Bighorn a Big Win for Taxpayers

Our file containing the Supreme Court briefs in Bighorn-Desert View Water Agency v. Beringson is about seven inches thick. In addition to the briefs filed by the parties, this case drew briefs from several amici curiae (friends of the court), including the League of California Cities, the California State Association of Counties, the Association of California Water Agencies, and others. We were among the others.

When there are that many briefs filed in a case, you wonder whether the Justices of the Supreme Court have the time or inclination to read them all. Perhaps one Justice sees HJTA’s name on the cover and never opens the brief because, "Everybody knows what their position is." Maybe another Justice skims the table of contents and tosses HJTA’s brief aside because our argument headings were not catchy enough to arouse his interest. After investing many hours researching and writing a brief that represents the interest of California’s taxpayers, I always hope, but never know, that the Court will consider our arguments.

When the Bighorn decision was released on July 24th, however, it was obvious that HJTA’s brief had been front and center as the opinion was being written. The result was a sweet victory for taxpayers and a personal vindication of a loss from six years ago.

The Bighorn case began in November 1998, when the voters of Bighorn-Desert View Water Agency adopted two initiatives known as Measures Q and S. Measures Q and S eliminated certain fees that were paid only by non-customers and part-time residents to subsidize the consumption rates of the year-round residents.

After the election, the Water Agency challenged the initiatives in court. HJTA defended the initiatives. The Agency lost in the trial court and, rather than appeal, entered into a settlement with us regarding implementation of the measures.

The initiatives, and thus the settlement, placed no limits on Bighorn’s consumption rates. Within two years, the Agency quadrupled its consumption rates from $0.75 per hundred cu. ft. to $3.00, blaming the increases on Measures Q and S (even though the rate increases greatly exceeded the fee revenue eliminated by the initiatives).

In June 2003, the Agency placed Measure L before its voters, to repeal Measures Q and S, and reinstate the fees they had eliminated. Bighorn promised rate relief if the voters passed Measure L. The voters dutifully passed Measure L. Instead, however, the Agency increased the rates to $4.00.

One frustrated ratepayer, E.W. Kelley, collected enough signatures to qualify yet another initiative, that would roll back consumption rates to $2.00 per hundred cu. ft. the Agency filed suit against the County Registrar to keep Kelley’s initiative off the ballot.

In a two-pronged decision against taxpayers, the Court of Appeal held that, despite the expanded initiative power under Proposition 218, metered water rates are not subject to Proposition 218 and thus cannot be adjusted by the people using their initiative power. As authority for its holding that metered water rates are not subject to Proposition 218, the Court cited Howard Jarvis Taxpayers Assn. v. City of Los Angeles, a case we lost in 2000.

We sued Los Angeles in 2000 because, during a four year period, the City charged water rates that greatly exceeded the funds required to provide water service. The overcharges resulted in a huge surplus each year, which the City transferred to its General Fund, for non-water related expenditure. The surpluses and transfers were a matter of public record, and the City did not deny them. The suit alleged that the overcharges violated Proposition 218, which states, "Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service," and "Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed."

The Court of Appeal in Los Angles ruled against us, holding that metered water rates are not subject to Proposition 218 because such charges "are based primarily on the amount consumed, and are not incident to or directly related to property ownership." We petitioned the Supreme Court, but the Supreme Court denied review.

Although we won subsequent cases against the cities of Roseville and Fresno that held water rates are subject to Proposition 218, the Los Angeles case has nonetheless been a thorn in our side for six years as cities, counties, and special districts throughout California have taken cover behind that case to justify not following Proposition 218's rules for rate-setting.

In our amicus brief to the Supreme Court in the Bighorn case, I explained the conflict between Los Angeles, Roseville, and Fresno. I said, "The conflict is causing confusion as illustrated by the present case. To eliminate this confusion, Jarvis v. Los Angeles should be overruled."

It is a big deal to ask the Supreme Court to overrule a precedent that has been on the books for several years, especially if it is a case where the Supreme Court previously denied review. Our brief stood alone in asking for this relief.

On July 24th, the Supreme Court answered our request with a big Yes. The Court held that the lower court had erred both in limiting the scope of the people’s initiative power and in holding that metered water rates are not subject to Proposition 218. In the Court’s words, Proposition 218 applies to "charges for a property-related service, whether the charge is calculated on the basis of consumption or is imposed as a fixed monthly fee." In a footnote, the Court ruled, "Howard Jarvis Taxpayers Assn. v. City of Los Angeles ... is disapproved insofar as it is inconsistent with this conclusion."

After waiting six years to read those words, I’m one happy camper.