California Court Strikes Down Unequal Property “Parcel Tax”
December 10, 2012
The California First District Court of Appeal late last week threw out a parcel tax (PDF) adopted to benefit the Alameda Unified School District (across the bay from San Francisco). Alameda voters in 2008 approved Measure H by a two-thirds vote, under which residential and small commercial property parcels paid a flat $120 per year, but larger commercial parcels paid on a sliding scale up to $9,500 per year.
California law requires parcel taxes to be uniform for each parcel, with exceptions permitted only for seniors and the disabled. (If the county wants to raise taxes more for larger properties, that makes it a property tax, not a parcel tax.) The parcel tax was thus in reality an illegal property tax, and Alameda County must now refund all but $90,000 of the $18 million it collected.
In defending Measure H, the Alameda district argued that the state law allowed it to make reasonable classifications of different types of property and set different tax rates for them, as long as properties in the same category were treated uniformly. A Superior Court judge agreed and upheld the measure but was overruled by the appeals court.
The court noted that the same state law allowed school districts to exempt seniors and the disabled from parcel taxes – an exemption that would not have to be spelled out, the court said, if districts were authorized to make their own classifications.
Alameda’s argument is sadly a common one. Many state constitutions require property taxes to be “uniform” within categories of taxpayers—to ensure that the tax burden isn’t shifted onto a small group of taxpayers even though all benefit from government services. However, judges for the most part defer to the categories defined by the government so long as they are not irrational, a tough-to-challenge standard known as “rational basis review.” In many cases this results in the constitutional requirement of uniformity being meaningless. Good to see California uphold this important taxpayer protection.
No word yet whether Alameda will appeal to the California Supreme Court.