If Proposition 218 is a Straight Jacket, Does that Make California’s Taxing Habits Crazy?

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 Prop 218The phrase “never let a crisis go to waste” has been attributed to various political Prop 218 thinkers over the years. The general idea behind the quote is that the people will allow the government to do all manner of things in a crisis that they might otherwise oppose. Thus, if you’re the type of person who wants to see government expanded, a crisis is a good time to make your move.

Recently, that type of thinking can fairly be attributed to several California government officials complaining about a recent court of appeal decision finding one city’s tiered water rates unconstitutional. For those unfamiliar with tiered utility rates, a tiered rate means that what the city charges for water becomes progressively more expensive the more of it you use.

On its face, there is nothing inherently unreasonable about tiered rates in a water crisis. Indeed, it makes economic sense to make hefty consumption of a precious resource more expensive during a shortage. On the other hand, as Tom Gray, general manager of the Fair Oaks Water District pointed out, even under (a non-tiered) system “the people who use the most pay the most and people who use the least pay the least,” Thus, there is some question as to how much difference a punitive system really makes.

Economic discussions aside, appeal lawyers recently argued and prevailed on the point that these programs are unconstitutional. Under Proposition 218, it is unconstitutional for government to charge more for a service than it costs to provide it. In a recent decision, the California Court of Appeal, Fourth Appellate District, held that the tiered water rate structure used by the city of San Juan Capistrano was unconstitutional in Capistrano Tax Payers Association v. City of San Juan Capistrano.

If Proposition 218 seems like a strange thing to have in the constitution, a short history lesson is in order. Over the years, California voters have enacted various tax reforms that make it difficult for local governments to raise taxes. In response to these reforms, many local governments refused to reduce their budgets and live within their means. Instead, governments across the state began raising utility rates and instituting various “fees” and penalties on the public. Once the public became privy to the fact that these so-called “fees” were merely taxes by another name, voters adopted Proposition 218, which makes it unconstitutional for the government to charge a fee for a public service greater than what it costs the government to provide the service. Progressives in state and local government having been trying to find a way around Proposition 218 ever since.

Which brings us to the current water crisis. As with any other crisis, some in government are now arguing that these desperate times call for reform to the limitations of Proposition 218–a law which, conveniently enough, they have never liked anyway.

In response to the Court’s recent ruling upholding Proposition 218, Governor Brown has gone so far as to call Proposition 218 a straight jacket. Maybe he is right. But perhaps he should consider this: if the voters had to put government in a straight jacket, maybe…just maybe…it is because government’s taxing and spending habits were crazy.

The appeal lawyers team at Kassouni Law practices government litigation to protect the Constitutional rights of Californians throughout the state. If you have a matter you’d like to discuss with lead attorney Timothy Kassouni, contact our offices by calling 877-770-7379.

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