Will court ruling revive defeated S.D. hotel tax?

In April, the San Diego City Council made an unusual move by not declaring a hotel-tax increase had been defeated in the March 3 primary election, even though it fell just short of the two-thirds voter majority deemed, at the time, necessary for approval.

The council was attempting to keep the tax in play should circumstances change one day.

That day may have arrived.

Measure C sought to boost hotel taxes to raise nearly $7 billion over more than four decades for an expansion of the convention center, homeless programs and road repairs. The proposal was backed by 65.24 percent of city voters, just shy of the needed 67 percent (or, to put a finer point on it, 66.666666666667 percent).

Cases challenging the two-thirds threshold for citizen-initiated ballot initiatives like Measure C had been wending their way through the California legal system, with lower courts concluding, or suggesting, only a simple majority was needed for approval. But the matter was still unsettled, so the determination was that Measure C required a supermajority.

The California Supreme Court earlier this month took a big step toward changing the two-thirds threshold for citizens tax initiatives by declining to hear an appeal of a lower court ruling in favor of the simple majority.

That decision could be a game-changer — for good or ill, depending on one’s perspective — for local governments across California. The two-thirds threshold to pass specific taxes has been a difficult hurdle to clear for decades and, in some cases, a deterrent from even trying.

The San Diego Metropolitan Transit System and the San Diego Association of Governments have been contemplating significant sales tax increases in the future for transportation projects costing tens of billions of dollars with the two-thirds requirement in place. A simple majority will certainly give those agencies, and no doubt others, greater motivation by moving forward through citizens initiative petition drives.

Government agencies would still face a two-thirds majority if they put tax measures for specific purposes directly on the ballot. General tax increases only require a simple majority.

While the Supreme Court action appears to pave the way for making it easier to pass taxes, the road ahead for San Diego’s hotel-tax

increase is uncertain and complicated.

The San Diego City Attorney’s Office is analyzing the Supreme Court ruling and how it may apply to Measure C. The City Council could decide to declare the measure had passed, or leave it be.

Regardless of what happens, litigation is expected to follow. When all this would be resolved is anybody’s guess. It could come down to another state Supreme Court ruling.

If the city decides, yes, in light of the recent Supreme Court ruling, Measure C passed, the tax plan could be challenged in court on a number of fronts. One of them may be regarding the

bonds authorized by the initiative, which would be paid off by the hotel tax.

Voter approval of bonds generally requires twothirds votes, which is spelled out in the San Diego City Charter. There are exceptions for lower approval threshold, such as for school district bonds.

Attorneys providing counsel for the coalition of business interests, labor and homeless advocates that backed Measure C said the two-thirds doesn’t apply here, according to Keith Maddox, executive-treasurer of the San Diego & Imperial Counties Labor Council.

Maddox, one of the leaders of the coalition, said the initiative “authorizes the use of bonds, but it does not require it,” and emphasized that’s an important distinction. He maintained a twothirds vote would apply to a straight-up bond proposal, not a tax like Measure C.

But the city could dip

into the general fund if the hotel tax falls short, which may mean a two-thirds vote is required regardless of any changes in the law governing citizens initiatives.

Andrea Guerrero, executive director of Alliance San Diego, said the more important issue is that city voters were told, including in official ballot pamphlets, that a supermajority was needed. She added that the San Francisco measure that triggered the Supreme Court action stated from the start a simple majority was required.

“What were voters told the threshold would be? Two-thirds. That’s what voters relied on,” said Guerrero, who opposed Measure C.

If the city leaves Measure C in defeat, Maddox said the coalition would consider filing a lawsuit to reverse that. That would also draw opponents into the legal fray, resulting in an expensive, yearslong legal battle.

The Measure C campaign was largely financed by San Diego’s tourism industry, which has fallen on hard times during the coronavirus pandemic.

In a sense, this all started decades ago with state Propositions 13 and 218, which require, among other things, special taxes to be approved by a two-thirds vote. The state Supreme Court in the so-called Upland case regarding marijuana dispensaries a few years ago ruled that Proposition 218 applied to government, not citizens initiatives.

That opened the door for the lower approval threshold.

The more recent court action on this pertained to a 2018 San Francisco initiative, Proposition C. The measure, which sought to raise taxes on large companies for homeless services, received a simple majority and was deemed approved by local authorities.

The Howard Jarvis Taxpayers Association challenged that decision in court, but lost, and the state Supreme Court declined to hear an appeal.

While the high court let the appellate ruling stand, a debate ensued about whether an affirmative ruling from the Supreme Court will be needed to finally settle the matter. Other cases on the tax vote threshold are still pending, including one out of Fresno where the judge ruled against simple-majority approval.

Should the simple-majority threshold become the unquestioned law of the state, a lot of things could happen. Citizens initiatives could be launched for taxes desired by a local government to avoid the more difficult two-thirds vote, which essentially was the strategy behind Measure C.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, suggested that elected officials acting as private citizens might be able to put forth such initiatives. He further noted that when initiatives qualify for the ballot, local governing bodies have the choice of calling an election or simply enacting the measure — bypassing a public vote entirely.

Such a move would seem open to a referendum repealing the action, however.

That’s a lot of speculation. One thing that seems certain is a lot more days in court are ahead.

Tweet of the Week

Goes to Rachel Laing (@Rachellaing), San Diego communications consultant.

“God I love it when someone thinks they’re muted on a Zoom and we get to hear them yelling at their kids.

“God I hate being that person.”

michael.smolens@ sduniontribune.com