Opinion ID: 1386714
Heading Depth: 2
Heading Rank: 3

Heading: Municipal Affairs and the Amendment of 1896

Text: The fulcrum of the Court of Appeal's opinion reversing the trial court's judgment was Ex Parte Braun (1903) 141 Cal. 204 [74 P. 780], one of the early decisions of this court interpreting the municipal affairs clause following its adoption by the voters in the election of 1896. In Braun, we considered a City ordinance imposing a license tax on a variety of occupations solely for revenue purposes. Braun, a wholesale liquor dealer subject to the tax, resisted paying it on the ground that the Legislature had forbidden the City to license occupations for revenue purposes by enacting a statute declaring that municipalities could impose license taxes for regulatory purposes only. Braun was prosecuted by the City and convicted of failing to pay the tax; he sought habeas corpus relief before this court. (2) We upheld the tax against Braun's claim that the Legislature could determine by general laws the tax policies of charter cities, ruling that the recently adopted home rule provision was intended to secure to such cities the maintenance of ... charter provisions in municipal matters, and to deprive the legislature of the power ... to interfere in the government and management of the municipality. ( Ex Parte Braun, supra, 141 Cal. at p. 209.) We reasoned that the power of taxation is a power appropriate for a municipality to possess; that that proposition was too obvious to merit discussion; and that the use of licensing statutes as revenue measures was a well-recognized exercise of the taxing power. ( Ibid. ) Braun's effort to avoid paying a municipal tax on the ground that the Legislature had forbidden a charter city to levy it thus failed. After almost a century of litigation inspired by the uncertain meaning of municipal affairs, we see no reason to question the soundness of Ex Parte Braun or to depart from its holding. The opinion remains a germinal gloss on the home rule provision of article XI, section 5(a), and one vital meaning of the doctrine it embodies  a recognition of the affirmative constitutional grant to charter cities of all powers appropriate for a municipality to possess ... and of the important corollary that so far as `municipal affairs' are concerned, charter cities are supreme and beyond the reach of legislative enactment. (141 Cal. at p. 207.) We had no occasion in Ex Parte Braun, however, to deal with a correlative dimension of the municipal affairs doctrine, namely those conditions under which the obverse proposition applies and the Legislature constitutionally may supplant charter city measures with its own enactments. No argument was made in Braun, for example, that the state statute purporting to dictate charter city tax policy was driven by a widespread fiscal crisis across the state, or provoked by some other broad controversy of the day making municipal tax policy an overarching issue, or by any other extramunicipal concern sufficient to compel legislative action or make its exercise appropriate. Rather, as our opinion in Ex Parte Braun noted, the effect of the city's revenue measure was entirely local, confined in operation to the city of Los Angeles, and affect[ing] none but its citizens and taxpayers and those doing business within its limits. (141 Cal. at p. 210.) Nor is there any suggestion that Braun offered a defense to his prosecution based on the claim that the state statute was prompted by anything more than an anchorless legislative desire to continue to assert plenary control over municipal governments, including charter cities. [10] Our opinion rejected the state's attempt as a groundless invasion of a core area of municipal concern  the power to tax in support of local government  prohibited by the home rule provision. Seminal as the Braun opinion was to the evolution of the municipal affairs doctrine in California, it necessarily represents an incomplete analysis, standing for nothing so much as the now unexceptional proposition that levying taxes to support local expenditures qualifies as a municipal affair within the meaning of the home rule provision of our Constitution. In short, Ex Parte Braun, supra, 141 Cal. 204, illustrates only one side of the coin of home rule. The clause affirmatively grants charter cities sovereignty over those matters deemed to be municipal affairs, but it also implicitly recognizes state legislative supremacy over matters not within the ambit of that phrase. Although we held in Braun that the power to levy local taxes in support of local expenditures is an essential function of municipal government, secure against legislative usurpation, we did not address directly this countervailing dimension. It is one thing to identify local taxation as an affirmative power of local government, as we did in Braun, and therefore a municipal affair. It is a quite different undertaking to formulate the criteria by which the choice is made between conflicting state and municipal enactments when both stem from concerns rooted in their respective spheres of government. Subsequent cases rounded out the municipal affairs doctrine by taking up the larger theme of the limits on a charter city's sovereignty when aspects of its activities interfere with interests which transcend the municipality. In the main, our later decisions reject a static and compartmentalized description of municipal affairs in favor of a more dialectical one. Out of these cases emerges the counterpoint of statewide concern as a conceptual limitation on the scope of municipal affairs and thus on the supremacy of charter city measures over conflicting legislative enactments. The Court of Appeal in this case purported to distinguish these later statewide concern cases on the ground that they dealt exclusively with charter city regulatory, rather than taxation, measures. That distinction, [11] together with the companion conclusion that our opinion in Ex Parte Braun made charter city powers of taxation forever sacrosanct, led the Court of Appeal to fracture the doctrine of municipal affairs and the case law supporting it into two halves, each with uncompromising language and holdings, as the opinion put it. It declined altogether to apply the concept of statewide concern as a limitation on the power of the City to levy its business license tax against petitioner; in a case such as this presenting a taxation rather than a regulatory measure, limits derived from that notion were deemed irrelevant. As our exposition of the Ex Parte Braun holding suggests, however, the duality perceived in our opinions by the Court of Appeal is illusory; Ex Parte Braun, supra, 141 Cal. 204, does not reject the statewide concern analysis as irrelevant to municipal affairs cases presenting local taxation issues. It simply predates the development of that branch of the doctrine; more importantly, Braun dealt with a statute which, as we have discussed, sprang from an attempt to decree the essentials of municipal tax policy rather than to further an identifiable interest of extramural dimension. Nor is the post- Braun authority invoked by the Court of Appeal supportive. None of the half dozen of our decisions relied on to shore up the conclusion that Ex Parte Braun holds immutable the power of charter cities to levy taxes considers the question at issue in this case  whether a charter city tax measure continues to qualify as a municipal affair to the extent that it conflicts with a statute addressing a subject of statewide dimension. [12] (3) Moreover, we find no reason in any policy underlying the municipal home rule provision why the subject of charter city taxation should merit treatment different from charter city regulatory measures. It is true, as we pointed out in Ex Parte Braun, supra, 141 Cal. 204, that the power to govern  whether local or state  means little without the coordinate power to tax, so integral is finance to government. But that is only a truism. It fails to explain why, among all other municipal powers, the power to tax should be singled out as specially protectible, as uniquely unyielding to transcendent interests. The answer cannot be that the Legislature's power to deprive a charter city of its authority to levy taxes is the power to cripple or destroy it, at least, to borrow Justice Holmes's phrase, while this Court sits. ( Panhandle Oil Co. v. Knox (1928) 277 U.S. 218, 223 [72 L.Ed. 857, 859, 48 S.Ct. 451, 56 A.L.R. 583].) Our charge under the Constitution to adjudicate such disputes confers ample power to preserve the core meaning of municipal home rule against legislative inroads. Thus the problem set for us by this case is not the one we faced in Ex Parte Braun of identifying the essentials of municipal affairs. Instead, it is that of adjusting the conflict between the effects of the City's business license tax and the Legislature's asserted interest in the uniform taxation of commercial banks and financial corporations, including savings banks such as petitioner. That, rather than the question whether the City's status as a charter city encompasses the power to levy local taxes in support of its expenditures, is the real issue before us.
Concurring in the majority opinion in Ex Parte Braun, Justice McFarland wrote that the Constitution uses the loose, indefinable, wild words `municipal affairs,' and imposes upon the courts the almost impossible duty of saying what they mean. (141 Cal. at p. 214.) He predicted  with foresight  that this court probably will not undertake to give a general definition of the words, so as to bring all future cases within the two categories of what is and what is not a municipal affair. A few cases ... have arisen, and in each of such cases the court has merely determined ... whether the thing there involved was or was not within the indeterminate constitutional words. ( Ibid. ) (4) The idea that the content of municipal affairs is indefinite in its essentials is one that has taken root in our cases on the subject. We have said that the task of determining whether a given activity is a municipal affair or one of statewide concern is an ad hoc inquiry; that the constitutional concept of municipal affairs is not a fixed or static quantity ( Pac. Tel. & Tel. Co. v. City and County of S.F. (1959) 51 Cal.2d 766, 771 [336 P.2d 514]); and that the question must be answered in light of the facts and circumstances surrounding each case ( In re Hubbard (1964) 62 Cal.2d 119, 128 [41 Cal. Rptr. 393, 396 P.2d 809]). No exact definition of the term `municipal affairs' can be formulated and the courts have made no attempt to do so, but instead have indicated that judicial interpretation is necessary to give it meaning in each controverted case. ( Butterworth v. Boyd (1938) 12 Cal.2d 140, 147 [82 P.2d 434, 126 A.L.R. 838].) But our decisions have also strived to confine the element of judicial interpretation by hedging it with a decisional procedure intended to bring a measure of certainty to the process, narrowing the scope within which a sometimes mercurial discretion operates. In broad outline, a court asked to resolve a putative conflict between a state statute and a charter city measure initially must satisfy itself that the case presents an actual conflict between the two. If it does not, a choice between the conclusions municipal affair and statewide concern is not required. Our decisions in Bishop v. City of San Jose (1969) 1 Cal.3d 56, 63-64 [81 Cal. Rptr. 465, 460 P.2d 137], upholding a charter city's wage scale on the ground that the Legislature did not intend to subject it to the prevailing wage provisions of the Labor Code, and Weekes v. City of Oakland, supra, 21 Cal.3d 386, upholding a license fee on all persons employed in a charter city on the ground that it was not an income tax prohibited by state law, are examples of cases  important perhaps more for their influential obiter than for their holdings  in which we found no real conflict. And as the summary of the cases relied on by the Court of Appeal in this case, ante, at footnote 12, illustrates, many opinions purportedly involving competing state and local enactments do not present a genuine conflict. To the extent difficult choices between competing claims of municipal and state governments can be forestalled in this sensitive area of constitutional law, they ought to be; courts can avoid making such unnecessary choices by carefully insuring that the purported conflict is in fact a genuine one, unresolvable short of choosing between one enactment and the other. In those cases where the preliminary conditions are satisfied, that is, where the matter implicates a municipal affair and poses a genuine conflict with state law, the question of statewide concern is the bedrock inquiry through which the conflict between state and local interests is adjusted. If the subject of the statute fails to qualify as one of statewide concern, then the conflicting charter city measure is a municipal affair and beyond the reach of legislative enactment. Ex Parte Braun, supra, 141 Cal. 204, itself is the paradigm of a legislative effort to prescribe a core municipal activity  local taxation  without support originating in identifiable statewide concerns. If, however, the court is persuaded that the subject of the state statute is one of statewide concern and that the statute is reasonably related to its resolution, then the conflicting charter city measure ceases to be a municipal affair pro tanto and the Legislature is not prohibited by article XI, section 5(a), from addressing the statewide dimension by its own tailored enactments. (5) The phrase statewide concern is thus nothing more than a conceptual formula employed in aid of the judicial mediation of jurisdictional disputes between charter cities and the Legislature, one that facially discloses a focus on extramunicipal concerns as the starting point for analysis. By requiring, as a condition of state legislative supremacy, a dimension demonstrably transcending identifiable municipal interests, the phrase resists the invasion of areas which are of intramural concern only, preserving core values of charter city government. As applied to state and charter city enactments in actual conflict, municipal affair and statewide concern represent, Janus-like, ultimate legal conclusions rather than factual descriptions. Their inherent ambiguity masks the difficult but inescapable duty of the court to, in the words of one authoritative commentator, allocate the governmental powers under consideration in the most sensible and appropriate fashion as between local and state legislative bodies. (Van Alstyne, Background Study Relating to Article XI, Local Government, Cal. Const. Revision Com., Proposed Revision (1966) p. 239.) In performing that constitutional task, courts should avoid the error of compartmentalization, that is, of cordoning off an entire area of governmental activity as either a municipal affair or one of statewide concern. Beginning with the observation in Pac. Tel. & Tel. Co. v. City and County of S.F., supra, 51 Cal.2d at page 771, that the constitutional concept of municipal affairs is not a fixed or static quantity ... [but one that] changes with the changing conditions upon which it is to operate, our cases display a growing recognition that home rule is a means of adjusting the political relationship between state and local governments in discrete areas of conflict. When a court invalidates a charter city measure in favor of a conflicting state statute, the result does not necessarily rest on the conclusion that the subject matter of the former is not appropriate for municipal regulation. It means, rather, that under the historical circumstances presented, the state has a more substantial interest in the subject than the charter city. A corollary of that proposition is that every decision sustaining a state statute over a charter city measure does not mean that if the former were repealed, charter cities would remain incompetent to legislate in the area. Nor does a decision favoring a charter city measure preclude superseding state legislation in a later case if the fact-bound justification  the statewide dimension  is subsequently demonstrated. To approach the dichotomy of municipal affairs/statewide concern as one signifying reciprocally exclusive and compartmented domains would, as one commentator has observed, ultimately all but destroy municipal home rule. [13] (6) In cases presenting a true conflict between a charter city measure  whether tax or regulatory  and a state statute, therefore, 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. We must decide whether those criteria were met in this case; that is, whether the showing before the superior court supports the Legislature's finding of a need for paramount state control over the aggregate income tax burden on financial corporations such as petitioner.