CC - 2010-58 - Opposing Proposition 19, The Regulate, Control and Tax Cannabis Act of 2010RESOLUTION: 2010 -58
A RESOLUTION OF THE ROSEMEAD CITY COUNCIL OPPOSING
PROPOSITION 19, THE REGULATE, CONTROL AND TAX CANNABIS ACT
OF 2010
WHEREAS, local autonomy and authority is paramount to a cities' ability to effectively
serve its residents: and
WHEREAS, public safety is a core value and central purpose of city government; and
WHEREAS, marijuana is prohibited by the federal government and the Federal
Controlled Substances Abuse Act provides criminal sanctions for various
activities related to marijuana; and
WHEREAS, the implementation of the statewide legalization of medicinal marijuana
use has serious flaws and should be reexamined for its value; and
WHEREAS, Proposition 19, also known as the "Regulate, Control and Tax Cannabis
Act of 2010" on the November 2, 2010, California state ballot would
expand legal marijuana possession for persons age 21 and over and also
permit the cultivation, transportation, and consumption of marijuana on a
statewide basis; and
WHEREAS, cities and counties would be authorized under Proposition 19 to tax the
sale of marijuana based on locally adopted ordinances; and
WHEREAS, changes to land use policies allowing for marijuana cultivation under Prop
19 could infringe on local governments zoning and regulatory authority;
and
WHEREAS, the language of Proposition 19 is broad and uses vague terminology,
which makes the poorly drafted sections subject to additional litigation and
conflict over interpretation; and
WHEREAS, one such provision of Proposition 19 could prevent private and public
employers from complying with federal drug -free workplace rules,
jeopardizing federal funding eligibility for California -based employers; and
WHEREAS, the public safety risks associated with the proliferation of marijuana
cultivation, possession, and consumption far outweigh any revenue
generating benefit that local governments could realize through taxing the
sale of marijuana; now, therefore, be it
NOW THEREFORE, BE IT FURTHER RESOLVED, that the City of Rosemead on the
14th of September, 2010, opposes Proposition 19 on the November 2,
2010, California state ballot.
PASSED, APPROVED AND ADOPTED this 14th day of September 2010.
ATTEST:
lit t ITaI� a1 o Qi
Gloria Molleda
City Clerk
aylor
APPROVE AS TO FORM:
Rachel Richman
City Attorney
LEAGUE 1400 K Street, Suite 400 •Sacramento, California
Phone: 916.658.8200 Fax: 916.658.8240 .8240
OF CALIFORNIA www.cacities.org
CITIES
Proposition 19
League Position: Oppose. The League of California Cities is OPPOSED to Proposition 19, _
The Regulate, Control and Tax Cannabis Act of 2010. This opposition position was taken
following review by both the League's Public Safety and Revenue and Taxation Committees, and
the League Board of Directors.
Reasons for Opposition: City officials are concerned about the about the potential increase in
crime, the unsatisfactory experience with medical marijuana implementation, and the measure's
breadth and poor drafting. These policy concerns far outweighed the potential for additional
local revenue.
Text of Measure: http: / /ag.ca.gov /cros attachments /initiatives /pdfs /i821 initiative 09-
0024 amdt 1 -s.pdf
Initiative Summary:
The initiative would:
I ) Permit people age 21 or older to personally consume marijuana. The personal
consumption would be confined to a "non- public place," defined as including a residence
or a public establishment licensed for on -site (onsite ?) marijuana consumption.
2) Allow a person to (a) possess, process, or transport up to one ounce of marijuana for
personal consumption; (b) cultivate marijuana on private property in an area up to 25 sq.
feet; (c) possess harvested and living marijuana plants cultivated in such an area; (d)
possess any items or equipment associated with these activities.
3) Permit the state or a local government to authorize the possession and cultivation,
including commercial production, of larger amounts of marijuana.
4) Allow local governments to adopt ordinances and regulations regarding the cultivation,
processing, distribution, transportation, sale or possession for sale of marijuana by such
establishments. Local governments would be able to license businesses that could sell up
to one ounce of marijuana (per transaction) to a person 21 years or older, including
regulation of the location, size, hours of operation, and signs and displays of the business.
5) Permit local governments to impose general, excise, or transfer taxes, as well as benefit
assessments and fees, on authorized marijuana - related activities in order to raise revenue
or offset any costs associated with marijuana regulation. Requires that licensed
marijuana establishments pay all applicable federal, state, and local taxes and fees
currently imposed on other similar businesses.
6) Allow sales of marijuana in public establishments licensed for marijuana consumption.
7) Permit the transport of marijuana from a licensed marijuana establishment in one locality
to a licensed establishment in another locality. Does not permit interstate or international
transportation of marijuana.
8) Prohibit local law enforcement agencies from seizing or destroying marijuana that was
possessed, used, or sold in accordance with this measure.
9) Prohibit the smoking of marijuana in the presence of minors or the consumption of
marijuana while driving.
10) Ban any individual licensed to engage in authorized marijuana activity who negligently
gives or sells (or offers to do so) marijuana to a person under 21 from owning, operating,
or being employed by a licensed marijuana establishment for a period of one year. Any
person age 21 or older who knowingly gives (or offers) marijuana to a person between
the ages of 18 and 21 could be sent to county jail for up to 6 months and fined up to
$1,000 per offense. Does not change the penalties associated with giving, or offering,
marijuana to minors under the age of 18. Local governments could impose additional
penalties or civil fines on activities that were inconsistent with the terms of the measure.
1 1) State that no person could be punished, fined, or discriminated against for engaging in
any conduct permitted by the measure.
12) Maintain employers' existing rights to address on-the-job consumption of marijuana that
affects an employee's job performance.
Background:
California is considered a pioneer in the regulation of marijuana. In 1913, California first
prohibited the sale and possession of marijuana. The possession, use, transportation or cultivation
of marijuana is still generally illegal. Penalties for marijuana - related activities vary depending on
the offense, but may result in a fine, probation, jail, or a prison term.
In 1996, California voters passed Proposition 215 which authorized the limited use of marijuana
for medicinal purposes. The proposition was intended to ensure that "seriously ill" residents have
access to marijuana for medical purposes, and to encourage state and federal governments to take
steps towards ensuring the safe and affordable distribution of the drug to patients in need. The
proposition created an exemption from prosecution for physicians, as well as for patients and
primary caregivers who possess or cultivate marijuana for medicinal purposes with the
recommendation of a physician.
Marijuana is prohibited by the federal government. The Federal Controlled Substances Abuse
Act provides criminal sanctions for various activities related to marijuana that are imposed by
federal law enforcement agencies that may act independently or in conjunction with state and
local law enforcement agencies. Although the federal government announced in March 2009 that
it would no longer prosecute medical marijuana patients and providers whose actions are
consistent with Prop 215, it has continued to enforce its prohibitions on non - medical marijuana
activities.
While it is nearly impossible to know how much marijuana is grown and sold in California, some
estimates suggest that the total marijuana crop in California may be valued at $14 billion dollars
annually.
Committee Recommendations:
Public Safety: Oppose. After hearing from both proponents and opponents, the committee voted
to oppose the measure with only 1 person dissenting. Beyond one member stating that they were
not concerned with the initiative interfering with the ability of a city, or any other workplace, to
implement policies prohibiting marijuana use in the workplace, there was very little discussion of
the initiative.
Fiscal Impact: While specific dollar amounts are not available, the potential savings and
costs are as follows:
• Potential savings of tens of millions of dollars annually by reducing the number of
marijuana offenders incarcerated in state prisons, in countyjails and on probation and
parole.
Jon Gettman, Ph.D. "Marijuana Production in the United States." Bulletin of Cannabis Reform (December
2006).
• Potential increased costs for publicly- funded drug treatment programs.
• Potential costs and savings from the state's Medical Marijuana Program, a patient registry
that identifies individuals eligible to purchase /consume marijuana for medical purposes.
• Potential major revenues from local governments from transfer and transaction taxes, other
taxes, benefit assessments, and fees on marijuana. The amount of these revenues would
depend on the rate of such levies, level of consumption, and price of marijuana.
• Potential increased revenues for the state from income taxes.
• Potential reductions in revenues from fines for marijuana criminal offenders. Also potential
increased revenues from new civil and criminal fines established by the initiative.
• Loss of significant federal funding due to lack of compliance with the Federal Drug -Free
Workplace Act of 1988.
The Board of Equalization analyzed a previous proposal to legalize marijuana and impose a $50
per ounce levy (AB 390, Ammiano, 2009). They estimated that total revenues raised would be
about $1.38 billion 2. Specific revenue estimates were (in millions):
Net Excise Revenue Gain $ 990
State (6.00 %) $ 263
Fiscal Recovery Fund (0.25 %) 11
Local (2.00 %) 88
Special District (0.75 %) 31
Total Sales and Use Tax: S 392
Total Revenue: $1,382
(This information is given as a reference point only, as the initiative does not provide for a sales
tax.)
California NORML (National Organization for the Reform of Marijuana Laws) estimates that if
cannabis were taxed similar to cigarettes or alcohol, total revenues of $1.5 to $2.5 billion may be
realized.
Note: All revenue projections assume that the federal government does not enforce existing
federal law.
Existing League Policy:
The League does not have existing policy specific to the legalization or taxation of marijuana.
Comments:
Local Powers and Authority
Local governments have broad regulatory authority. The initiative would give local governments
broad authority to regulate, which contradicts current law on all other controlled substances. This
could result in different regulations in each jurisdiction, and could prove to be difficult to
The Board of Equalization assumed the following:
• Legalization of marijuana would cause its street price to decline by 50 percent.
• This 50 percent decline would lead to additional consumption of 40 percent.
• The imposition of the $50 /ounce tax would then lead to reduced consumption of l 1 percent.
enforce /regulate while opening the door for "jurisdiction shopping" for the least restrictive local
ordinances.
First Amendment issues. Local governments are given the authority to regulate advertising of
commercial marijuana. Advertising is generally covered by the First Amendment and cannot be
regulated. There are some instances of advertising regulation — cigarettes and adult entertainment
— that have survived First Amendment scrutiny.
Property owner approval may (or may not) be required The initiative states that "Cultivation on
leased or rented property may be subject to approval from the owner of the property" (emphasis
added). This could be read in at least two ways. It could be read to say that the owner could
prohibit cultivation on his/her property. Or it could be read that it is up to the local government to
decide if owner approval is required. This raises an interesting question about public lands. If a
public agency has an employee residing on public land, or a temporary residence is constructed
on public lands, is the cultivation of marijuana allowed?
Taxation and Revenue
State taxes limited. While local governments would be allowed to impose fees and taxes on
activities related to marijuana, the state government would be precluded from doing so. The state
could only benefit from general taxes imposed regardless of type of business or product
(example: income taxes).
No sales tax. The initiative allows a "transfer or transaction" tax, which, under some
circumstances, might be considered a sales tax. However, the local sales tax is preempted by the
Bradley -Burns law, and the initiative does not amend Bradley - Burns. Therefore, the tax allowed
by this initiative cannot be a sales or use tax. The legislature would have the authority to amend
the law to further the purposes of the act, so they could amend the Bradley -Burns law. The
likelihood that the legislature would do this is open to question.
Does not change current requirements to raise revenues. This is a statutory initiative; therefore,
any current constitutional requirements related to a local government's authorization to raise
revenues (i.e., majority voter approval for a general tax, supermajority voter approval for a
special tax) still apply.
Controlled Substance Regulation
DUUPossession on school grounds unchanged. Does not amend current law that prohibits
driving under the influence or possessing marijuana on school grounds.
Alcohol regulation versus marijuana regulation. While the initiative states that the purpose is to
"regulate cannabis like alcohol," the only way it does so is to restrict usage to persons age 21 and
older. Alcohol consumption and manufacturing is controlled by the state constitution and by the
Alcohol Beverage and Control Act, under which the state has "the exclusive right and power to
license and regulate" alcohol. Unlike other marijuana legalization proposals, there is no single
regulator of marijuana identified in the initiative.
No provisions similar to the open container law. The initiative specifically does not permit
marijuana use by the operator of any vehicle, boat or aircraft while it is being operated, or that
impairs the operator. However, it is silent (and therefore permits) use by passengers in a vehicle.
Possession v. Cultivation and Harvest. In the initiative, §1 1300(a)(1) allows a person to possess,
process, share, or transport one ounce of marijuana as long as it is for personal consumption.
However, § 1 1300(a)(3) allows the cultivation and harvest of marijuana plants in a twenty-five
square foot area, which would result in considerably more than one ounce. The committee may
want to discuss if these two sections conflict.
While amount possessed is limited, amount purchased is not. As mentioned above, the initiative
allows a person to possess, etc. one ounce of marijuana. The initiative also limits the sale of
marijuana to one ounce per transaction. However, there is no limit on the number of transactions
one person can make.
Public Safety Impact
Impact on prison/jail capacity. While there is the potential for significant savings due to the
reduction in marijuana offenders, the California Legislative Analyst's Office has stated that freed
jail /prison beds would quickly be filled with other offenders currently being released due to
limited space.
Shrinks the black market. Supporters argue that the prohibition of marijuana artificially creates
crime and black- market traffic in the same way as alcohol prohibition did in the past and deprives
our economy of legal business and revenues.
Impact on parole /probation conditions. §11304(c) provides that "[n]o person shall be punished,
fined, discriminated against, or be denied any right or privilege for lawfully engaging in any
conduct permitted by this Act..." It is not uncommon for parole /probation conditions to forbid
an individual from consuming alcohol or other drugs. Presumably, this initiative could exclude
marijuana use from such conditions.
Potential Legal Challenges & Areas of Contest
Some provisions lack clarity and invite challenges. There are various sections of the initiative
that are unclear and will invite a legal challenge. For example, § 11300 (a)(ii) states the any
person 21 years of age or older could "[c]ultivate, on private property by the owner, lawful
occupant, or other lawful resident or guest of the private property owner or lawful occupant,
cannabis plants for personal consumption only, in an area of not more than twenty-five square
feet per residence or, in the absence of any residence, the parcel." In preparing this analysis, staff
contacted several attorneys to ask if this meant that a person could cultivate an entire parcel if
there was no residence. Staff received differing legal opinions and no final conclusion on the
affect of this language.
Unknown and confusing terms. There are several terms used in the initiative that are unknown or
unclear. Some examples are "transaction and transfer tax" and "benefit assessments," both of
which would impact the ability of a city to raise revenues.
Other Points for Consideration
Federal Safe and Drug -Free Workplaces. While the initiative states that an employer's right to
address consumption that actually impairs job performance by an employee shall not be affected,
there may be some additional impacts that employers should be aware of. According to initiative
opponents, California employers will no longer be able to:
• Screen job applicants for marijuana use;
• Regulate any employee conduct related to use, transportation, or cultivation of marijuana,
unless the employer can prove job impairment;
• Choose to maintain a drug -free workplace as required by federal law.
As the Federal Drug -Free Workplace Act of 1988 requires that all employers who receive
government grants and contracts over $100,000 maintain a drug -free workplace, there may be a
significant loss of federal funding to California, potentially billions. In addition, the U.S.
Department of Transportation requires operators of airplanes, locomotives, trucks and buses be
removed if they test positive for narcotics, including marijuana.
Other attorneys who have reviewed the initiative have found that the initiative would not
necessarily have these impacts because 1) federal law will continue to preempt state law, and 2) a
workplace could be considered a "public place" in which consumption is prohibited without a
specific license.
Amendments can be made by the Legislature under certain conditions. Amendments to the
initiative would be allowed to be made by a future initiative or by the Legislature if the law is to
establish a statewide regulatory system for commercial cannabis or adopts less restrictive
provisions regarding personal possession and use. It also allows the state to impose taxes and
fees in place of local governments.
Support- Opposition: (as of May 28, 2010)
Support:
City of Oakland
The campaign in support of the initiative was unable (not authorized) to provide a list of
supporters. However, similar legislative proposals have received support from the following
organizations:
A New PATH
AFL -CIO
American Civil Liberties Union
American Federation of State, County and Municipal Employees (AFSCME)
California Communities United Institute
California NORML
California Public Defenders Association
California Tax Reform Association
Courage Campaign
Drug Policy Alliance
Interfaith Drug Policy Initiative
Legal Services for Prisoners with Children
Los Angeles Community Action Network
Northern California Chapters of Pink Pistols
Taxpayers for Improving Public Safety
Opposition:
California Association of Code Enforcement Officers
California Bus Association
California Correctional Supervisors Organization
California District Attorney Investigators' Association
California District Attorneys Association
California Narcotic Officers Association
California Peace Officer's Association (John Standish, President)
California Police Chiefs Association
California State Sheriffs' Association
CALM
CoachAmerica
International Faith Based Coalition
Mothers Against Drunk Driving
North Coastal Prevention Coalition
PRIDE- Omaha, Inc.
Save Our Society from Drugs
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF ROSEMEAD )
I, Gloria Molleda, City Clerk of the City of Rosemead, do hereby certify that the foregoing
Resolution No. 2010.58 being:
A RESOLUTION OF THE ROSEMEAD CITY COUNCIL OPPOSING PROPOSITION 19,
THE REGULATE, CONTROL AND TAX CANNABIS ACT OF 2010
was duly and regularly approved and adopted by the Rosemead City Council on the 14th of
September, 2010, by the following vote to wit:
Yes: Armenta, Clark, Low, Ly, Taylor
No: None
Abstain: None
Absent: None
'o hir > el
Gloria Molleda
City Clerk
ROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY C UNCIL
FROM: JEFF ALLRED, CITY MANAGER
DATE: SEPTEMBER 14, 2010
SUBJECT: STATE BALLOT MEASURES 19 AND 26 OPPOSITION
SUMMARY
The League of California Cities (League) has taken a position of opposition on Propositions 19
and 26, which are scheduled to be included in the Novemer 2010 Statewide Election. The
League has also requested its members to adopt resolutions opposing these propositions.
Staff Recommendation
Staff recommends that the City Council approve Resolutions 2010 -58 and 2010 -59 in opposition
to Propositions 19 and 26.
ANALYSIS
Proposition 19
The League of California Cities is opposed to Proposition 19, The Regulate, Control and Tax
Cannabis Act of 2010. This opposition position was taken following review by both the
League's Public Safety and Revenue and Taxation Committees, and the League Board of
Directors.
Reasons for Opposition: City officials are concerned about the about the potential increase
in crime, the unsatisfactory experience with medical marijuana implementation, and the
measure's breadth and poor drafting. These policy concerns far outweighed the potential for
additional local revenue.
Initiative Summary:
The initiative would:
1) Permit people age 21 or older to personally consume marijuana. The personal
consumption would be confined to a "non- public place," defined as including a residence
or a public establishment licensed for on -site marijuana consumption.
2) Allow a person to (a) possess, process, or transport up to one ounce of marijuana for
personal consumption; (b) cultivate marijuana on private property in an area up to 25 sq.
feet; (c) possess harvested and living marijuana plants cultivated in such an area; (d)
possess any items or equipment associated with these activities.
3) Permit the state or a local government to authorize the possession and cultivation,
including commercial production, of larger amounts of marijuana.
4) Allow local governments to adopt ordinances and regulations regarding the cultivation,
processing, distribution, transportation, sale or possession for sale of marijuana by such
establishments. Local governments would be able to license businesses that could sell
up to one ounce of marijuana (per transaction) to a person 21 years or older, including
ITEM NO.
APPROVED FOR CITY COUNCIL AGENDA:
City Council Meeting
September 14, 2010
Pace 2 of 5
regulation of the location, size, hours of operation, and signs and displays of the
business.
5) Permit local governments to impose general, excise, or transfer taxes, as well as benefit
assessments and fees, on authorized marijuana - related activities in order to raise
revenue or offset any costs associated with marijuana regulation. Requires that licensed
marijuana establishments pay all applicable federal, state, and local taxes and fees
currently imposed on other similar businesses.
6) Allow sales of marijuana in public establishments licensed for marijuana consumption.
7) Permit the transport of marijuana from a licensed marijuana establishment in one locality
to a licensed establishment in another locality. Does not permit interstate or
international transportation of marijuana.
8) Prohibit local law enforcement agencies from seizing or destroying marijuana that was
possessed, used, or sold in accordance with this measure.
9) Prohibit the smoking of marijuana in the presence of minors or the consumption of
marijuana while driving.
10) Ban any individual licensed to engage in authorized marijuana activity who negligently
gives or sells (or offers to do so) marijuana to a person under 21 from owning, operating,
or being employed by a licensed marijuana establishment for a period of one year. Any
person age 21 or older who knowingly gives (or offers) marijuana to a person between
the ages of 18 and 21 could be sent to county jail for up to 6 months and fined up to
$1,000 per offense. Does not change the penalties associated with giving, or offering,
marijuana to minors under the age of 18. Local governments could impose additional
penalties or civil fines on activities that were inconsistent with the terms of the measure.
11) State that no person could be punished, fined, or discriminated against for engaging in
any conduct permitted by the measure.
12) Maintain employers' existing rights to address on- the -job consumption of marijuana that
affects an employee's job performance.
Proposition 26
The League of California Cities is opposed to Proposition 26, Proposed Constitutional
Amendment: State and Local Fees and Charges: Vote Requirements and Limitations. This
opposition position was taken following review by the League's Revenue and Taxation
Committee and the League Board of Directors.
Reasons for Opposition: City officials are concerned about the many potential negative
effects of this measure on local revenue raising authority.
Initiative Summary: Restricts in various ways the ability of the state and local governments to
adopt fees. More specifically, this initiative:
1) States via findings that: (A) Since the enactment of Proposition 13 in 1978, increases in
state taxes require a two - thirds vote in each house of the Legislature; (B) Since the
enactment of Proposition 218 in 1996, local tax increases must be approved by voters;
(C) Despite these limitations rates for state income tax, sales and use tax, and state and
local business taxes continue to escalate; (D) Recently, the Legislature added another
$12 billion in taxes; (E) This escalation in taxation does not account for the recent
phenomenon whereby the Legislature and local governments have disguised new taxes
as "fees" without having to abide by (Prop 13 and Prop. 218) voting requirements; (F)
Fees that,are couched as "regulatory' which exceed the reasonable costs of actual
City Council Meeting
September 14, 2010
Pane 3 of 5
regulation, or are simply imposed to raise revenue for a new program and are not part of
any licensing or permitting program, are actually taxes and should be subject to the
limitations applicable to the imposition of taxes; and (G) the measure states that it
defines a "tax" for state and local purposes so that neither the Legislature nor local
governments can circumvent these restrictions by simply defining new or expanded
taxes as "fees."
2) Changes applicable to the STATE:
• Amends Section 3 of Article XIII A to delete language that requires a two- thirds vote
of both houses of the Legislature for "any change to state taxes enacted for the
purpose of increasing revenues collected thereto, whether by increased rates or
changes in computation" and instead substitutes a new standard which requires a
two- thirds vote of both houses of the Legislature for "Any change in state statute
which results in any taxpayer paying a higher tax." This changed standard
appears designed to eliminate recent legislative interpretations of the existing phrase
"purpose of increasing revenues" that allow, via majority vote, one tax to be
increased if another tax is lowered by an - equivalent amount.
Creates a definition of a "tax' to include any levy, charge or exaction of any kind
imposed by the state except for:
a. A charge imposed for a specific benefit conferred or privilege granted directly to
the payor that: (1) is not provided to those not charged, and (2) does not exceed
the reasonable costs to the state of conferring the benefit or granting the
privilege.
b. A charge imposed for a specific governmental service or product provided
directly to the payor that: (1) is not provided to those not charged, and (2) does
not exceed the reasonable costs to the state of providing the product or service.
c. A charge imposed for the reasonable regulatory costs to the state "incident to"
issuing licenses and permits, performing investigations, inspections, and audits,
enforcing agricultural marketing orders, and the administrative enforcement and
adjudication thereof.
d. A charge imposed for entrance or use of state property, or its purchase rental or
lease, except for Article XI, Section 15 (The Constitutional reference to Vehicle
License Fees VLF). While this reference to the VLF is awkwardly located in this
measure, in a clause that otherwise relates to state property, it presumably
reflects that VLF charges are already considered taxes at the state level).
e. A fine, penalty, or other monetary charge imposed by the judicial branch or the
State as the result of a violation of law.
Applies the above changes to any state statute tax adopted after January 1, 2010.
Declares any tax adopted prior to the effective date of the Act that is not in
compliance with the above requirements and definitions is void 12 months after the
effective date, unless the tax is reenacted by the Legislature and signed by the
Governor in conformance with its provisions.
3) Changes applicable to Local Governments:
• Amends Section 1 of Article XIII C to add to definitions applicable to local taxation
authority a definition of "tax" that is virtually identical to the definition applicable to the
state outlined above (See Paragraph #2), with the following "additions" (added to the
City Council Meeting
September 14, 2010
Page 4 of 5
local definition) and "exceptions' (included in the state definition, but missing from
the local definition):
a. Additions: There are two additional items -- that are only applicable to local
governments -- that are added to the list of exceptions from the definition of "tax,"
described in paragraph #2, they are: (1) a charge imposed as a condition of
property development, and (2) assessments and property- related fees imposed
in accordance with the provisions of Article XIII D, adopted by Proposition 218 in
1996.
b. Exceptions: While language used in the definition of "tax" applicable to state
and local government is very similar, in several instances the wording in the local
government section is slightly different. The reason to point this out is that these
differences may lead to future different legal interpretations: (1) the term `to the
payor" is dropped from the end of two provisions describing an exception to a tax
applicable to (A) benefits conferred or a privilege granted, and (B) a specific
governmental service or product provided; (2) the term "for" is used in the
language related to licenses and permits applicable to local government, as
opposed to the potentially broader "incident to" in language applicable to the
state; and (3) the exception related to Vehicle License Fees included in the state
definition is missing from the local definition. This omission may or may not be
designed to reflect that in some instances local governments have levied a local
"fee" on VLF registrations, such as in San Mateo which imposes a local vehicle
registration fee (a regulatory fee) for various congestion management relief and
storm water cleanup programs. That said, other provisions of this measure may
capture the San Mateo type "fee" as a "tax."
4) Changes applicable to both State and Local Governments:
• Requires both the state and local governments to bear the burden of proof by a
"preponderance of the evidence" that a levy, charge or exaction is: (1) not a tax; (2)
that the amount is no more than necessary to cover reasonable costs of the
governmental activity; and (3) that the manner in which those costs are allocated to a
payor bear a fair and reasonable relationship to the payor's burdens on, or benefits
received from, the governmental activity. (This is currently the standard recognized
by the California Supreme Court.)
5) Includes a "conflicting measures' provision stating that should another measure appear
on the same ballot relating to the legislative or local votes required to enact taxes or fees
that the provision of this measure shall prevail in its entirety should it receive a greater
number of affirmative votes, and the conflicting measure be deemed null and void. The
measure also contains a "severability clause" which permits any provisions that are not
held to be invalid or unconstitutional to remain in effect.
The complete League analysis for both propositions have been included as attachments.
City Council Meeting
September 14, 2010
Pace 5 of 5
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
novIll, r ^
Matthew E. Hawkesworth
Assistant City Manager
Attachments: A — Resolution 2010 -58
B — Resolution 2010 -59
C — League Analysis of Proposition 19
D — League Analysis of Proposition 26