Source: https://law.justia.com/cases/california/supreme-court/3d/27/855.html
Timestamp: 2019-04-25 21:44:31+00:00

Document:
Donald L. Clark, County Counsel, Lloyd M. Harmon, Jr., Chief Deputy County Counsel, and Jack Limber, Deputy County Counsel, for Defendant and Appellant.
George P. Kading, County Counsel, and Robert D. Curiel, Chief Assistant County Counsel, as Amici Curiae on behalf of Defendant and Appellant.
Gray, Cary, Ames & Frye, Peter G. Aylward, William S. Boggs, Paul J. Dostart, Mark L. Mann, K. Michael Garrett and Aylward & Kintz for Plaintiff and Respondent.
O'Melveny & Myers, Bennett W. Priest, Frederick A. Richman, Glen L. Kulik, Evans, Manpearl & Harter, Gerald T. Manpearl and Kent Ten Brink as Amici Curiae on behalf of Plaintiff and Respondent.
In Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal. 3d 208 [149 Cal. Rptr. 239, 583 P.2d 1281] (hereinafter Amador), we upheld the validity of article XIII A of the California Constitution against multiple constitutional challenges. Adopted in June 1978 as an initiative measure designated and popularly known as Proposition 13, article XIII A significantly altered the system of real property taxation in this state.
In considering the substantial attacks mounted against the measure, we restricted our inquiry to the "principal, fundamental challenges to the validity of article XIII A as a whole." (Id. at p. 219.) Thus we expressly acknowledged the enactment was not wholly free from uncertainties, but reserved judgment as to their proper resolution: "'Analysis [27 Cal. 3d 858] of the problems which may arise respecting the interpretation or application of particular provisions of the act should be deferred for future cases in which those provisions are more directly challenged.' [Citation.]" (Ibid.) We have before us such a case, and the question presented is whether the real property tax rate and valuation limitations mandated by article XIII A are applicable to property taxed on the unsecured portion of the assessment roll for the tax year 1978-1979.
Shortly after Proposition 13 was adopted, the Board of Supervisors of San Diego County (board) filed this action seeking a writ of mandate and declaratory and injunctive relief against Gerald J. Lonergan, the San Diego County Auditor and Controller (auditor), and James E. Jones, the San Diego County Treasurer-Tax Collector (tax collector). Alleging that a genuine controversy existed as to whether taxes assessed on the unsecured roll are within the coverage of article XIII A, the board sought to compel the auditor and tax collector to compute, bill, and collect taxes in accordance with the limitations set forth in the new constitutional provision. The court issued declaratory relief and held that the auditor and tax collector were required to comply with article XIII A in taxing property on the unsecured roll. fn. 1 The auditor appeals. As will appear, we conclude that Proposition 13, when adopted, was not intended to apply to the 1978-1979 unsecured roll. Accordingly, the judgment granting declaratory relief is reversed.
No factual issues are in dispute, as the question before us is essentially a matter of constitutional construction. We begin our analysis with a review of the fundamental concepts of California property tax law.
Whether a tax on property is a lien against real property is determined by statute. Section 2187 provides that "Every tax on real property is a lien against the property assessed." Further, a tax on personal property may be secured or "cross secured" by real property. fn. 3 If either of these conditions exists, the personal property so secured will be assessed on the secured roll. All other personal property is assessed on the unsecured roll.
In short, although the property tax system distinguishes between real and personal property, and also between secured and unsecured property, the two classification systems overlap. As a result, the secured and unsecured rolls each contain both real and personal property.
Taxes on property assessed on the secured roll are payable in two equal installments, due November 1 and February 1 of each year. (§§ 2605, 2606, 2701, 2702.) fn. 6 The first installment becomes delinquent on December 10 and the second installment on April 10. (§§ 2617, 2618, 2704, 2705.) Taxes on the unsecured roll, however, are due March 1 preceding the fiscal year for which the taxes are levied (§§ 2901, 2192) and, if included on the assessment roll as of July 31, become delinquent on August 31 (§ 2922).
Against this setting, Proposition 13 was adopted by the voters on June 6, 1978. As we observed in Amador, the initiative measure "changes the previous system of real property taxation and tax procedure [27 Cal. 3d 862] by imposing important limitations upon the assessment and taxing powers of state and local governments." (22 Cal.3d at p. 218.) Two of the proposition's four principal elements are pertinent here.
Section 2, subdivision (a), imposes a limitation on the assessed value of real property, commonly referred to as the valuation "rollback" provision: "The full cash value means the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment ...."
The tax rate and valuation limitations took effect for the tax year beginning July 1, 1978, pursuant to section 5 of article XIII A and the implementing legislation subsequently adopted. (See Stats. 1978, chs. 292, 332, 353, 576; also see Stats. 1979, ch. 242.) The issue now before us is whether these limitations apply to both real and personal property on the unsecured roll for the tax year 1978-1979. The controversy is rooted in the previously discussed and apparently conflicting requirements that the tax on personal property shall not be higher than that on real property (art. XIII, § 2) and that the unsecured roll be taxed at the prior year's secured rate (art. XIII, § 12).
In this appeal, the auditor contends that article XIII, section 12, was not repealed by the adoption of article XIII A; hence the 1978-1979 unsecured roll must be taxed at the previous year's secured rate, and the 1 percent limitation cannot be applied to the unsecured roll until the 1979-1980 tax year. In rebuttal, the board offers the following syllogism: article XIII A establishes a rate limitation for real property for the 1978-1979 tax year; the unsecured roll contains real property; therefore the rate limitation applies to real property on the 1978-1979 unsecured roll. Further, the tax on personal property cannot exceed the tax on real property; therefore the rate limitation also applies to personal [27 Cal. 3d 863] property on the unsecured roll. As we shall explain, however, the board's reasoning is fundamentally flawed.
Relying on time-honored principles of constitutional construction, both parties urge us to harmonize the provisions of article XIII, section 12, and article XIII A, section 1. In the alternative, they concur that if such harmonization is not possible, one provision must prevail over the other. Not surprisingly, however, they part company at this point: the auditor contends that article XIII, section 12, must prevail, whereas the board makes a similar argument in favor of article XIII A, section 1.
Before attempting to reconcile the two provisions, we must first determine whether they indeed clash with one another. Any apparent conflict rests on the assumption that the tax rate limitation established by article XIII A must be applied to the 1978-1979 unsecured tax roll.
The board would have us read this language as proof that the voters must have understood that, if enacted, Proposition 13 would result in a tax rate limitation applicable to both the unsecured and the secured rolls for the 1978-1979 tax year. We do not agree. The quoted analysis gives overbroad and inaccurate definitions of real and personal property. Chief among its deficiencies is the absence of any mention of taxable possessory interests. Moreover, it wholly fails to apprise the voters of the concept of secured versus unsecured taxes. Proposition 13 was widely publicized as a taxpayers' revolt providing tax relief for homeowners. fn. 9 Accordingly, we deem it probable that those electors who were previously unaware of the existence of the unsecured tax roll were in no way enlightened by the ballot pamphlet, and therefore cast their votes without regard to any anticipated effect on unsecured taxes.
As to those voters who were knowledgeable of unsecured property taxes, the absence of any discussion in the ballot pamphlet could well have led them to believe that such taxes were not embraced by Proposition 13. A factor potentially contributing to such an impression is the Legislative Analyst's incorrect definition of real property as "land and buildings," to the apparent exclusion of possessory interests. It is equally [27 Cal. 3d 865] plausible that voters who knew unsecured property has for decades been taxed at the prior year's secured rate believed that the 1 percent limitation would apply to the unsecured roll in the following year. For such voters the phrase in the analysis, "Beginning with the 1978-79 fiscal year" (italics added), might have had especial import.
Article XIII, section 9a, was amended in 1936 to include not only unsecured personal property but also "assessments upon possession of, claim to, or right to the possession of land and upon taxable improvements located on land exempt from taxation." In Forster Shipbldg. Co. v. County of L. A. (1960) 54 Cal. 2d 450, 456 [6 Cal. Rptr. 24, 353 P.2d 736], we recognized that the 1936 amendment signified a change in the law in that "possessory interests in land are real property for purposes [27 Cal. 3d 868] of taxation .... [and] were not within the purview of 'personal property' as used in the original provision."
Thus, as it presently reads, article XIII, section 12, clearly provides that taxes on unsecured property, both real and personal, are to be assessed at the prior year's rate for the secured roll.
Tobriner, J., Clark, J., Richardson, J., Manuel, J., and Newman, J., concurred.
Bird, C. J., concurred in the judgment.
FN 1. In light of this declaration, the court deemed it unnecessary to resolve the dispute as to whether it had jurisdiction to issue a writ of mandate or injunctive relief. The judgment granting declaratory relief therefore denied the petition for writ of mandate and request for injunctive relief.
FN 2. Unless otherwise indicated, all constitutional references are to the California Constitution and all statutory references are to the Revenue and Taxation Code.
FN 3. A tax on personal property is a lien against real property if the personal property belongs to the owner of the real property on which it is located and the fact of the lien is noted on the secured roll opposite the description of the real property. (§ 2189.) Similarly, personal property that does not belong to the owner of the real property on which it is located is a lien against other real property owned by the taxpayer and located in the same county, if the taxpayer obtains a certificate from the assessor and records it with the county recorder. (§ 2189.3) The latter personal property is deemed to be "cross secured."
FN 7. Section 2905 implements the mandate of article XIII, section 12: "In collecting taxes on unsecured property the tax rate to be used is the rate for property of the same kind on the secured roll last fixed before the lien date for the taxes to be collected ...."
FN 9. See, e.g., Ehrman and Flavin, op. cit. supra, at section 2.1, page 28: "But the single most inflammatory factor [presaging the adoption of Proposition 13], the one that fanned the flames, was the dramatic increase in the burden of the property tax, particularly on California homeowners."
In any event we need not reach the issue since we hold in favor of the auditor on the alternate ground that article XIII A was not intended to apply to the 1978-1979 unsecured roll.
FN 11. In this regard we take judicial notice of the State Board of Equalization's letter to county assessors, dated March 29, 1978, stating that because of uncertainty as to the status of taxes on the 1978-1979 unsecured roll the assessors might wish to consider waiting until after the June 6 election to issue the unsecured tax bills. The letter arguably demonstrates that the assessors were on notice of the potential impact on unsecured taxes if Proposition 13 became law; it has no effect on our reading of the intent of the voters in adopting the measure. Moreover, it has been represented to us that in some counties the unsecured tax bills were issued before June 6, 1978.
FN 12. Asserting an equal protection claim in a communication presented after oral argument, the board attempts to distinguish Abrams by stressing the relatively small differential between the two rates for the year then in issue. As we have explained, however, the Abrams court rested its equal protection holding on the constitutional distinction between secured and unsecured taxes, not on the specific rates applied to the two rolls.
It is also contended that in Abrams the classification was upheld on the ground that it served the legitimate goal of administrative convenience, whereas here the sole purpose of disparate treatment is to tax the unsecured roll at a substantially higher rate than the secured roll. The attempted distinction mistakenly suggests we are reviewing a newly enacted classification. Our task is simply to decide the continued vitality of a system of taxation that has been in effect for more than 50 years.
FN 13. The board contends that it in fact seeks to harmonize the two provisions. The gist of its argument is that the tax rate provided by article XIII A has two components: the flat 1 percent limitation under section 1, subdivision (a); and an amount necessary to make annual debt service payments on general obligation bonds or other indebtedness pursuant to section 1, subdivision (b) (and see § 2237, subd. (a)). Since the latter amount will fluctuate from year to year, article XIII, section 12, can apply to this component of the tax rate under the new law.
As the auditor asserts, however, there is no authority, either statutory or constitutional, for the suggested bifurcation of the tax rate to be applied to the unsecured roll. Newly enacted section 2237.5 provides no assistance, although the board views it as dispositive. The statute reads: "For the 1979-80 fiscal year and thereafter, except as provided by subdivision (b) of Section 12 of Article XIII of the Constitution, for purposes of computing tax rates on the unsecured tax roll, the county auditor may add to the 1 percent rate and rate levied on the prior year's secured tax roll for indebtedness approved by the voters prior to July 1, 1978, as described in subdivision (b) of Section 1 of Article XIII A of the California Constitution." (Stats. 1980, ch. 60, § 1.) By its terms the statute has no application to the 1978-1979 fiscal year. It merely makes explicit that beginning in 1979-1980 taxes on the unsecured roll, including the component for debt service, shall be computed at the prior year's secured tax rate.
In any event, since we conclude the board has not demonstrated the requisite voters' intent that article XIII A apply to the unsecured roll, we need not dwell upon this theory.
FN 14. Although the judgment explicitly states that both the tax rate and valuation limitations are applicable to the 1978-1979 unsecured roll, all parties have focused their arguments on the applicability of the 1 percent rate limitation. As we conclude that Proposition 13 in its entirety was not intended to apply to the 1978-1979 unsecured roll, we need not address the question of the valuation limitation separately.

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 § 2237
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