1996 California Proposition 218 facts for kids

Proposition 218 is a special rule added to the California Constitution. It changed how local governments in California collect money through taxes and fees. This rule is also known as the "Right to Vote on Taxes Act." It was created by the Howard Jarvis Taxpayers Association.

Proposition 218 was a follow-up to Proposition 13, which limited property taxes in 1978. Voters in California approved Proposition 218 on November 5, 1996.

This new rule added two sections to the California Constitution: Article XIII C and Article XIII D. Article XIII C made it so voters must approve most local government taxes. It also made it easier for voters to start a process to lower or get rid of local taxes, fees, or charges. Article XIII D added new rules for special fees and charges related to property. For example, utility fees from local governments cannot be more than the actual cost of the service.

Experts at the California Senate Office of Research called Proposition 218 one of the most important laws of the 20th century in California.

What is Proposition 218?

The official name for Proposition 218 was: "Voter Approval for Local Government Taxes. Limitations on Fees, Assessments, and Charges. Initiative Constitutional Amendment."

The people who created Proposition 218 said that Proposition 13 was meant to lower taxes and require voters to approve tax increases. However, local governments found ways to raise money without asking voters. This new rule was made to protect taxpayers by limiting how local governments could collect money without people's permission.

Proposition 218 has been part of the California Constitution for 28 years, 7 months.

Why Was Proposition 218 Needed?

After Proposition 13 passed in 1978, local governments looked for new ways to get money. They wanted to avoid the rule that required two-thirds of voters to approve special taxes.

Supporters of Proposition 218 said that local governments started using "assessment districts" to raise money. These were special fees on properties. They claimed this was a way to avoid asking voters for approval.

The 1992 Knox Case

A big change happened in 1992 with a California Supreme Court decision called the Knox case. This decision said that Proposition 13's rules, like the two-thirds voter approval for special taxes, did not apply to special fees on properties.

Because of the Knox decision, local governments could add special fees to properties for many reasons without asking voters. These fees became like property tax increases that appeared on people's tax bills. There were no limits on how high these fees could be.

After the Knox decision, some special fees became very creative. For example, there was a "view tax" where people with better ocean views paid more. In another case, property owners 27 miles from a park were charged a fee because their property supposedly benefited from it.

The Campaign for Proposition 218

Many people in the media did not pay much attention to Proposition 218 at first. Local governments were not allowed to use public money to campaign against it.

Experts thought Proposition 218 would cost local governments at least $100 million each year. Some even thought it could cost billions. Moody's Investors Service, a company that rates how financially healthy governments are, warned that the new rule could make local governments' credit ratings go down. The California State Treasurer even told opponents not to overstate the negative effects.

Who Supported and Opposed It?

Like Proposition 13, most major newspapers and political leaders were against Proposition 218. Groups that opposed it included public employee unions, local governments, environmental groups, and public education groups.

Most of the money (74%) contributed to oppose Proposition 218 came from public employee unions.

Opponents of Proposition 218 made strong predictions about what would happen if it passed. They said things like:

• Expensive landscaping would die and cause fires.
• Silicon Valley would shut down.
• Parks and senior centers would close.
• Neighborhoods would no longer be safe.

Supporters of Proposition 218 focused on one main benefit: voters would have the right to approve local government taxes. They also told voters to check their property tax bills. This would show them the many fees and charges added by local governments without voter approval.

Election Results

Proposition 218 passed with 56.55% of the vote across California. This was a winning margin of 13.1 percentage points.

It passed in 54 out of 58 counties (93%) and in 405 out of 469 cities (86%). It also passed in most state legislative districts, no matter which political party represented them.

What was surprising was that Proposition 218 was behind in almost all the polls before the election. Some polls predicted it would lose by about 15 points. The final Field Poll showed only 36% support. But it ended up winning by 13 points. This big difference between polls and actual results was very rare for statewide initiatives in California.

Big Changes for California Government

After the election, a high-ranking official from the California State Association of Counties said Proposition 218 "profoundly changes the way California is governed." They even called it "the most revolutionary act in the history of California."

An article in a League of California Cities publication said that voters now have the power to control money for government services. This happened because voters did not trust their elected leaders. They wanted direct control over local government money.

Joel Fox, who was president of the Howard Jarvis Taxpayers Association when Proposition 218 passed, said it was "the next level" after Proposition 13.

Article XIII C: Rules for Local Taxes

Section 3 of Proposition 218 added Article XIII C to the California Constitution. This part mainly deals with local government taxes and when voters need to approve them.

What is a "Local Government"?

Article XIII C defines "local government" very broadly. This was done to prevent loopholes that allowed some local agencies to avoid voter approval for taxes. It includes:

• Counties
• Cities
• School districts
• Community college districts
• Public authorities
• Joint powers agencies
• Special districts (like water or fire districts)

It also includes charter cities, which have their own local rules.

Types of Local Taxes

Article XIII C also defines different types of taxes:

• A "general tax" is for general government purposes. The money can be spent on anything.
• A "special tax" is for specific purposes. Even if the money goes into a general fund, it's still a special tax if it's for a specific purpose.

Many local governments, like school districts, can only collect special taxes. Only cities and counties can usually collect general taxes.

What is a "Tax"? (Proposition 26)

In 2010, California voters approved Proposition 26. This added a broad definition of "tax" to Proposition 218. Before this, courts often decided what counted as a "tax." For example, a 911 "fee" was seen as a special tax needing two-thirds voter approval.

If something a local government collects is a "tax" under Proposition 26, then voters must approve it if it's new, increased, or extended. If it's not a tax, it might still be covered by Proposition 218's rules for property-related fees.

When Do Voters Need to Approve Taxes?

Section 2 of Article XIII C explains when voters must approve local government taxes. Every local tax is either a general tax or a special tax. It cannot be a mix of both. This difference is important because it changes how many votes are needed.

New Taxes

New local government taxes always need voter approval under Proposition 218. "Imposed" usually means the first time a tax is put in place.

Tax Increases

When local governments "increase" a local tax, voters must approve it. A tax is "increased" if:

• The rate used to calculate the tax goes up.
• The way the tax is calculated changes, and this makes someone pay more.

For example, if utility rates go up, and this also makes a utility users tax go up, that might be considered a tax "increase." This would then need voter approval.

A tax is not "increased" if:

• It adjusts based on a schedule or formula set before November 6, 1996.
• It's a previously approved tax, and the rate or calculation method hasn't changed to make people pay more.
• Payments are higher because of changes in how land is used, not because the tax rate or method changed.

Tax Extensions

When a local government "extends" a local tax, voters must approve it. This means if a tax has an end date (a "sunset provision") and the government wants to keep it going longer, voters must agree.

"Modernizing" Taxes

Sometimes, local governments combine a small tax reduction (which doesn't need voter approval) with a tax increase (which does). This is often called "modernization." For example, they might "modernize" a utility user tax. The small reduction makes the tax seem more appealing to voters.

Voters should always read the full details of these measures. This is especially true for any part that expands the tax. For example, some "modernization" measures might allow taxes on online video streaming services. If voters don't want this, they can use their local initiative power to reduce or repeal it.

How Many Votes Are Needed?

• General Tax: A local government cannot create, extend, or increase a general tax unless a majority vote of the people approves it. These elections usually happen during regular elections.
• Special Tax: A local government cannot create, extend, or increase any special tax unless two-thirds of voters approve it. This also applies to taxes on real property (like parcel taxes, which are taxes not based on property value).

General taxes can be spent on anything local politicians decide, including salaries for public employees.

Temporary vs. Permanent Taxes

Taxes proposed by local governments can be temporary or permanent. If a tax is temporary, voters must approve it again to extend it. Permanent taxes continue indefinitely. However, voters can use their local initiative power to reduce or repeal permanent taxes.

Sometimes, the ballot question doesn't say how long a tax will last. Usually, if no duration is mentioned, it's a permanent tax. Some local governments propose temporary taxes to make them easier to pass. They hope it will be easier to extend or increase the tax later. History shows that once a "temporary" tax passes, it often gets extended or increased.

Issues in Proposition 218 Elections

There are some common issues that can affect how fair and honest Proposition 218 elections are.

Opinion Polls Before Elections

Local governments often ask voters what they think before deciding to put a tax measure on the ballot. This is called opinion polling. They can use public money for this.

However, sometimes these polls ask questions that are more about campaigning than just gathering information. For example, they might test arguments for or against the tax. Voters might question if it's right for local governments to spend public money on polls that are used for political campaigns. If this happens, voters can make it a political issue during the campaign.

"Informational" Campaigns

Local governments are not allowed to spend public money to campaign for tax measures. But they can spend money on "informational" campaigns to "educate" voters about the measures. Courts have generally allowed this.

However, some voters might question if these "informational" campaigns are really just trying to get the tax approved. If voters feel this is happening, they can make it a political issue during the campaign.

Ballot Questions

Local governments usually write the ballot question for tax elections. This is the text voters see when they vote. How the question is written can affect the election's outcome. Sometimes, ballot questions can be misleading or incomplete. Local governments might even "poll test" questions to find the wording that gets the most support.

If a ballot question seems unfair, voters can make it a political issue during the campaign. Since January 1, 2018, new rules require ballot statements for taxes to include:

• The amount of money to be raised each year.
• The tax rate.
• How long the tax will last.

The statement must be true, fair, and not try to make voters feel for or against the tax.

"Letting the Voters Decide"

Sometimes, local politicians say they are just "letting the voters decide" when they put a tax measure on the ballot. But Proposition 218 requires them to get voter approval for these taxes. So, it's not a choice to protect taxpayers, but a requirement.

When politicians vote to put a tax on the ballot, they are also saying they support the tax. They often do this to avoid being held responsible for supporting a tax.

What Voters Should Think About

When voting on a local tax proposed by a local government, it's good to think about a few things.

Tax Increases and Public Employee Costs

As costs for public employee salaries and benefits (like pensions) go up, local governments might have to cut services or raise taxes. Often, new taxes help pay for these employee costs. Research shows that many tax increases happen in California communities with big public employee pension problems.

Tax Increases and Public Safety

Some local governments might say they need more money for important services like public safety (police and fire). This is to make the tax proposal more appealing.

However, the California Constitution says that public safety is the "first responsibility" of local government. This means they must provide enough public safety services, whether a new tax passes or not.

Total Tax Burden

Even small new taxes can add up. It's a good idea for voters to check their current property tax bill. This helps them see the total amount of property taxes and fees they already pay.

Sometimes, many tax proposals appear on the same ballot, even from the same local government. This can make the total tax burden very high. Voters might then vote against all of them.

Local governments often plan their tax elections to increase the chances of passing multiple taxes. For example, they might put taxes on the ballot during a primary election, and then other taxes during a general election a few months later. They might also wait for presidential elections, as voters tend to support taxes more then.

If a local tax passes, it can also set a "precedent." This means it might lead to more and more expensive tax measures in the future.

Finding Information for Voters

It's helpful for voters to have financial information about the local government proposing a tax. This helps them decide if the tax is truly needed. This includes comparing financial data with similar local governments.

You can often get financial data directly from the local government. Sometimes, you might need to make a written request under the California Public Records Act. It's good to ask for data in electronic format for easier study. Useful information includes:

• Public employee salaries and benefits (including pensions).
• Annual financial reports.
• Past budget data.
• Future budget predictions.

Spending decisions show what a local government values. This is helpful for general tax elections where politicians decide how to spend the money.

The California Supreme Court has said that even emails or texts from public officials on their personal devices about public business can be public records. This information can be useful for voters.

Lots of financial data about California local governments are also available online from state agencies like the California State Controller, the California Department of Tax and Fee Administration, and the California Department of Education.

Voters' Power to Change Local Taxes and Fees

One of the most important parts of Proposition 218 gives local voters the power to reduce or get rid of any local tax, special fee, or charge. This is a strong tool for voters, especially when local government officials don't listen to their concerns about money.

The rule says:

SEC. 3. Initiative Power for Local Taxes, Assessments, Fees and Charges. Notwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives.

Easier to Get Signatures

This local initiative power also has a much lower signature requirement. It cannot be higher than 5% of the votes for Governor in the last election in that local area. This makes it easier for citizens to get an initiative on the ballot.

Examples of Using This Power

Voters can use this power to reduce or repeal many local taxes, like:

• Utility user taxes
• Sales taxes
• Business taxes
• Parcel taxes

They can also use it for local government fees and charges, such as:

• Stormwater fees
• Groundwater fees
• Public ambulance/paramedic fees
• Public park/sports fees
• Public parking fees
• Utility fees for water, sewer, or trash collection.

Courts Uphold This Power

The California Supreme Court confirmed and supported this local initiative power in a 2006 case called Bighorn-Desert View Water Agency v. Verjil. The California Legislative Analyst's Office said that the only limits on this power seem to be those under federal law.

Article XIII D: Rules for Property Fees

Section 4 of Proposition 218 added Article XIII D to the California Constitution. This part mainly deals with special fees on real property and fees related to property.

Article XIII D applies to all special fees and property-related charges, no matter if they come from state law or local rules. It also makes it clear that Proposition 218 does not give local governments new power to impose taxes or fees. They must get that power from other laws.

This section does not affect existing laws about:

• Fees for property development (like developer fees).
• Timber yield taxes.

Important Definitions

Section 2 of Article XIII D has important definitions:

"Agency"

The term "agency" means the public groups that must follow these rules. It uses the same broad definition as "local government" in Article XIII C.

"Assessment"

An "assessment" is "any levy or charge upon real property by an agency for a special benefit conferred upon the real property." If something is an "assessment," it must follow the rules in Section 4 of Article XIII D.

Proposition 218 keeps the idea that a special assessment must give a special benefit to the property. But it makes the definition of "special benefit" much stricter.

"Special Benefit"

A "special benefit" means a "particular and distinct benefit over and above general benefits conferred on real property locate in the district or to the public at large." Simply increasing property value does not count as a "special benefit." The California Supreme Court confirmed this stricter definition. It means the benefit must be unique to the property, not something the general public also gets.

Property-Related Fee or Charge

Proposition 218 created a new type of fee called a "property-related fee or charge." This is important because if a fee is "property-related," it must follow the rules in Section 6 of Article XIII D.

A "property-related" fee or charge is "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property-related service." A "property-related service" is a public service directly linked to owning property.

Examples of property-related fees include charges for ongoing water, sewer, and trash collection services.

Groundwater Fees

In 2017, the California Supreme Court ruled that a fee on taking groundwater is generally no longer a property-related fee under Proposition 218. However, these fees might still be considered a "tax" under Proposition 26, which would require voter approval.

Voters can still use their local initiative power under Proposition 218 to reduce or repeal groundwater fees.

Limits on Fees and Charges

Section 3 of Article XIII D says that no tax, assessment, or property-related fee can be charged on property or people because they own property, except for:

• Property taxes based on value.
• Special taxes approved by two-thirds vote (under Proposition 13).
• Assessments on real property (under Article XIII D).
• Property-related fees for property-related services (under Article XIII D).

This means that most parcel taxes must be special taxes needing two-thirds voter approval. It also means property-related fees can only be for property-related services.

Electrical or Gas Service Exemption

Section 3 of Article XIII D also says that fees for electrical or gas service are *not* property-related fees. This means they don't have to follow the rules for property-related fees, like the rule that they can't be more than the cost of the service.

However, these fees might still be considered a "tax" under Proposition 26 (2010), which would require voter approval.

Voters can still use their local initiative power to reduce or repeal electrical or gas service fees if they are too high. For example, if a city transfers too much money from its utility to its general fund, voters could use an initiative to lower the fees.

Rules for Assessments

Section 4 of Article XIII D has detailed rules for special benefit assessments on real property. These rules make sure that any special assessment is fair and proper.

Proposition 218 also requires a vote of affected property owners before any new or increased assessment can be charged. Before Proposition 218, this was not required.

Identifying Properties for Assessment

An agency proposing an assessment must first find all properties that will get a special benefit. This area is called an assessment district.

The agency must figure out how much each property benefits compared to the total cost of the public improvement or service.

Engineer's Report

All assessments must have a detailed report from a certified professional engineer. This report explains why the assessment is needed and how it follows Proposition 218 rules. It covers things like:

• The special benefits.
• How benefits are divided among properties.
• Separating general benefits from special benefits.
• Costs.
• How assessments are calculated.

The engineer's report is a public record. Property owners can ask for a copy.

Special Benefit and Cost Rules

Under Proposition 218, only special benefits can be assessed. The rule makes it harder to charge special assessments for things that mainly benefit people, not property.

Separating Benefits

Agencies must separate general benefits (benefits to the public) from special benefits (benefits unique to the property). General benefits cannot be assessed; they must be paid for by other money, like taxes.

Proportionality Rule

No assessment can be charged on a property that is more than the reasonable cost of the special benefit that property receives. This ensures that the total assessment is divided fairly among all properties.

Public Properties Also Pay

Proposition 218 says that properties owned by local agencies, the State of California, or the United States are not exempt from assessments. They must pay their fair share unless the agency can prove they get no special benefit.

Before Proposition 218, public properties were often exempt. This meant private property owners had to pay the share that public properties would have paid.

Written Notice and Ballot

When an agency proposes an assessment, it must send a written notice by mail to the owner of each affected property. The notice must include:

• The total assessment amount for the district.
• The amount for that specific property.
• How long payments will last.
• The reason for the assessment and how it was calculated.
• The date, time, and place of a public hearing.

The notice must also clearly explain how to complete and return the assessment ballot. It must say that the assessment will not be charged if more ballots are against it than for it, based on the amount of the proposed assessment.

The envelope must say "OFFICIAL BALLOT ENCLOSED" in bold type. Each notice must include an assessment ballot.

Public Hearing and Vote

The agency must hold at least one public hearing at least 45 days after mailing the notices. Anyone can speak or submit written comments at the hearing.

At the end of the hearing, an impartial person must count the assessment ballots. The ballots are weighted by the amount of the proposed assessment for each property. This means properties with higher proposed assessments have more "weight" in the vote.

Secrecy of Ballots

Proposition 218 doesn't directly talk about ballot secrecy. However, state laws say that ballots must be sealed until counting starts. They must be unsealed and counted in public view. Ballots and the information used to weigh them are public records.

Majority Protest

An agency cannot impose a proposed assessment if there is a "majority protest." This happens if, at the end of the public hearing, the weighted ballots against the assessment are more than the weighted ballots in favor.

Before Proposition 218, a majority protest usually meant an absolute majority of property owners had to protest. If an owner did nothing, it counted as a "yes" vote. Also, local agencies could often overrule a majority protest.

Proposition 218 changed this. Now, a majority protest is based only on the ballots actually received. If an owner doesn't return a ballot, it doesn't count for or against. And if a majority protest happens, the agency cannot legally impose the assessment.

Agency Must Prove Compliance

Before Proposition 218, if someone challenged an assessment in court, they had to prove it was illegal. Proposition 218 shifted this burden to the local agency. Now, the agency must prove that the assessment follows the law. This makes it much easier for taxpayers to win a legal challenge.

The Landmark Silicon Valley Taxpayers Case (2008)

In 2008, the California Supreme Court confirmed and supported the strict assessment rules of Proposition 218 in a case called Silicon Valley Taxpayers' Association, Inc. v. Santa Clara County Open Space Authority.

This case was very important for taxpayer protection. The court decided that when reviewing assessments, courts must use their "independent judgment." This means courts will look closely to see if the assessment truly follows Proposition 218. Before this case, courts usually gave local agencies a lot of freedom. This new standard makes it much easier for taxpayers to win lawsuits challenging assessments.

The court also said that no law, even from the California Legislature, can weaken or go against Proposition 218.

Voters Can Reduce or Repeal Approved Assessments

Even after an assessment is approved, voters can use their local initiative power under Proposition 218 to reduce or repeal it. This includes the easier signature requirement.

For example, if an assessment was approved because of weighted voting (where larger properties have more say), but most residential owners were against it, a local initiative could be used to fix this. If an initiative qualifies, the election would be by registered voters, and ballots would not be weighted.

Rules for Property-Related Fees and Charges

Section 6 of Article XIII D has detailed rules for property-related fees and charges. These rules make sure that these fees are fair and not just hidden taxes without voter approval.

These rules apply if a fee is "property-related." Common property-related fees include utility fees for water, sewer, trash, stormwater, and flood control.

When Do Rules Apply?

The rules apply to new, increased, or existing property-related fees. All property-related fees must follow these rules starting July 1, 1997.

When Fees Are "Increased"

When an agency "increases" a property-related fee, it must follow Proposition 218 rules. A fee is "increased" if:

• The rate used to calculate it goes up.
• The way it's calculated changes, and this makes someone pay more.

A fee is not "increased" if it adjusts based on a schedule set before November 6, 1996, or if payments are higher due to changes in land use, not the fee rate.

When Fees Are "Extended"

When an agency "extends" a property-related fee, it must follow Proposition 218 rules. This means if a fee has an end date and the agency wants to keep it going longer, it's an "extension."

Steps for New or Increased Fees

For any new or increased property-related fee, an agency must:

Send Written Notice

The agency must identify all properties that will be charged. It must calculate the proposed fee for each property. Then, it must send a written notice by mail to the owner of each property. The notice must include:

• The amount or rate of the fee.
• How it was calculated.
• The reason for the fee.
• The date, time, and location of a public hearing.

Hold Public Hearing

The agency must hold at least one public hearing at least 45 days after mailing the notices.

Majority Protest for Fees

Property owners can formally protest the proposed fee. At the public hearing, the agency must consider all protests. If written protests from a majority of the identified property owners are received, the agency cannot impose the fee.

Because it requires an absolute majority of owners to protest, it's often hard to get a majority protest for fees, especially if many properties are affected. If a majority protest happens, the agency cannot legally override it.

If an agency approves a controversial fee despite public objections, voters can use their local initiative power to reduce or repeal it. For example, they could lower water fee increases caused by customers saving water during a drought.

Political Responsibility

Approving property-related fees is a political decision by elected officials. If there's a lot of public anger about an approved fee, those officials can be held politically responsible in the next election. In extreme cases, voters can even use the recall power to remove officials.

Applies to Tenants Too

If a tenant is directly responsible for paying a property-related fee, they are also considered a "property owner" under Proposition 218. This means they have the right to receive notice and protest the fee.

Five Key Requirements for Fees

Proposition 218 has five rules that every property-related fee must meet. An agency cannot create, extend, or increase a fee unless it meets all five. These rules ensure fees are legitimate and not hidden taxes.

If a fee doesn't meet these rules, it can still be charged as a tax, but it would need voter approval.

Total Cost Rule

1. The money collected from the fee cannot be more than the money needed to provide the service. This means agencies cannot charge excessive or unnecessary costs. If voters think a fee is too high, they can use their local initiative power to reduce or repeal it.

Courts have said that Proposition 218 stops local governments from moving extra money from a water utility to their general fund unless it's to pay back the general fund for real utility expenses. If utility money is more than the cost of the service, the extra is a tax and needs voter approval.

Use Rule

2. The money from the fee can only be used for the purpose it was charged for.

Proportional Cost Rule

3. The amount of the fee cannot be more than the proportional cost of the service for that specific property. This is called the "cost of service" rule.

Agencies usually need to prepare a detailed report to show how they meet this rule. This report is a public record.

Actual Use or Availability Rule

4. A fee cannot be charged for a service unless it is actually used by, or immediately available to, the property owner. Fees based on possible future use are not allowed.

This means property owners should not pay for future costs of a service they are not yet using.

A "standby charge" (a fee for water availability) is considered an assessment under Proposition 218. It must follow the stricter rules for assessments.

No General Government Services Rule

5. A fee cannot be charged for general government services like police, fire, ambulance, or library services. These services are available to everyone, not just property owners. This rule makes it hard for local agencies to charge property-related fees for general services.

Tiered Water Rates (Capistrano Decision)

In 2015, a California court ruled in the Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano case that Proposition 218 stops local governments from charging higher water rates for heavier water users (called tiered or conservation rates) unless they meet the "cost of service" rule.

This decision was widely reported because it happened during a severe drought in California. The court said that "tiers must still correspond to the actual cost of providing service at a given level of usage." If rates are higher than the cost of service, they act like a tax and need voter approval.

The court also rejected the idea that higher rates could be justified as "penalties." It said this would create a huge loophole in Proposition 218.

The California Supreme Court refused to remove this decision from being cited as precedent. This means the Capistrano decision can be used in other lawsuits about tiered water rates.

Proposition 218 does not stop other ways to save water, like restricting wasteful water use or setting water usage limits.

Lifeline Utility Rates

Local agencies sometimes help low-income customers with lower utility rates (lifeline rates). They might use taxpayer funds, donations, or voter-approved tax increases for this.

However, Proposition 218 stops local agencies from charging other ratepayers more to pay for lifeline programs without voter approval. This is because property-related fees cannot be more than the cost of service for each property.

If a local water agency raises water fees too much, voters can use their local initiative power to reduce or repeal those increases.

Voter Approval for Some Fees

Voter approval is also needed for some new or increased property-related fees. Except for fees for sewer, water, or trash collection services, a fee cannot be imposed or increased unless approved by:

• A majority vote of the property owners affected.
• Or, if the agency chooses, a two-thirds vote of the registered voters in the area.

These elections must happen at least 45 days after the public hearing.

Election Exemptions

Fees for sewer, water, or trash collection services are exempt from the voter approval rule. Most property-related fees fall into these categories. Examples of fees that usually *do* require an election include stormwater fees or flood control fees.

Stormwater Drainage Fees (Salinas Decision)

A big issue under Proposition 218 is whether stormwater drainage fees are exempt from voter approval, like water or sewer fees.

In 2002, a California court in Howard Jarvis Taxpayers Association v. City of Salinas ruled that a stormwater drainage fee was a "property-related" fee and needed voter approval. The court said that "sewer" and "water" exemptions should be interpreted strictly. It concluded that stormwater drainage fees are not the same as sanitary sewer or water supply services.

The California Supreme Court refused to review the Salinas case, meaning its decision stands.

Many local agencies want stormwater drainage services to be treated like other utilities that are exempt from voter approval. If this happened, local agencies would not need voter approval for new or increased stormwater fees. This would likely lead to many new and higher stormwater fees.

SB 231 (2017) Attempt to Avoid Voter Approval

In 2017, a law called Senate Bill No. 231 (SB 231) tried to redefine "sewer service" to include stormwater fees. The goal was to make it easier for local governments to charge these fees without voter approval.

However, the Salinas court case already made it clear that stormwater fees need voter approval. Jon Coupal of the Howard Jarvis Taxpayers Association called SB 231 an attempt to illegally get around Proposition 218.

SB 231 became law on January 1, 2018. But local governments are still bound by the Salinas court decision, which interprets the California Constitution.

Voters Can Reduce or Repeal Stormwater Fees

Even if stormwater fees existed before Proposition 218 or were imposed without proper voter approval (like relying on SB 231), voters can still use their local initiative power to reduce or repeal them. This includes the easier signature requirement. This can be done instead of, or along with, a legal challenge.

After a stormwater fee is approved by property owners or voters, the local initiative power can still be used to reduce or repeal it. If an initiative qualifies, the election would be by registered voters.

Agency Must Prove Compliance

Like assessments, if someone challenges a property-related fee in court, the local agency has the burden to prove it followed all the rules. This makes it easier for taxpayers to win legal challenges.

The "independent judgment" standard of review from the Silicon Valley Taxpayers case also applies to property-related fees. This means courts will look closely to see if the fee violates Proposition 218.

How Proposition 218 Affects Regional Governments

Proposition 218 applies to regional governments in California. This means regional governments must follow the voter approval rules for taxes and the rules for special assessments and property-related fees.

Sometimes, regional governments are not directly elected by the people. This can lead to problems with accountability. If the leaders are not elected, voters cannot easily vote them out if there are problems with how money is spent.

However, voters can still use their local initiative power to reduce or repeal a regional fee or tax. But it can be harder to get enough signatures for a regional initiative because there are so many voters.

How Proposition 218 Affects State Government

Generally, Proposition 218 does not apply to taxes or fees imposed by the State of California. This is because the state is not considered a "local government" or "agency" under the rules.

State taxes usually need approval from two-thirds of the California Legislature. Proposition 26 (2010) broadened the definition of "tax" for the state, meaning more state fees now need this two-thirds approval.

However, there are limited cases where state actions might be subject to Proposition 218. For example, if a state agency acts like a "special district" by imposing a fee within a limited area, it might be covered.

Under Proposition 218, if the State of California owns property within an assessment district, it must pay its fair share of any special assessment. The state also has the right to vote in assessment ballot proceedings.

The State of California also gets the same protections as property owners for property-related fees. This includes getting written notice, the right to protest, and the "cost of service" protections.

How Local Governments Reacted to Proposition 218

Proposition 218 greatly limits how local governments can raise money without voter approval. Because of this, most local governments opposed Proposition 218 when it was on the ballot, and they still don't like it.

In almost every court case about Proposition 218, local government groups (like the League of California Cities) have tried to limit the rules and protections for taxpayers.

Local governments also try to change Proposition 218 through new laws in the California Legislature. California law allows them to spend taxpayer money to lobby for these changes, even if they would weaken taxpayer protections. Local governments often say they need more money, but they also spend a lot lobbying against laws that protect taxpayers.