HJTA Lawsuit Fails: RM3 Further Cements Calling a Tax a Fee

On April 3, 2019, San Francisco Superior Court Judge Ethan Schulman upheld the $3 increase in Bay Area bridge tolls called for by Regional Measure 3. A good article on the matter appeared on the San Francisco Examiner on April 8. RM3 was approved by voters in June of 2018, and on July 5, 2018 the Howard Jarvis Taxpayers Association filed a lawsuit against the Bay Area Toll Authority and the California State Legislature, based primarily on the constitutionality of calling RM3 a fee instead of a tax. As the Nine-County Coalition noted in our article on the lawsuit and subsequent updates, the HJTA was not alone claiming RM3 was a tax requiring 2/3 voter approval dressed as a fee requiring only majority approval.

Judge Schulman disagreed with the HJTA and issued two orders, one addressing the Bay Area Toll Authority and the other addressing the State Legislature. The State Legislature was named in the lawsuit as the entity that passed Senate Bill 595 which enabled RM 3.

The BATA Order declares,

Article XIIIC, section 1 of the California Constitution applies only to taxes imposed by local governments. Because Defendant California State Legislature imposed the challenged toll increase by passing SB 595 and because BATA is a regional entity charged with implementing that state mandate, Article XIIIA, Section 3 of the Constitution applies to this state-imposed charge, not ArticleXIIIC, Section 1.

The State Legislature Order declares,

The Legislature has met its burden to show the applicability of the exception for “entrance to the use of state property” from the general definition of “tax” in Article XIIIA, section 3(b)(4) of the California Constitution. Therefore, the toll increase imposed by SB 595 is not a tax subject to the two thirds supermajority vote requirement.

Ultimate Power More Than Ever Now Rests at the Ballot Box

HJTA decided not to appeal the case given the risk of an appellate court supporting the findings of the San Francisco Superior Court, and thus rendering the decision citable, that is available for citing in future cases.

Thomas Jefferson

Judge Schulman’s decision reinforces what the Nine-County Coalition feared at the time of both Regional Measure AA and Regional Measure 3. First, regional “laws” that willy-nilly apply to all nine Bay Area counties are unchartered territory and subject to wide interpretations by the courts. Secondly, uncontrolled dressing of taxes as fees will no doubt lead to uncontrolled taxation. Thirdly, ultimate control rests with the people at the ballot box, and if voters are aware only of arguments made by tax and spend contingents, tax and spending will prevail.

The decision in favor RM 3 implies the $3 bridge toll increase is just like any other fee charged for “entrance to or use of state property.” Taxpayers have no say in how much they have to pay to use a state park. Based on Judge Schulman’s decision, they might end up with no say in how much they pay to cross state-owned bridges. But the difference here is that a lower-income worker can do without visiting a state park if he or she cannot afford the entrance fee, but the same would not hold true if the worker needs to cross one of the Bay Area’s state-owned bridges in order to make a living.