Title: City & County of San Francisco v. Regents of the University of California

State: california

Issuer: California Supreme Court

Document:

IN THE SUPREME COURT OF 
CALIFORNIA 
 
CITY AND COUNTY OF SAN FRANCISCO, 
Plaintiff and Appellant, 
 
v. 
 
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA et al., 
Defendants and Respondents. 
 
S242835 
 
First Appellate District, Division One 
A144500 
 
San Francisco City and County Superior Court 
CPF-14-513-434 
 
 
June 20, 2019 
 
Justice Kruger authored the opinion of the court, in which 
Chief Justice Cantil-Sakauye and Justices Chin, Corrigan, Liu, 
Cuéllar, and Baker* concurred. 
                                        
 
*  
Associate Justice of the Court of Appeal, Second Appellate 
District, Division Five, assigned by the Chief Justice pursuant 
to article VI, section 6 of the California Constitution. 
 
 
 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF 
THE UNIVERSITY OF CALIFORNIA 
S242835 
Opinion of the Court by Kruger, J. 
 
The City and County of San Francisco (San Francisco) imposes 
a tax on drivers who park their cars in paid parking lots.  To enforce 
the tax, the city requires parking lot operators to collect the tax from 
drivers and remit the proceeds to the city.  We granted review to 
consider whether the California Constitution permits San Francisco 
to apply this tax collection requirement to state universities that 
operate paid parking lots in the city.  We conclude the answer is yes. 
I. 
San Francisco is a consolidated city and county that has adopted 
a charter for its own governance under article XI, section 3 of the 
California Constitution.  Exercising its constitutional power to 
regulate its “municipal affairs” as a charter city (Cal. Const., art. XI, 
§ 5, subd. (a)), in the early 1970’s San Francisco enacted a tax on the 
cost of “rent” for any parking space at a parking lot or garage in the 
city.  (S.F. Bus. & Tax Regs. Code, art. 9, § 601.)  Since 1980, the 
parking tax rate has been set at 25%.  (Id., § 602.5.) 
The San Francisco parking tax is imposed on drivers.  But like 
many taxes of its kind, the parking tax is not paid directly to the city; 
drivers instead pay the parking tax to the parking lot operator, along 
with the parking fee the operator charges.  The operator then collects 
the taxes and remits them to the city.  (S.F. Bus. & Tax Regs. Code, 
art. 9, § 603.)  To ensure it receives the proper amounts, San Francisco 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
2 
 
requires operators to document the taxes they collect and holds them 
liable for any underpayments.1 
By its terms, the ordinance applies to public entities and private 
ones alike, though it does excuse public entity operators from some of 
the requirements imposed on private parking operators, such as 
                                        
 
1  
To be more specific:  The ordinance generally requires the 
operator to file quarterly tax returns that document the amount of the 
parking tax to be remitted, and such other information as the city may 
require.  (S.F. Bus. & Tax Regs. Code, art. 6, § 6.7-2, subd. (c).)  The 
operator must also certify in writing, under penalty of perjury, that it 
has utilized machines that record all parking transactions to the city’s 
specifications.  (Id., art. 9, § 607, subd. (b); id., art. 22, § 2203.)   
 
If an operator does not collect the tax from drivers renting 
parking space in its facilities, the operator becomes liable to the city 
for the amount of the tax.  (S.F. Bus. & Tax Regs. Code, art. 9, § 604, 
subd. (a).)  The city will excuse the operator from remitting tax on a 
small percentage of lost or unaccounted-for tickets, but operators are 
otherwise generally liable for the full value of the highest maximum 
daily rate charged for any lost or unaccounted-for ticket.  (Id., subd. 
(b).)  The city may consider “in its sole and absolute discretion” 
whether an operator’s explanation for lost tickets or canceled 
transactions is reasonable.  (Id., subd. (c).)   
The operators’ compliance with these requirements is backed by 
the threat of more significant sanctions.  Under San Francisco law, 
operators must post a bond and obtain a certificate of authority in 
order to operate a parking lot.  (S.F. Bus. & Tax Regs. Code, art. 6, 
§ 6.6-1.)  If an operator violates any city rule or regulation related to 
the parking tax, “including but not limited to any failure to timely 
collect, report, pay, or remit any tax imposed by this Code, failure to 
maintain accurate registration information, failure to sign any return 
or pay any tax when due, or failure to timely respond to any request 
for information,” then the operator’s certificate of authority may be 
suspended or revoked.  (Id., subd. (g).) 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
3 
 
bonding and permitting requirements (S.F. Bus. & Tax Regs. Code, 
art. 6, § 6.6-1, subd. (h)(2); S.F. Police Code, art. 17, § 1215, subd. (b)), 
and requirements for installing devices to properly track parking 
revenue and taxes (S.F. Bus. & Tax Regs. Code, art. 22, § 2202).  But 
public entities are still required to “collect, report, and remit” the 
parking tax owed by drivers to the city (S.F. Bus. & Tax Regs. Code, 
art. 6, § 6.8-1, subd. (b)).  It is this requirement that has generated the 
present controversy. 
Defendants are the Regents of the University of California 
(Regents), which oversees the University of California at San 
Francisco (UCSF); the Board of Directors of Hastings College of the 
Law (Hastings); and the Board of Trustees of the California State 
University (CSU), which operates San Francisco State University 
(SFSU) (collectively, the universities).  All of the university 
defendants own and operate private parking facilities in San 
Francisco in order to serve the needs of their respective campuses.  
Specifically, the Regents own and operate parking facilities at UCSF’s 
educational and healthcare facilities for the use of faculty, staff, 
students, researchers, visitors, and patients who receive care at the 
clinics and hospitals on campus.  UCSF uses its parking fee revenue 
to fund, among other things, a shuttle bus service between its various 
locations for students, faculty, and staff.  Hastings operates a garage 
near its law school, which is located in the Tenderloin neighborhood 
of San Francisco.  Hastings explains that it operates the garage at a 
loss in order to maintain a safe and secure environment for its 
students.  CSU, for its part, operates nine parking lots on SFSU’s 
campus, which is located in an urban environment where parking is 
scarce. 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
4 
 
In 1983, San Francisco attempted to collect parking lot taxes from 
UCSF, but the Regents asserted immunity and San Francisco 
declined to pursue the matter.   That was, for quite some time, the end 
of the controversy.  But in 2011, San Francisco reconsidered and 
directed UCSF, Hastings, and SFSU to begin collecting and remitting 
the parking tax.  The universities refused.  In response, San Francisco 
filed a petition for a writ of mandate in the trial court to compel 
compliance.  San Francisco argued that it would be a minimal burden 
for the universities to collect the parking tax along with whatever 
parking fees they charge.  San Francisco also offered to reimburse the 
universities for their administrative costs in collecting and remitting 
the taxes, as the trial court had ordered in another municipal tax 
collection case, City of Modesto v. Modesto Irrigation Dist. (1973) 34 
Cal.App.3d 504, 508–509 (City of Modesto).  The trial court denied the 
writ, concluding that the universities are exempt from compliance 
with the parking tax ordinance.  The trial court reasoned that this 
result followed from the constitutional principles articulated and 
applied in In re Means (1939) 14 Cal.2d 254 (Means) and Hall v. City 
of Taft (1956) 47 Cal.2d 177 (Hall), which hold that a local government 
may not regulate a state entity in its performance of governmental 
functions unless the state consents to the regulation.    
The Court of Appeal affirmed in a published opinion, agreeing 
with the trial court that the Means-Hall doctrine exempts the state 
agencies from collecting and remitting the parking tax.  (City and 
County of San Francisco v. Regents of University of California (2017) 
11 Cal.App.5th 1107 (City and County of San Francisco).) 
Justice Banke dissented.  In her view, the state’s sovereignty is 
“not impinged” (City and County of San Francisco, supra, 11 
Cal.App.5th at p. 1149 (dis. opn. of Banke, J.)) by the “minimal 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
5 
 
burden” (ibid.) of “collecting a general local tax imposed on third 
parties, particularly where the costs of such are reimbursed” (id. at 
p. 1146).  She also observed that other authorities have, contrary to 
the majority’s holding, concluded that a municipality may require a 
state entity to collect a general tax imposed on third parties doing 
business with the entity, at least where the municipality reimburses 
the state entity for the costs of collection.  (See City of Modesto, supra, 
34 Cal.App.3d 504 [charter city could require state agency operating 
as utility to collect utility user’s tax]; Eastern Mun. Water Dist. v. City 
of Moreno Valley (1994) 31 Cal.App.4th 24, 26 (City of Moreno Valley) 
[relying on City of Modesto to conclude general law city could require 
state agency operating as utility to collect utility user’s tax]; accord, 
65 Ops.Cal.Atty.Gen. 267 (1982) [relying on City of Modesto to 
conclude municipality may require state agency to collect local 
occupancy tax from private users of state conference center].)  While 
the law on the subject “has been far from a paragon of clarity,” she 
argued, the majority’s decision left the law “in some disarray.”  (City 
and County of San Francisco, at p. 1124 (dis. opn. of Banke, J.).)  She 
called on this court to “state clearly whether or not a state entity can 
be asked to collect a local tax imposed on third parties doing business 
with the entity, particularly where . . . the entity will be reimbursed 
its costs of doing so.”  (Ibid.) 
Hearing the call, we granted review. 
II. 
 
The general problem in this case is familiar to any constitutional 
system in which two governments exercise authority within the same 
territory.  The specific task before us is to determine the proper 
allocation of authority between a local government and state agencies 
under a constitution that confers substantial powers on each. 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
6 
 
 
Many of California’s local governments predate California’s 
statehood, and the framers of the 1879 California Constitution 
dedicated an entire article to the subject of their powers.  From the 
outset, the 1879 Constitution expressly recognized the police powers 
of local government, and continues to do so today:  As relevant here, 
any city “may make and enforce within its limits all local, police, 
sanitary, and other ordinances and regulations not in conflict with 
general laws.”  (Cal. Const., art. XI, § 7.)  The 1879 Constitution also 
permitted cities of a certain size to adopt charters for their own 
government.  (Weekes v. City of Oakland (1978) 21 Cal.3d 386, 399 
(Weekes), citing Cal. Const., art. XI, §§ 6, 8 (1879).)  In 1896, voters 
approved a so-called “home rule” provision granting charter cities 
“supremacy over local matters.”  (Weekes, at p. 399.)  This provision, 
as presently written, permits charter cities to “make and enforce all 
ordinances and regulations in respect to municipal affairs”; with 
respect to such matters, the cities’ charters “supersede all laws 
inconsistent therewith.”  (Cal. Const., art. XI, § 5, subd. (a).)2  
                                        
 
2  
Charter counties also enjoy home rule authority.  (See Cal. 
Const., art. XI, § 3 [County charters “shall supersede . . . all laws 
inconsistent therewith.”].)  This authority, however, is more limited 
than that of charter cities; the Constitution contains no provision 
giving charter counties supreme authority over “ ‘county affairs.’ ”  
(Dibb v. County of San Diego (1994) 8 Cal.4th 1200, 1207–1208.)  San 
Francisco, as California’s only consolidated city and county, enjoys the 
greater degree of autonomy that comes with charter city status.  (Cal. 
Const., art. XI, § 6, subd. (b).) 
 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
7 
 
 
This home rule authority includes the power to tax for local 
purposes.3  The power to tax, we have explained, is the lifeblood of the 
charter city; without it, “the municipality cannot exist, and the 
municipality alone is directly concerned in its preservation.”  (Ex parte 
Braun (1903) 141 Cal. 204, 210.)  It is this local taxation power that 
San Francisco, a charter city, asserts here.  
 
The universities in this case are agencies of the state 
government whose powers and responsibilities are defined in the 
Constitution, as well as in statutory law enacted by the Legislature.  
The Constitution itself establishes the University of California, 
vesting the Regents with “full powers of organization and 
government” (Cal. Const., art. IX, § 9, subd. (a)), including “the legal 
title and the management and disposition of the property of the 
university and of property held for its benefit” (id., subd. (f)), and “all 
the powers necessary or convenient for the effective administration of 
[the University of California]” (ibid.).  Hastings is statutorily 
designated as the law department of the University of California (Ed. 
Code, § 92201), and is charged with “afford[ing] facilities for the 
acquisition of legal learning in all branches of the law” (id., § 92202). 
 
The CSU system, too, finds explicit mention in the California 
Constitution, which refers to the Legislature’s authority to create a 
“state agency . . . in the field of public higher education which is 
charged with the management, administration, and control of the 
                                        
 
3  
By statute, the Legislature has conferred a parallel taxation 
power on “general law” cities—that is, cities that have not adopted a 
charter under article XI, section 3 of the California Constitution.  
(Gov. Code, § 37100.5.)  We do not consider today whether this power 
is coincident with charter cities’ constitutional authority. 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
8 
 
State College System of California.”  (Cal. Const., art. XX, § 23.)  
Exercising that authority, the Legislature has conferred on CSU a 
variety of powers, including the power “to acquire . . . real property 
and to construct, operate, and maintain motor vehicle parking 
facilities and other transportation facilities thereon for state 
university officers, employees, students, or other persons.”  (Ed. Code, 
§ 89701, subd. (a); see generally id., §§ 66600 et seq., 89000 et seq.)  
The Board of Trustees may also prescribe the “terms and conditions 
of the parking, . . . including the payment of parking fees” (id., 
§ 89701, subd. (a)), which it has done through regulation (Cal. Code 
Regs., tit. 5, § 42201). 
 
San Francisco contends that its power to raise municipal 
revenue through taxation permits it to apply its tax ordinance to paid 
university parking lots within San Francisco borders, just as it applies 
the ordinance to other paid parking lots operated by private entities.  
The universities, on the other hand, argue that their status as 
agencies of the sovereign state government, engaged in duties 
assigned to them by state law and addressing matters of statewide 
importance, places private parties’ use of their paid parking lots 
beyond the reach of San Francisco’s revenue power.  No provision of 
the state Constitution expressly resolves this controversy; the parties 
thus rely primarily on inferences from constitutional structure and 
this court’s precedent resolving other types of intergovernmental 
conflicts.  To answer the question, we must disentangle two separate 
threads of the inquiry.  First, does San Francisco have the power to 
tax drivers who use paid university parking lots?  Second, if so, may 
San Francisco enlist the universities’ help in collecting and remitting 
the taxes? 
 
 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
9 
 
III. 
We begin with the first issue, which goes to the substantive 
validity of the parking tax.  The answer follows from settled precedent.  
As we have described it, the tax in question is not imposed on the state 
universities or their property.  It is, rather, imposed on private 
parties—namely, drivers who use parking lots.  This is a critical 
distinction.  Since the days of M’Culloch v. State of Maryland (1819) 
17 U.S. 316, it has been understood that the law forbids one 
government from imposing a tax on another.  But it is also understood 
that the law does not forbid a government from imposing a tax on 
private third parties who happen to do business with another 
government (provided, that is, the tax does not discriminate against 
the parties because they are doing business with the government).  
(E.g., Weekes, supra, 21 Cal.3d at p. 398, citing Graves v. N. Y. ex rel. 
O’Keefe (1939) 306 U.S. 466, 486–487 (Graves).)  The parking tax here, 
which applies to drivers in precisely the same way regardless of 
whether they use the university parking lot or a private parking lot 
across the street, belongs to this second category of taxes.  There is no 
assertion here that the drivers here stand in the shoes of the 
universities themselves.  Principles of governmental tax immunity do 
not bar the parking tax.   
 
The universities do not take direct aim at this settled 
understanding of the limits of governmental tax immunity or their 
application to this case; the primary focus of their challenge to San 
Francisco’s ordinance is, rather, the requirement that they play a role 
in collecting and remitting the taxes.  Nevertheless, the universities 
raise a series of objections to San Francisco’s tax ordinance that can 
only be understood as indirect challenges to San Francisco’s power to 
impose the parking tax on the third parties who pay for use of 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
10 
 
university parking lots.  CSU, for example, contends that it should not 
be required to collect the parking tax because parking is of particular 
importance to the university and the tax threatens to interfere with 
CSU’s educational mission by making parking more expensive.  It 
explains that parking for SFSU students, staff, and visitors is scarce; 
adding a parking tax would make it difficult for CSU to ensure 
parking remains affordable; and CSU would lose revenue if it reduced 
its parking prices by the amount of the tax.  The other universities 
raise similar concerns about interference with their judgments about 
how to provide affordable access to their facilities and the downstream 
impact on their budgets; indeed, Hastings adds that it considers 
parking so important that it already operates its garage at a loss.   
 
Although the universities offer these arguments in service of 
their arguments for avoiding collection of San Francisco’s parking tax, 
their true target is plainly the tax itself.  If San Francisco’s parking 
tax ordinance interferes with their judgments about how best to 
provide affordable access for guests and affiliates, it is because of San 
Francisco’s chosen tax rate as applied to the third parties who park in 
university lots, not because of the requirement that parking lot 
operators collect these taxes along with other parking charges. 
 
The answers to this set of objections, however, also follow from 
settled precedent.  Our cases have made clear that a particular private 
activity may be a matter of particular concern to the state and 
nonetheless subject to municipal taxation.  Even when the state has 
exclusive regulatory authority in a particular area, a local tax on the 
conduct of the regulated activity, without more, is not an 
impermissible “ ‘interference with state affairs.’ ”  (In re Groves (1960) 
54 Cal.2d 154, 157, quoting In re Galusha (1921) 184 Cal. 697 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
11 
 
[municipality may tax attorney engaged in practice of law, 
notwithstanding exclusive state regulation of legal practice].) 
 
Our cases have also held that it is permissible for a municipality 
to tax such private activities even though the tax imposes an indirect 
economic burden on the state government.  General taxes on 
government employees and contractors are prime examples.  In 
Weekes, supra, 21 Cal.3d 386, for example, this court upheld the 
application of a municipal occupation tax to state workers 
notwithstanding the clear, if indirect, impact on the state’s choices 
regarding employee compensation.  Similarly, in City of Los Angeles 
v. A.E.C. Los Angeles (1973) 33 Cal.App.3d 933 (A.E.C. Los Angeles), 
the Court of Appeal upheld the application of city business taxes to a 
state contractor, calculated on the basis of the gross receipts the 
contractor had obtained from the state.  The court in A.E.C. Los 
Angeles explained that while “local ordinances may not impose a 
regulatory scheme upon private persons which operates to impinge 
upon the sovereign power of the state . . . revenue measures of general 
application imposing a nondiscriminatory tax upon persons doing 
business in a state regulated activity or with the state, do not so 
impinge.”  (Id. at p. 940, citations omitted.)  This is so, the court 
explained, even when the economic burden can be passed on to a 
“higher governmental unit,” thus indirectly affecting its operations.  
(Ibid.) 
 
In elaborating these principles, these cases drew on a body of 
federal case law applying similar principles to uphold similar taxes 
imposed by state governments on federal employees and contractors.  
(See Weekes, supra, 21 Cal.3d at p. 398; A.E.C. Los Angeles, supra, 33 
Cal.App.3d at p. 940.)  In Graves, for example, the United States 
Supreme Court upheld a state tax on federal employees’ income, 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
12 
 
rejecting the argument that the resulting burden on the federal 
government is “tantamount to an interference by one government 
with the other in the performance of its functions.”  (Graves, supra, 
306 U.S. at p. 481.)  The high court has likewise upheld state taxes 
even when the levy effectively draws from the public treasury, as 
under cost-plus contracts that pass the entirety of the tax onto the 
federal government (see United States v. Boyd (1964) 378 U.S. 39, 46–
47; Alabama v. King & Boozer (1941) 314 U.S. 1, 8 (King & Boozer)), 
or other contracts under which the taxes are paid with federal monies 
(see United States v. New Mexico (1982) 455 U.S. 720, 741–743 (New 
Mexico)). 
The relationship between the federal and state governments is 
by no means identical to the relationship between state universities 
and charter cities.  But the federal cases nevertheless offer several 
important lessons that have proved influential in our own case law.  
The federal cases recognize that “inferior” governments may levy 
taxes on private parties, even if the economic burden of that tax is 
passed entirely to the “superior” government.  That this economic 
burden may make it more expensive for the superior government to 
perform its mission does not create an immunity from taxation—even 
when the mission is as critical as managing national railroads 
(Railroad Company v. Peniston (1873) 85 U.S. 5, 33), locks and dams 
on navigable rivers (James v. Dravo Contracting Co. (1937) 302 U.S. 
134), army camps (King & Boozer), atomic energy plants (Boyd), or 
atomic laboratories (New Mexico).  The cases reason that our 
federalist system is structured with overlapping governmental 
jurisdictions, and each level of government must be able to raise 
revenue from the constituents who benefit from its services—even 
though this taxation will inevitably impose indirect economic costs on 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
13 
 
other governments operating within that jurisdiction.  This is “but a 
normal incident of the organization within the same territory of two 
independent taxing sovereignties.”  (King & Boozer, supra, 314 U.S. 
at p. 9.) 
California cases adopting this general view have not been 
limited to the realms of employment or contracting.  For example, in 
Board of Trustees v. City of Los Angeles (1975) 49 Cal.App.3d 45 
(Board of Trustees), the court upheld a municipal permitting 
requirement as applied to a circus held on CSU property.  The court 
noted the ordinance would affect CSU “only in whatever manner 
enforcement might affect the revenue production” of the property, 
which was insufficient to bar the tax under preemption or sovereign 
immunity principles.  (Id. at p. 49.)  And in Oakland Raiders v. City 
of Berkeley (1976) 65 Cal.App.3d 623 (Oakland Raiders), the court 
upheld a city gross receipts tax on the Oakland Raiders for 
professional football games played in California Memorial Stadium at 
the University of California, Berkeley.  The court acknowledged “the 
University of California is not subject to local regulations with regard 
to its use or management of the property held by the Regents in public 
trust.”  (Id. at p. 626.)  Nonetheless, the court concluded, “[a] tax upon 
the operation of a business by a lessee of publicly owned property 
constitutes a tax upon the privilege of performing the business rather 
than a tax upon the property.”  (Id. at p. 627.)  And “ ‘where it merely 
appears that one operating under a government contract or lease is 
subjected to a tax with respect to his profits on the same basis as 
others who are engaged in similar businesses, there is no sufficient 
ground for holding that the effect upon the Government is other than 
indirect and remote. . . .’ [citation]; the fact that a tax may constitute 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
14 
 
an indirect burden upon an organ of government does not invalidate 
the tax.”  (Ibid.) 
 
The only municipal tax case in which we have invalidated a 
city’s assertion of the power to tax parties regulated by or doing 
business with the state is California Fed. Savings & Loan Assn. v. 
City of Los Angeles (1991) 54 Cal.3d 1 (California Federal).  Not 
surprisingly, the universities rely heavily on California Federal, but 
it does not help them.  In California Federal, we held that a state 
statute imposing a tax on banks and financial corporations in lieu of 
all other taxes and licenses preempted a municipal business tax that 
the City of Los Angeles, a charter city, sought to collect from a savings 
and loan association operating within its jurisdiction.  The core of the 
ruling concerned the conflict between the municipal tax and the state 
taxation law, which had been designed to displace all other taxation 
laws.  (Id. at pp. 18–19.)  We explained that although taxation is a 
“necessary and appropriate power of municipal government, aspects 
of local taxation may under some circumstances acquire a 
‘supramunicipal’ dimension, transforming an otherwise intramural 
affair into a matter of statewide concern warranting legislative 
attention.”  (Id. at p. 7.)  “In the event of a true conflict between a state 
statute reasonably tailored to the resolution of a subject of statewide 
concern and a charter city tax measure, the latter ceases to be a 
‘municipal affair’ to the extent of the conflict and must yield.”  (Ibid.) 
 
This case involves no similar conflict between the Legislature’s 
resolution of a matter of statewide concern and a charter city tax 
measure; the Legislature has enacted no overriding statutory regime 
designed to displace municipal parking taxes as applied to university 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
15 
 
students, staff, or other guests.4  CSU, pointing to the unique 
provisions of its governing statute, does argue that the Legislature 
impliedly displaced San Francisco’s parking tax by giving CSU the 
power to build parking facilities (Ed. Code, § 89701, subd. (a)), and 
giving the Board of Trustees the power to prescribe “the payment of 
parking fees in the amounts and under the circumstances determined 
by the trustees” (ibid.).  But the argument is unpersuasive; San 
Francisco’s tax does not hinder CSU’s ability to build parking facilities 
or charge the fees of its choice, any more than the municipal licensing 
tax at issue in Weekes hindered the state employer’s ability to hire 
employees or set the salary of its choice.  We discern no “true conflict” 
that would require the tax measure to yield.  (California Federal, 
supra, 54 Cal.3d at p. 7.) 
 
To the extent CSU or the other universities argue San 
Francisco’s parking tax is impliedly preempted because it imposes an 
economic burden that threatens interference with the universities’ 
                                        
 
4  
The Regents argue that California Federal should be read for 
the broader proposition that municipal tax measures applicable to 
transactions with state agencies should be reviewed with the same 
degree of scrutiny as substantive regulations of those transactions.  
They rely for this argument on a sentence that reads:  “[C]harter city 
tax measures are subject to the same legal analysis . . . as charter city 
regulatory measures.”  (California Federal, supra, 54 Cal.3d at p. 7.)  
But as the surrounding context makes clear, this sentence meant only 
that charter city taxes are not “invariably,” and thus uniquely, 
“immune from state legislative supremacy” in the preemption context.  
(Id. at p. 6.)  In other words, a charter city tax—like a charter city 
regulation—may be preempted by a state statute in appropriate 
circumstances.  But as we explain, there is no preemptive state statute 
applicable to the circumstances of this case. 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
16 
 
performance of their assigned duties, we have already explained that 
the law is to the contrary; indirect economic consequences alone are 
insufficient to invalidate a nondiscriminatory municipal tax on third 
parties doing business with the state or its agencies.  This is, in 
substance, the same argument that was rejected in Oakland Raiders.  
And it is an argument inconsistent with the basic principles we 
applied in Weekes.  Any municipal tax will produce economic ripples 
that reach every significant market participant.  If state agencies 
could invalidate municipal taxes based on these indirect effects on 
their operations, little would be left of the city’s revenue power.  
Rather than attempt to draw granular distinctions based on the 
degree to which a tax on third parties affects government operations, 
the law instead generally confers on municipal governments the 
power to tax third parties, provided the tax is nondiscriminatory—and 
provided the tax satisfies the test against which the validity of all 
taxes are judged, namely, that it bears the necessary “ ‘fiscal relation 
to protection, opportunities and benefits given.’ ”  (Weekes, supra, 21 
Cal.3d at p. 398.) 
Applying these principles here, we conclude that the San 
Francisco parking tax ordinance is not invalid as applied to drivers 
who park in paid university parking lots even though the tax will have 
secondary effects on the universities.  This conclusion in no way calls 
into question the genuineness or importance of the universities’ 
interest in providing accessible parking to staff, students, and guests, 
while minimizing the impact on their own budgets.  We instead 
conclude that such interests, important though they may be, are not 
a sufficient basis for setting aside a nondiscriminatory municipal tax 
where the legal incidence falls on private parties who do not actually 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
17 
 
“ ‘stand in the Government’s shoes.’ ”  (New Mexico, supra, 455 U.S. at 
p. 736.) 
To put the matter simply:  Private parties transacting on state 
property may not appropriate to themselves the state’s immunity from 
local taxation, and state agencies may not nullify local taxes on 
account of unfavorable secondary economic effects.  (See Oakland 
Raiders, supra, 65 Cal.App.3d at p. 627; Board of Trustees, supra, 49 
Cal.App.3d at p. 49; A.E.C. Los Angeles, supra, 33 Cal.App.3d at 
p. 940.)  Affirming San Francisco’s power to tax drivers who park in 
paid university lots does not answer whether San Francisco has the 
further power to order the universities to collect and remit those taxes.  
It does, however, sharpen the inquiry.  If San Francisco has exceeded 
its authority, it is because there is something constitutionally 
improper about the particular burden of requiring state employees to 
perform tax collection on behalf of municipalities.  We must evaluate 
this burden separately from the universities’ opposition to the parking 
tax itself. 
IV. 
We turn then, to the crux of the case before us:  whether the 
California Constitution permits San Francisco to require the state 
university parking lot operators to collect the parking tax and remit 
the proceeds to the city. 
As an initial matter, we note there is nothing unusual about San 
Francisco’s general requirement that parking lot operators collect and 
remit the parking taxes on its behalf.  Such arrangements are 
standard operating procedure in many areas of tax law.  As this court 
observed decades ago:  “The field of taxation is replete with examples 
of a government entity making businesses generally its agent in tax 
collections and prescribing certain regulations in the accounting 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
18 
 
therefor . . . such as withholding taxes and social security taxes for the 
United States government, unemployment taxes and numerous excise 
taxes for the state—‘a familiar and sanctioned device.’ ”  (Ainsworth 
v. Bryant (1949) 34 Cal.2d 465, 477 (Ainsworth).)  When a 
governmental entity lays a tax on a particular type of transaction, it 
often tasks one party to the transaction with the duty to see the tax is 
paid.  Without such arrangements, a great many valid tax laws—
including this one—would simply go unenforced.  (Ibid.) 
What makes this case unusual is that one government has 
sought to impose such a requirement on another.  While governments 
have often agreed among themselves to lend such assistance (see, e.g., 
5 U.S.C. § 5517 [authorizing federal employers to withhold state 
income taxes]; Rev. & Tax. Code, § 7204 [authorizing the State Board 
of Equalization to remit sales and use taxes collected on behalf of local 
governments]), here no such agreement has been reached.  The 
universities contend that principles of “hierarchical sovereignty” 
embodied in the California Constitution forbid a municipality from 
imposing any sort of requirement on the sovereign state or state 
agencies 
engaged 
in 
their 
assigned 
functions—including 
a 
requirement to collect and remit local taxes from users of their 
facilities—unless the state consents to the imposition. 
 
The centerpiece of the universities’ argument is a series of cases 
holding that otherwise legitimate exercises of municipal regulatory 
power cannot be enforced against state agencies engaged in pursuit of 
their constitutionally or statutorily assigned duties.  The line of cases 
begins with Means, supra, 14 Cal.2d 254, which concerned the 
constitutionality of applying a municipal plumber certification 
ordinance, which required plumbers to sit for examination and deliver 
a bond, against a state employee working on state property.  (Id. at 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
19 
 
pp. 256–257.)  We held the ordinance could not be constitutionally 
applied to the state employee, explaining that when setting 
qualifications for its employees, the state “acts in an exclusive field 
[citations], and is not subject to the legislative enactments of 
subordinate governmental agencies.”  (Id. at p. 258.)  Thus, “[i]f one 
who has been employed by the state may not work on state property 
within a municipality without the consent of the municipality 
obtained after examination, the city has, in effect, added to the 
requirements for employment by the state, and restricted the rights 
of sovereignty.”  (Ibid.)   
In so holding, Means outlined a set of general limits on a charter 
city’s power over “municipal affairs.”  The rule, we explained, “is not 
entirely a geographical one.  Under certain circumstances, an act 
relating to property within a city may be of such general concern that 
local regulation concerning municipal affairs is inapplicable.”  (Means, 
supra, 14 Cal.2d at p. 259.)  For example, maintenance of city streets 
ceases to be a municipal affair if the Legislature designates a street 
as a secondary state highway; so, too, regulations that require 
construction to be overseen by local supervisors ceases to be a 
municipal affair once they are applied to state buildings.  (Ibid.)  In 
each example, the municipality’s exercise of power results in a “direct 
conflict of authority.”  (Id. at p. 260.)  “Upon fundamental principles,” 
we concluded, “that conflict must be resolved in favor of the state.”  
(Ibid.) 
We addressed a similar issue in Hall, supra, 47 Cal.2d 177, in 
which we held that a school district organized under state laws was 
exempt from building regulations promulgated by a nonchartered city.  
We explained that under the California Constitution, “[t]he public 
schools of this state are a matter of statewide rather than local or 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
20 
 
municipal concern” (id. at p. 179); furthermore, we observed, the state 
has occupied the field of the construction of school buildings (id. at 
pp. 184, 188).  Citing Means, we explained that, as a general rule, 
when the state “engages in such sovereign activities as the 
construction and maintenance of its buildings . . . it is not subject to 
local regulations unless the Constitution says it is or the Legislature 
has consented to such regulation.”  (Hall, at p. 183.)  So, too, with the 
construction of school buildings by school districts that act as state 
agencies for the operation of the local school system.  (Ibid.; see id. at 
p. 181.) 
The Courts of Appeal have applied the principles articulated in 
Means and Hall to exempt state agencies from the regulatory reach of 
a wide array of local ordinances.  In City of Santa Ana v. Board of Ed. 
of City of Santa Ana (1967) 255 Cal.App.2d 178 and Laidlaw Waste 
Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Cal.App.4th 630, 
for example, the courts held that school districts were exempt from 
local garbage collection regulations.  In City of Orange v. Valenti 
(1974) 37 Cal.App.3d 240, the court held that the state unemployment 
insurance office did not have to comply with a local parking ordinance 
prescribing the number of parking spaces that must be available.  (Id. 
at pp. 242–244.)  In Regents of University of California v. City of Santa 
Monica (1978) 77 Cal.App.3d 130, 136–137, the court held the city 
could not enforce a construction fee against the Regents, because “the 
University of California is not subject to local regulations with regard 
to its use or management of the property held by the Regents in public 
trust.” 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
21 
 
This line of cases does not articulate quite as broad a rule as the 
universities suggest.5  The cases concern substantive regulatory 
requirements that interfered with the state’s substantive judgments 
about how to perform its assigned functions.  Means and Hall tell us 
that in the event of a conflict between a municipality’s view of, say, 
how best to build a parking lot, and the state’s ability to decide for 
itself what sort of parking lot would best serve its needs, the state’s 
prerogatives must prevail.  But the Means-Hall cases do not hold that 
state agencies are categorically beyond the reach of any local law, no 
matter how inobtrusive, including one that does no more than require 
assistance in collecting a concededly valid tax on third parties.  No 
such scenario was presented in those cases, and we did not answer the 
question. 
                                        
 
5  
The Court of Appeal understood this line of cases to distinguish 
between municipal regulations that operate on state agencies in their 
performance of “proprietary” activities—which are permissible—and 
those regulations that instead operate on state agencies in their 
performance of “governmental functions.”  The court concluded that 
the operation of the parking lots in question is a “governmental” 
function, and for that reason deemed San Francisco’s collection 
requirement unconstitutional as applied.  (City and County of San 
Francisco, supra, 11 Cal.App.5th at p. 1114; see Board of Trustees, 
supra, 49 Cal.App.3d 45; City of Modesto, supra, 34 Cal.App.3d 504.)  
Although the parties continue to debate whether operation of paid 
parking lots is better described as a “proprietary” or a “governmental” 
function, both sides agree that the proper result in this case does not 
turn on this matter of characterization.  We agree.  Because this case 
does not require us to decide how the distinction between 
governmental and proprietary functions might inform our assessment 
of the state’s interest, if at all, we decline to do so. 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
22 
 
The universities’ argument for an absolutist view of 
“hierarchical sovereignty” also draws on an intuition derived from 
federal constitutional law, where the high court has held that one 
sovereign—namely, 
the 
federal 
government—cannot 
conscript 
officials of another sovereign—state governments—for its own 
purposes.  (See Murphy v. National Collegiate Athletic (2018) 584 U.S. 
___ [138 S.Ct. 1461]; Printz v. United States (1997) 521 U.S. 898.)  But 
it is not clear that even those cases, which concern the unique 
federalism principles embodied in the United States Constitution, are 
properly read to adopt a rule of categorical immunity from any and all 
ministerial requirements one government might impose on another.  
(See Printz, at p. 936 (conc. opn. of O’Connor, J.) [reserving question 
whether 
anticommandeering 
doctrine 
invalidates 
ministerial 
reporting requirements].) 
And outside of the context of federal-state relations, the high 
court has concluded that one government—the state—does have the 
authority to require another government—an Indian tribe—to bear 
“ ‘minimal burdens’ ” in collecting any applicable state taxes on its 
behalf, even though the tribe is in no way answerable to the state.  
(Oklahoma Tax Comm’n v. Chickasaw Nation (1995) 515 U.S. 450, 
459.) 
Having exhausted the relevant precedent in this area, it 
remains to consider whether the structure of our state Constitution 
requires us to erect a rigid bar against the sort of intergovernmental 
tax collection assistance requirement at issue here.  We conclude that 
it does not.  In matters concerning the structural division of authority 
under our Constitution, we have generally avoided the type of 
absolutist approach the universities urge in favor of a more flexible 
one, capable of adaptation to the practical imperatives of governance.  
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
23 
 
(See, e.g., People v. Bunn (2002) 27 Cal.4th 1, 14 [recognizing that 
while our Constitution divides power among three coequal branches, 
“the branches share common boundaries [citation], and no sharp line 
between their operations exists.  [Citations.]   . . .  [¶]  Indeed, the 
‘sensitive balance’ underlying the tripartite system of government 
assumes a certain degree of mutual oversight and influence.  
[Citations.]”) 
In questions concerning the division of authority between the 
state and charter cities, in particular, we have recognized the need to 
maintain a sensitive balance between competing prerogatives.  In 
California Federal, we emphasized the fact- and circumstance-specific 
nature of the determination whether an ordinance governs a 
“ ‘municipal affair,’ ” (California Federal, supra, 54 Cal.3d at p. 17) 
over which charter cities maintain ultimate authority (Cal. Const., 
art. XI, § 5, subd. (a)), or a “ ‘statewide concern,’ ” which means the 
charter city measure must yield in the face of conflicting state 
interests (California Federal, at p. 17).  “In cases presenting a true 
conflict between a charter city measure—whether tax or regulatory—
and a state statute,” we said, “the hinge of the decision is the 
identification of a convincing basis for legislative action originating in 
extramunicipal concerns, one justifying legislative supersession based 
on sensible, pragmatic considerations.”  (California Federal, at p. 18.)  
Courts may invalidate an otherwise valid charter city measure only 
where, “under the historical circumstances presented, the state has a 
more substantial interest in the subject than the charter city.”  (Ibid.)  
This state interest must be demonstrated through a “fact-bound 
justification,” for deferring to the mere assertion of a state prerogative 
would “ ‘ultimately all but destroy municipal home rule.’ ”  (Ibid.) 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
24 
 
Here, too, we conclude that the constitutional task before us 
calls for a sensitive balancing of constitutional interests, rather than 
a simple invocation of constitutional rank.  To be sure, this is not a 
preemption case like California Federal; we are not asking whether 
an ordinance that would otherwise represent a lawful exercise of the 
charter city’s powers is invalid, either on its face or as applied, because 
the Legislature has claimed the relevant regulatory area exclusively 
for the state.  But the basic task is similar.  Here, much as in 
California Federal, we are called on to “adjust[] the political 
relationship between state and local governments in discrete areas of 
conflict.”  (California Federal, supra, 54 Cal.3d at p. 18.)  Our 
emphasis on pragmatic balancing and factual context in the 
preemption analysis translates cleanly to the present dispute, and 
contradicts the kind of categorical, sweeping rule urged by the 
universities.  A state agency’s generalized offense at the notion of 
taking orders from a local government cannot alone be dispositive; we 
must consider and pragmatically weigh the substantive constitutional 
interests on both sides of the balance. 
Here, on the state’s side of the balance, we recognize the 
universities’ objection rests on more than just generalized offense; 
they worry that if municipalities begin to impose legal requirements 
on them, their attention will inevitably be diverted from their 
missions.  The concern is a legitimate one, but it bears emphasis that 
the case before us does not concern just any kind of legal requirement; 
it concerns a requirement to collect parking taxes along with the 
university’s parking fees.  Even so, we agree with the dissenting 
opinion in the Court of Appeal that “requiring a state entity to collect 
a local tax brings the respective sovereign spheres of the state and a 
municipality within harrowingly close proximity.”  (City and County 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
25 
 
of San Francisco, supra, 11 Cal.App.5th at p. 1146 (dis. opn. of Banke, 
J.).)  But as a practical matter, the burdens associated with the 
particular tax-collection requirement at issue here are minimal.6  The 
only disruptions the universities have been able to identify with any 
specificity are the secondary economic effects that San Francisco’s tax 
will impose on their parking operations.  As we have already 
explained, however, “the fact that a municipal tax is imposed in a 
fashion which permits its ultimate economic burden to be passed on 
to a higher governmental unit does not invalidate it.”  (A.E.C. Los 
Angeles, supra, 33 Cal.App.3d at p. 940.)   
On the other side of the balance, the city’s interest in enforcing 
the collection requirement is considerable.  San Francisco has a 
legitimate interest in the millions of dollars in contested tax money, 
and a tax is effective only if it can be collected.  It is precisely for that 
reason that we have repeatedly held in other contexts that the power 
to tax includes the power to order steps necessary to collect the tax, 
including the recruitment of third parties who would otherwise be 
beyond the charter city’s regulatory power.  In Ainsworth, supra, 34 
Cal.2d 465, for example, a liquor retailer challenged San Francisco’s 
sales tax, arguing it was inconsistent with a constitutional provision 
vesting the state with the exclusive power to regulate liquor within 
the state.  (Id. at p. 468; see Cal. Const., art. XX, § 22.)  San Francisco’s 
                                        
 
6  
And indeed, to avoid any question on the score, San Francisco 
has conceded that it may be required to reimburse the universities for 
their costs of collection and remittance.  While it is clear that there is 
no significant burden on a sovereign when these administrative costs 
are reimbursed, the parties have not asked us to decide whether the 
burden could be significant where reimbursement is not provided. 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
26 
 
ordinance required the retailer to collect a sales tax from the 
purchaser at the time of sale, to register with the tax collector, to keep 
records, and to make quarterly returns.  (Ainsworth, at pp. 468–469.)  
We held that the effect of the constitutional provision should not be 
extended to reduce “the plenary power of taxation possessed by a 
chartered municipality as an essential attribute of its existence.”  (Id. 
at p. 472.)  Because the tax was a valid exercise of the city’s authority, 
we further held that the collection, recordkeeping, and remittance 
requirements “appear reasonably adapted to insure the collection and 
proper remission of the tax, and as so premised, they constitute the 
maintenance of an accounting standard coincident with the city’s 
taxing power rather than a regulation exclusively reserved to the state 
in the exercise of its police power over the liquor traffic.”  (Id. at 
p. 476.)  The conclusion that a collection requirement is not a 
“regulation” reserved to the state, we said, “seems wholly clear when 
it is remembered that the city’s power to levy such tax would include 
the power to use reasonable means to effect its collection.”  (Ibid.) 
 
Similarly, in Rivera v. City of Fresno (1971) 6 Cal.3d 132, 
disapproved on other grounds by Yamaha Corp. of America v. State 
Bd. of Equalization (1998) 19 Cal.4th 1, consumers sought to 
invalidate an ordinance requiring utility companies to collect and 
remit a municipal utility tax.  (Rivera, at p. 135.)  We held that the 
tax was consistent with the charter city’s “home rule” powers, and was 
not preempted by the state’s law regulating local sales and use taxes 
or its laws regulating public utilities.  (Id. at pp. 135–136, 139–140.)  
“[W]hether or not the state has occupied the field of regulation,” we 
said, “cities may levy fees or taxes solely for revenue purposes, as was 
done by the Fresno utility users’ tax.”  (Id. at p. 139.)  “Further, the 
requirement that the utility company supplying a particular utility 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
27 
 
service collect the utility users’ tax and remit to the city does not 
constitute forbidden or conflicting regulation of the utility.”  (Ibid.)  
Similar principles are in play here, though the subject of the collection 
requirement is a state agency rather than a private entity subject to 
exclusive state regulation. 
 
This conclusion accords with the only appellate decision to 
consider this issue before the Court of Appeal decision in this case.  In 
City of Modesto, supra, 34 Cal.App.3d 504, Modesto, a charter city, 
sought to compel irrigation districts—state agencies that distribute 
and sell electrical energy—to collect utility taxes owed by the service 
user.  The irrigation districts conceded the utility users’ tax was a 
“valid exercise of a chartered city’s power to tax for revenue purposes.”  
(Id. at p. 506.)  But much like the universities here, the irrigation 
districts argued “that they cannot be compelled to collect the city’s tax 
because the ordinance, to the extent that it applies to them, impinges 
on the state’s sovereignty over local entities; they assert that the 
collection requirement of the city ordinance is a regulation and that 
this regulation, if extended to state agencies, contravenes the almost 
universal rule throughout this country that the activities of the state 
and its agencies cannot be controlled or regulated by local entities in 
the absence of legislative consent.”  (Ibid.)   
 
The Court of Appeal rejected this argument.  The court held, as 
an initial matter, that a collection requirement that affects a state 
agency in its “proprietary” capacity does not impinge on state 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
28 
 
sovereignty.  (City of Modesto, supra, 34 Cal.App.3d at pp. 506–507.)7  
But the court then proceeded to “affirm the judgment for another 
reason.”  (Id. at p. 508.)  Recognizing that the city “has no practical 
nor economical means of collecting such a tax without the cooperation 
of the supplier of the utility service,” the court concluded:  “It is basic 
that the power to tax carries with it the corollary power to use 
reasonable means to effect its collection; otherwise, the power to 
impose a tax is meaningless.  (Ainsworth[, supra,] 34 Cal.2d [at p.] 476 
[211 P.2d 564].)  It is also basic that if there is a conflict between the 
California Constitution and a law adopted by the Legislature, the 
California Constitution prevails.  While irrigation districts may be 
state agencies, they are nevertheless creatures of the Legislature, and 
like the Legislature must submit to a constitutional mandate; the 
California Constitution is the paramount authority to which even 
sovereignty of the state and its agencies must yield.  It follows that 
the collection requirement of respondent’s ordinance, though 
applicable to state agencies, is a reasonable exercise of the city’s 
constitutional power to tax for revenue purposes.”  (City of Modesto, 
at p. 508.)  In so holding, the court emphasized that the irrigation 
districts “are merely conduits for the collection of the city’s tax; they 
are not liable for the tax itself or the cost of collection; the trial court 
has ordered the city to reimburse the districts for all costs incurred in 
                                        
 
7  
As noted above, we do not rely on the distinction between 
proprietary and governmental activities in reaching our conclusion in 
this case.  (See ante, fn. 5.)  
 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
29 
 
the collection process.”  (Id. at pp. 508–509.)8  The same is true here, 
and the same result should obtain.   
Our conclusion is also, as noted, consistent with high court 
precedent holding that the power to tax includes the power to require 
reasonable collection efforts from a fellow government.  In Moe v. 
Salish & Kootenai Tribes (1976) 425 U.S. 463 (Moe), the court 
adjudicated a series of disputes between the asserted taxing power of 
the State of Montana and the immunity claimed by an Indian tribe.  
As relevant here, although states have no power to regulate Indian 
tribes, the court upheld a state cigarette tax imposed on reservation 
sales to non-Indians.  The court went on to consider whether the state 
could require an Indian retailer on the reservation (including the tribe 
itself) to collect a state cigarette tax imposed on sales to non-Indians.  
The tribe argued “that to make the Indian retailer an ‘involuntary 
agent’ for collection of taxes owed by non-Indians is a ‘gross 
interference with [its] freedom from state regulation.’ ”  (Id. at p. 482.)  
But, the court recognized, “[w]ithout the simple expedient of having 
the retailer collect the sales tax from non-Indian purchasers, it is clear 
that wholesale violations of the law by the latter class will go virtually 
unchecked.”  (Ibid.)  The court further explained that the “State’s 
                                        
 
8 
In City of Moreno Valley, supra, 31 Cal.App.4th 24, the court 
relied on City of Modesto to hold that the city could require a 
municipal water district to collect and remit utility taxes.  Unlike in 
City of Modesto, however, the district in City of Moreno Valley did not 
claim that the ordinance impinged on the state’s sovereignty; it 
argued only that no statute authorized the city to impose the collection 
requirements on it.  (See City of Moreno Valley, at p. 30.) 
 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
30 
 
requirement that the Indian tribal seller collect a tax validly imposed 
on non-Indians is a minimal burden designed to avoid the likelihood 
that in its absence non-Indians purchasing from the tribal seller will 
avoid payment of a concededly lawful tax.”  (Id. at p. 483.)  This 
collection requirement, the court said, did not frustrate tribal self-
government or run afoul of any congressional enactment.  (Ibid.)  
Thus, “the State may require the Indian proprietor simply to add the 
tax to the sales price and thereby aid the State’s collection and 
enforcement thereof.”  (Ibid.)9 
Here, balancing the relevant interests of the concerned 
governments, we reach a similar conclusion.  The municipal interests 
at stake are weighty.  As a charter city, San Francisco has the 
                                        
 
9  
The court sounded a similar theme in Rainier Nat. Park Co. v. 
Martin (W.D.Wn. 1937) 18 F.Supp. 481, affd. sub nom. Rainier Nat. 
Park Co. v. Martin (1938) 302 U.S. 661, which we cited in Ainsworth.  
A corporation operating in a national park in the State of Washington 
challenged the validity of various taxes levied by the state, including 
a retail sales tax that the state required the corporation to collect on 
merchandise sold to tourists, on the grounds that it was an 
instrumentality of the United States and immune from taxation.  
(Rainier Nat. Park, supra, 18 F.Supp. at p. 487.)  The court held that 
Washington did possess the authority to impose the contested taxes, 
and “[w]hen the state reserved the right to tax, it also reserved the 
right to collect or enforce the tax.  The former without the latter would 
be an empty gesture, which is not the purpose of the reservation.  If 
the collection or enforcement incidentally constituted a regulation of 
plaintiff’s business, it was valid, nevertheless, if the means adopted 
for the collection or enforcement are reasonable.  It has long been held 
that the imposition of the duty to collect the tax upon a person, and 
thus constitute such person an agent of the state, is a reasonable 
means for collection of the tax.”  (Id. at p. 488.) 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
31 
 
constitutional power to raise revenue through taxes.  This power is an 
“essential attribute of its existence” (Ainsworth, supra, 34 Cal.2d at 
p. 472), and it would be “meaningless” (City of Modesto, supra, 34 
Cal.App.3d at p. 508) if the city was prohibited from taking reasonable 
steps to collect the tax.  Frequently, the city will have no practical 
means of collecting the tax itself (see City of Modesto, at p. 508), and 
requiring consumers to self-report their tax liability would simply 
invite extensive fraud (see Moe, supra, 425 U.S. at p. 482).   
The interests of the state agency tasked with collection are, by 
contrast, less compelling.  Receiving and remitting the particular tax 
at issue in this case is a “minimal burden” (Moe, supra, 425 U.S. at 
p. 483), particularly where, as in City of Modesto, the agency tasked 
with collection is reimbursed by the city for all of its associated 
administrative costs (City of Modesto, supra, 34 Cal.App.3d at 
pp. 508–509).  Neither the universities’ ability to pursue their broadly 
defined educational mission nor their ability to construct and manage 
on-campus parking operations depends on whether state employees 
collect a parking tax or the city undertakes the expense to collect the 
tax itself. 
For these reasons, we conclude that San Francisco’s parking tax 
collection requirement, as applied to the state universities, does not 
violate principles of state sovereignty embodied in the California 
Constitution.  The universities maintain the autonomy to manage 
their property as they wish, and the universities have failed to 
demonstrate that the minimal burden associated with collecting and 
remitting the parking tax poses a risk of substantial interference with 
their ability to carry out their governmental functions.  We must, in 
any event, recall that it is ultimately the People of the State of 
California who are its “highest sovereign power.”  (Oakland Paving 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
32 
 
Co. v. Hilton (1886) 69 Cal. 479, 514.)  The universities exercise those 
powers granted to them by the People of this state, just as the charter 
cities exercise those powers granted to them by the People.  If San 
Francisco’s tax collection requirement offends state sovereignty, it 
must be because the requirement in some way offends or 
disadvantages the People’s interests.  For reasons already explained, 
that is not the case here.   
V. 
We conclude charter cities may require state agencies to assist 
in the collection and remittance of municipal taxes.  Levying taxes to 
raise revenue is an archetypal municipal affair, and a power secured 
by the home rule provision of the state Constitution.  Requiring public 
parking lot operators to collect municipal taxes along with parking 
fees, and to remit the taxes owed, represents no more than a de 
minimis administrative burden on the state agencies.  San Francisco’s 
collection requirement is a valid exercise of its power, from which the 
universities are not immune. 
 
 
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE 
UNIVERSITY OF CALIFORNIA 
Opinion of the Court by Kruger, J. 
 
33 
 
We reverse the judgment of the Court of Appeal and remand for 
further proceedings consistent with this opinion. 
 
 
 
 
 
 
 
 
KRUGER, J. 
 
We Concur: 
CANTIL-SAKAUYE, C. J. 
CHIN, J. 
CORRIGAN, J. 
LIU, J. 
CUÉLLAR, J. 
BAKER, J.*
                                        
 
* 
Associate Justice of the Court of Appeal, Second Appellate 
District, Division Five, assigned by the Chief Justice pursuant to 
article VI, section 6 of the California Constitution. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion City and County of San Francisco v. Regents of University of California 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 11 Cal.App.5th 1107 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S242835 
Date Filed: June 20, 2019 
__________________________________________________________________________________ 
 
Court: Superior 
County: San Francisco 
Judge: Ernest H. Goldsmith and Marla J. Miller 
 
__________________________________________________________________________________ 
 
Counsel: 
 
Dennis J. Herrera, City Attorney, Jean H. Alexander, Chief Tax Attorney, Christine Van Aken, Chief of 
Appellate Litigation, and Peter J. Keith, Deputy City Attorney, for Plaintiff and Appellant. 
 
Colantuono, Highsmith & Whatley, Michael G. Colantuono and Aleks R. Giragosian for League of 
California Cities as Amicus Curiae on behalf of Plaintiff and Appellant. 
 
Jarvis, Fay, Doporto & Gibson, Jarvis, Fay & Gibson, Benjamin P. Fay, Gabriel McWhirter; Elise 
Traynum; Charles F. Robinson, Karen J. Petrulakis and Margaret L. Wu for Defendant and Respondent 
Board of Directors of Hastings College of the Law. 
 
Margaret L. Wu; Munger, Tolles & Olson, Bradley S. Phillips, Benjamin J. Horwich and Dila Mignouna 
for Defendant and Respondent The Regents of the University of California. 
 
Kamala D. Harris and Xavier Becerra, Attorneys General, Edward C. DuMont, State Solicitor General, 
Janill L. Richards, Principal Deputy State Solicitor General, Gonzalo C. Martinez, Deputy State Solicitor 
General, Geoffrey H. Wright, Associate Deputy State Solicitor General, Paul D. Gifford, Assistant 
Attorney General, Joyce E. Hee, David Lew and Robert E. Asperger, Deputy Attorneys General, for 
Defendant and Respondent Board of Trustees of the California State University. 
 
David A. Carrillo; Benbrook Law Group, Bradley A. Benbrook and Stephen M. Duvernay for California 
Constitution Center as Amicus Curiae on behalf of Defendants and Respondents. 
 
 
 
 
 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Peter J. Keith 
Deputy City Attorney 
1390 Market Street, Sixth Floor 
San Francisco, CA  94102 
(415) 554-3908 
 
Janill L. Richards 
Principal Deputy State Solicitor General 
455 Golden Gate Avenue, Suite 11000 
San Francisco, CA  94102 
(415) 510-3920