Standing for taxpayers and direct democracy

By Jon Coupal and Timothy Bittle

The powers of direct democracy — initiative, referendum and recall — have been powerful tools to control slow-moving or corrupt politicians.

These powers are enshrined in the California constitution for reasons that are just as compelling in 2020 as they were in 1911 when Gov. Hiram Johnson, seeking to counterbalance the influence the railroads had over the state Capitol, pushed to give ordinary citizens equal footing with legislative bodies to enact or reject legislative proposals.

Direct democracy has, for more than 100 years, been used most frequently on matters of taxation and government spending.

Indeed the most iconic example of direct democracy in the Golden State is Proposition 13, approved by the voters in 1978.

It is no wonder then that taxpayer advocates have been the staunchest defenders of direct democracy.

That tradition carries on to this very day.

Last Tuesday, the California Supreme Court heard argument in a case that threatens one of these powers of direct democracy — the referendum power.

At the root of the referendum power is a bedrock American principle, that “all political power is inherent in the people,” is delegated by the people to the government and is just only so long as it has the people’s consent.

The California constitution confers upon the Legislature the power to make laws, but “reserves” to the people the referendum power.

The referendum power is the right, if the people so choose, to vote on a law that was passed by the Legislature.

The constitution extends that same power to the voters of cities, counties and special districts.

With the exception of emergency statutes and tax levies, most laws and ordinances do not take effect immediately.

At the state level, for example, the effective date of most laws is delayed at least 90 days.

During that time, if there is widespread dissatisfaction with a law, opponents can gather signatures from the requisite number of voters and qualify a referendum for the ballot. When a referendum qualifies, the law is suspended until the election.

At the election, people vote to approve or reject the law.

A recent example would be the law that banned plastic grocery bags and placed a 10-cent charge on paper bags.

Opponents circulated a petition and qualified a referendum. It appeared as Proposition 67 on the November 2016 ballot. A majority of voters approved the plastic bag ban, so it became law. But, because of the people’s referendum power, it did not become law without the consent of the governed.

The case heard by the Supreme Court on Tuesday involved a controversial water rate increase in the city of Dunsmuir. Opponents gathered enough signatures on a referendum petition to place the rate increase on the ballot, but the city refused to call an election.

The city claimed that voters do not have the right to vote on water rates because the price to buy water is a tax levy that is exempt from the people’s referendum power. The opponents filed a lawsuit. They won in the Court of Appeal, but the city took it to the California Supreme Court.

If the question before the court was whether water rates are considered taxes under today’s law, it would be an easy case.

Thanks to taxpayer protections like Proposition 13, the law today defines water rates as “user fees,” not taxes.

But in this case the court must determine what “tax levies” meant to the voters who originally added the referendum power to California’s constitution in 1911.

There is one thing the parties agree upon. Water is essential to life. For that reason, the city argues that voters should not be allowed to interfere with city decisions about the amount of money it needs to supply water.

The referendum proponents argue, however, that because water is essential to life, it must be kept affordable for low-income families and seniors on fixed incomes.

The people must have resort to their referendum power, they argue, to keep rates under control.

The Dunsmuir case will determine whether the people of California will retain their right to vote, via referendum, on governmental fees for everything from water, to public records, to election recounts.

If not, then the state and local governments will be able to impose those fees without the consent of the governed.

A more serious injury to our democratic principles is hard to imagine.

Jon Coupal is the president and Timothy Bittle is the director of legal affairs of the Howard Jarvis Taxpayers Association.