Sad day for RM3 litigation

The First District Court of Appeal handed down its decision today, affirming the lower court’s dismissal of the Howard Jarvis Taxpayers Association’s challenge to the Bay Area Toll Authority’s Regional Measure 3 (RM3). The decision, which echoed the detailed textual analysis of the trial court’s decision, had one new significant element. Another panel of the same appellate court had recently ruled on a very similar matter.

The Zolly court ruled that Proposition 26 placed the burden on the state or local agency imposing a purported fee to demonstrate its reasonableness in relation to the value received by the fee payor. This is the issue at the heart of the RM3 appeal. RM3 Appellants argued that there was no relationship between the cost involved in providing a trip across a bridge and the RM3 tolls, because most of the revenues raised by the toll were dedicated to building transportation improvements that had nothing to do with bridge travel.

The RM3 ruling sought to ignore Zolly by stating in a footnote:

The [Zolly] court therefore based its decision on the voters’ intent, in passing Proposition 26, to “expand the definition of ‘tax’ to require more types of fees and charges be approved by two-thirds of the Legislature or by local voters.” (Zolly, at p. 88.) The Zolly court did not engage in the textual analysis that leads us to conclude subdivision (d) of article XIII A, section 3, does not impose a substantive requirement of reasonableness beyond that stated in subdivision (b) of this section.

TRANSDEF believes this statement fails to justify the Court’s reliance on the textual analysis rather than on an analysis of the intent of the voters. As the decision correctly reported,

Appellants argue the trial court’s ruling “is a perversion of Proposition 26, which was intended to reinforce and strengthen existing taxpayer protections by closing loopholes,” not to “open new ones” and provide the Legislature with a “free pass” for charges collected at the entrance to state property that make it “easier for the government to hide taxes within fees.”

TRANSDEF agrees. We believe the Court had to intentionally ignore the obvious intent of the Proposition to be able to reach such a contrary outcome. This is the same court that refused to consider TRANSDEF’s amicus brief.

Because the RM3 ruling conflicts with another appellate court’s ruling on the same subject, a Petition for Review to the California Supreme Court could be filed. Stay tuned…

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