures are covered by this provision. One might argue that there is a deep principle of California law that the people's power of initiative is to be jealously guarded[2] and thus the judgment of the Court of Appeal should be affirmed. On the other hand, one might argue that Proposition 218 was clearly intended to make it harder to raise taxes. And permitting votes on initiative measures to raise taxes at special elections would make it easier to raise taxes (at least assuming the limitations added by Proposition 218 are effective).

The (somewhat simplified) facts of this case seem to be as dry as the question presented, even though they involve cannabis. The California Cannabis Coalition wanted to place an initiative on the ballot at a special election. The measure arguably imposed a tax on medical marijuana dispensaries and so the City argued that the measure must be put on the ballot at a general election, per the state constitutional rule governing the imposition of taxes.

This case has been much written about in tax circles and drew multiple amicus briefs, almost all arguing that the special Proposition 218 rules should govern initiative measures. Among the amici making this argument are the strange bedfellows The California League of Cities and the California Taxpayer's Association. Indeed, the City is represented by the Howard Jarvis Taxpayer's Foundation. On the other side, the high-powered firm of Munger, Tolles & Olson wrote an amicus brief on behalf of the San Diego Chargers in support of the California Cannabis Coalition.

What then is really going on here? Proposition 218 does not just require that all measures imposing a tax be voted on at a general election. It also requires, crucially, a two-thirds supermajority for the passage of special taxes.[3] This is a high hurdle. If the strictures of Proposition 218 do not apply to initiative measures, then this is a way for the people to tax themselves with only a majority vote.  Imagine the residents of a so-called sanctuary city opting to increase their taxes to counter a loss of federal funds.

Given this broader context, it is easy to understand the interest of advocacy groups that are generally hostile to taxes. Apparently the cities are not happy about the Court of Appeal's ruling because they are worried about losing relative control; the cities will have their revenue measures limited by Proposition 218 but initiatives from the voters will not be so limited. And the Chargers, well, they are apparently interested in getting some help from the public in financing a new stadium and a lower threshold for a tax initiative measure would likely be very helpful.[4] That is, it will be easier to get a majority of San Diego residents to back a tax to help the Chargers, but much harder to get a supermajority.

As indicated, I think the text can be mustered to support either position. Furthermore, the legislative history of the ballot measure, such as it is, contains passages supporting both sides. Proposition 218 was certainly about limiting taxes, but also about limiting taxes by making sure that the voters-not just local politicians-get to vote on taxes. Therefore, the case will be decided on the basis of the background principles that the court brings to its analysis and in particular the importance of the power of the initiative.

It should be noted-though it was not by the Court of Appeal-that there is a California Supreme Court decision that is nearly exactly on point and dispositive. In 1978, Proposition 13 added the requirement that the legislature could only increase taxes with a supermajority.[5] The question then arose whether this requirement also applies to tax increases imposed by the voters. In Kennedy Wholesale,[6] the court acknowledged the broad language of that provision could also apply to initiative measures, but held the requirement did not apply to initiative measures, at least in significant part because of the background assumption about protecting the power of the initiative.[7] To be sure, this case can be distinguished on the basis of different text, different ballot history and even the difference between state and local taxation. But crafting such a distinction will be difficult. First, a different canon of interpretation imputes to the voters knowledge of the law, which would include Kennedy Wholesale. The canon is supposed to put the burden on the party seeking to change the law and thus the absence of any indication that Proposition 218 limits the power of initiative is a problem. Second, if there is an important distinction between state and local level fiscal rules, then this implicates many cases in which the courts have toggled between the two in deciphering California's fiscal constitution.

A final note about political economy. It is an empirical question how significant it would be if the California Supreme Court upheld the Court of Appeal, but there are a few points worth noting.

First, in a world in which the Court of Appeal is affirmed, there will still need to be elections about tax increases (there is an argument made by the appellants that local governments could collude with initiative proponents to get tax increases imposed without an election, but this is a red herring because local governments cannot impose taxes without a vote of the electorate). In other states with similar tax limitation measures, such as Missouri,[8] there is often just the requirement that tax increases be subject to a vote. The underlying political intuition seems to be that taxes are so inherently unpopular that forcing voters to focus on them is tantamount to limiting them. Consider what has happened at the state level since Kennedy Wholesale. The voters of California have indeed approved tax increases via a majority vote, but they have not done so often.

Second, it is true that upholding the Court of Appeal would create an asymmetry between the powers of the people and the powers of government officials. Leaving aside the possible merits of such an arrangement, it is worth noting that the California Supreme Court has already created a not-dissimilar asymmetry through its interpretation of Article XIIIC, section 3. As things currently stand, voters can reduce fees by initiative even after the government has gone through all the procedural requirements for imposing the fee that are mandated by Article XIIID, which was also added by Proposition 218.[9]

Third, it is already the case that general-purpose governments, namely cities and counties, can increase taxes with a majority vote.[10] It is also common practice for these governments to ask for non-binding guidance on how to spend the money that they raise from general tax increases.[11] Thus, it is not clear how much this decision would affect cities and counties.

Finally, the power of initiative is specifically authorized for only cities and counties in the California constitution,[12] and so this decision will have no immediate effect upon special districts, including school districts. That said, the power to impose taxes by initiative could be given to the electors of school districts.[13] Suppose that school district electors were so empowered and that tax increase measures could pass with a bare majority instead of a two-thirds supermajority, as is currently the case. But how much would this matter? School districts have had the ability to finance new capital projects through a 55% vote since 2000 (assuming certain conditions are met).[14] All of this is not to say that there would not be a significant impact should the Court of Appeal decision be affirmed-perhaps schools will find it easier to raise taxes for non-capital costs if current law were changed-only that matters should be kept in perspective.

[1] 245 Cal.App.4th 970.

[2] Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) at 250.

[3] Special taxes are defined in Article XIIIC, section 1(d) as "as any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund." The two-thirds requirement is found in Article XIIIC, section 2(d).

[4] http://www.dailybulletin.com/general-news/20160721/how-the-fate-of-the-san-diego-chargers-could-hinge-on-uplands-marijuana-battle.

[5] Cal. Const. art. XIIIA, § 3.

[6] Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) at 248-49.

[7] Id. at 253.

[8] Mo. Const. art. X, § 22(a).

[9] Bighorn-Desert View Water Agency v. Verjil (2006).

[10] Cal. Const. art. XIIIA, § 2(b).

[11] Coleman v. County of Santa Clara (1998).

[12] Cal. Const. art. II, § 11.

[13] The electors of school districts can use the power of initiative to impose term limits on board members. See Cal. Educ. Code § 35107(c).

[14] Cal. Const. art. XIIIA, § 1(b)(3).

 

October 26, 2016

California International Law Center 2015-16 Annual Newsletter: Letter from the Director

Editor's Note: The following is Professor Anupam Chander's "Letter from the Director" published in the California International Law Center's 2015-15 Annual Newsletter.

Dear Colleagues,

International and comparative law continues to thrive at UC Davis School of Law. I highlight here some recent news about our highly productive international and comparative law faculty, as well as news about the California International Law Center's plans for the upcoming year.

Professor Karima Bennoune was named the United Nations Special Rapporteur in the field of cultural rights. Her first report to the UN Human Rights Council can be viewed here. A second report on the intentional destruction of cultural heritage is available here. The Sacramento Bee featured her prize-winning book, Your Fatwa Does Not Apply Here, which won the 2014 Dayton Literary Peace Prize. She is currently teaching a seminar where UC Davis law students help provide research for her United Nations reports.

Professor William Dodge, who joined our faculty last year after having served as the Honorable Roger J. Traynor Professor of Law at UC Hastings, continues his work as Co-Reporter for the American Law Institute's Restatement (Fourth) of Foreign Relations Law: Jurisdiction and as a member of the State Department's Advisory Committee on International Law. His article" International Comity in American Law" was published last December in the Columbia Law Review.

I'm so pleased to announce that Professor Afra Afsharipour will serve as the Associate Director of the California International Law Center. She recently published The India Corporate Governance Handbook, a key reference tool in understanding Indian corporate regulations.

Professor Madhavi Sunder took up the position of Senior Associate Dean at UC Davis School of Law as Professor Vik Amar left to become Dean of the University of Illinois College of Law. We wish Professor Amar great success in Urbana-Champaign. Professor Sunder published The Luxury Economy and Intellectual Property, with Oxford University Press. Co-edited with Haochen Sun, Associate Professor of Law and Deputy Director of the LLM Program in Information Technology and Intellectual Property at the University of Hong Kong, and Barton Beebe, the John M. Desmarais Professor of Intellectual Property Law at New York University School of Law, the book comprehensively explores the rise of the luxury goods economy and the growing role of intellectual property in creating, sustaining, and regulating this economy.

I just returned from speaking in Brasilia last week and am off to Tokyo this coming week to speak before the Keidanren, the Japanese business federation, on issues of cross-border Internet regulation. I published a paper in the Emory Law Review with Uyen Le, Senior Research Fellow at the California International Law Center. I also authored a new paper, "The Racist Algorithm?," which is forthcoming in the Michigan Law Review. Professor Kriss Ravetto-Biagioli and I were pleased to receive a major grant from the Mellon Foundation for a Mellon Sawyer Seminar Series on "Surveillance Democracies?," which supported a lecture series during the 2015-2016 school year.

Professor Peter Lee was awarded the 2016 Distinguished Teaching Award, an honor bestowed to only one professor per year.

Just this month, Dean Kevin Johnson led some of our extraordinary immigration and refugee law faculty to a major UC Davis cosponsored conference on Migration and Asylum at the University of Geneva, Switzerland. Professors Leticia Saucedo, Brian Soucek, Rose Cuison Villazor spoke at the conference, along with Dean Johnson. UC Davis law aluma Jihan Kahssay '12 also participated.

The Center also invited several speakers from across the world as part of our mission to educate King Hall on current international and comparative law matters. We were pleased to host distinguished international lawyers including Judge Seung Wha Chang, Member of the Appellate Body of the World Trade Organization; Dr. Edward Kwakwa, Legal Counsel for the World Intellectual Property Organization; and Ms. Andrea Bjorklund, International Arbitration and Commercial Law Professor at McGill University. We hosted the Northern California International Law Scholars Works-In-Progress Workshop and the Conference of Asian Pacific American Law Faculty (CAPALF).

The Mellon Sawyer award that Professor Ravetto-Biagioli and I received, in collaboration with Professor Ken Goldberg at UC Berkeley, allowed us to host a year-long multidisciplinary seminar series to explore the tension between the surveillance state and democracy. As part of this seminar series, we invited several academics and practitioners with expertise in privacy law, encryption, and government surveillance. Such experts included Ben Wizner, the ACLU's Free Speech Director and attorney for Edward Snowden; Laura Donahue, Georgetown Law Professor and Director of Georgetown's Center on Privacy and Technology; and Helen Nissenbaum, Professor of Media, Culture and Communication, and Computer Science, and Director of the Information Law Institute, New York University. In addition, we co-hosted with the Mellon Initiative in Digital Cultures a symposium on drones titled "Eyes in The Skies: Drones and the Politics of Distance Warfare."

This fall we welcome Nida Siddiqui '16, who will serve as this year's Law Fellow at the California International Law Center. A former Student Fellow of the Center, Nida will aid in our efforts to educate and engage UC Davis students and the legal community at large on current international law issues, as well as work on international law research.

One highlight of this school year will be the 50th Anniversary UC Davis Law Review symposium with the theme of "Future Proofing Law: From DNA to Robots." We have a stellar lineup of confirmed speakers: California Supreme Court Justice Mariano Florentino Cuellar; Mark Lemley, Stanford University; Jane Bambauer, University of Arizona; Julie Cohen, Georgetown University; Paul Ohm, Georgetown University; Ryan Calo, University of Washington; Mary Anne Franks, University of Miami; Molly Van Houweling, UC Berkeley; Dan Burk, UC Irvine; Hank Greely, Stanford University; Arti Rai, Duke University; I. Glenn Cohen, Harvard University; Laura DeNardis, American University; Nancy Leong, University of Denver; Margot Kaminski, Ohio State University; Mira Burri, University of Lucerne, Switzerland; Gary Marchant, Arizona State University; Mario Biagioli, UC Davis; Lisa Ikemoto, UC Davis; Albert Lin, UC Davis; Peter Lee, UC Davis; and Elizabeth Joh, UC Davis.

None of our work would have been possible without the support of our wonderful staff-Administrative Assistant Nina Marie Bell, Senior Research Fellow Uyên Lê, and Student Fellows Varun Aery '16 and Nida Siddiqui '16. We are also grateful to support from the staff at UC Davis School of Law, including Pamela Wu, Gia Hellwig, and Sam Sellers. We also depended on collaborations with student organizations including King Hall International Law Association, King Hall Intellectual Property Law Organization, and the Journal of International Law & Policy. We also were delighted to co-sponsor events with the Aoki Center for Critical Race & Nation Studies, UC Davis School of Law International Programs, Sacramento Chapter of the World Affairs Council, the State Bar of California's International Law Section of the ABA's Section of International Law, UC Berkeley's Art, Technology, and Culture Colloquium, UC Davis Office of the Provost & Executive Vice Chancellor, Compliance & Policy, and UC Davis Information and Education Technology.

The California International Law Center is committed to increasing King Hall's contribution to the world in developing an understanding both the possibilities and challenges international law poses to our community and values. We thank you for your support and welcome your participation in our activities!

Sincerely,

Anupam Chander

Director, California International Law Center, and

Martin Luther King, Jr. Professor

UC Davis School of Law