Gangloff, Gangloff & Pool, on behalf of Renee Bezaire and Robert Pool, the class representatives in County of Orange v. Bezaire, offer our most sincere THANK YOU! to each and every one of the taxpayers who are victims of “recapturing” throughout California.
Thousands of you took the time to support this lengthy effort to protect the voters’ intent behind the 1978 initiatives, Propositions 13 and 8. You filed refund claims, wrote letters to federal, state and local officials, sent faxes and e-mail messages, telephoned us, and several of you even dropped by our office to wish us well. Many of you filled the trial and appellate courtroom galleries, too, demonstrating your continuing concern with this important issue. That showed us that we always had the People’s support, even though the forces of state and local government bureaucracy were aligned against us from the beginning.
Unfortunately for California property taxpayers, the deck was stacked against us all back in 1979 when the Legislature “further implemented” Propositions 13 and 8, by crafting a statutory mechanism for “recapturing.” But the problem is the Legislature has NO LEGITIMATE POWER to change the settled meaning of a voter-initiative constitutional amendment WITHOUT A 2/3 VOTE OF THE PEOPLE!!
Consider for yourself what the majority of the California Supreme Court voted not to review by failing to take up our petition:
On June 24, 1978, the Legislature implemented the so-called 2% inflation cap of Proposition 13, with a statute – Revenue and Taxation Code, section 110.1, subdivision (c) – which (correctly) interpreted the 2% limit as measured from “the full cash value of the preceding lien date.”
On November 7, 1978, 78% of California voters approved Proposition 8, through which the Legislature itself invited voters to clarify what Proposition 13 always intended: that is, the “full cash value base” of property could “be reduced to reflect substantial damage, destruction or other factors causing a decline in value.”
“The full cash value base” is the same thing that Propositions 13 and 8 limit to 2% increase.
On July 10, 1979 – more than a year after voters passed Proposition 13; more than a year after the Legislature itself implemented Proposition 13’s 2% limit, based on “the preceding lien date” value (that is, the prior year’s assessment); and 8 months after voters approved Proposition 8 – the Legislature changed its interpretation of the 2% limit and paved the way for “recapturing” through a new statute: Revenue and Taxation Code, section 51 – justifying the 180-degree change by labeling it “further implementation” of Propositions 13 and 8.
In 1984 the Legislature routinely deleted from Revenue and Taxation Code, section 110.1, subdivision (c) (which by that date became subdivision (f), as it is today) any reference to “the preceding lien date.” In its place, the reference to the 2% limit now pointed to the 1979 enactment, Revenue and Taxation Code, section 51. Thus, the last vestige of voter intent to prohibit “recapturing” was quietly eliminated from the state tax code.
AT NO TIME AFTER NOVEMBER 7, 1978 (when Proposition 8 was adopted) DID THE LEGISLATURE EVER SUBMIT ITS DRASTIC CHANGE OF THE MEANING OF THE CONSTITUTIONAL 2% LIMITATION TO VOTERS FOR APPROVAL!!!!
The California Court of Appeal, Fourth Appellate District, Division Three (in Santa Ana, CA) effectively approved the Legislature’s 1979 and 1984 statutes, adopted without voter approval, through the appellate court’s opinion in County of Orange v. Bezaire. The appellate court accomplished that feat by ignoring the real history of the Legislature’s original statutory interpretation in 1978 – Revenue and Taxation Code, section 110.1, subdivision (c) – that the 2% limit is to be measured from “the preceding lien date” assessment. Instead, the Court of Appeal declared:
“The more natural reading of article XIII A, section 2, subdivision (b) is that the base on which the inflation factor is figured remains that of the original purchase price . . . not any reduced base resulting from a reassessment in the wake of a decline in property values, such as might happen with a general deflation . . . .” (Emphasis added.)
What actually happened was that the Legislature realized in early 1979 that its first interpretation of the 2% limit – that is, the (original and correct) view that “the preceding lien date” controlled the annual assessment increase – must be changed. The Legislature’s select task force in January 1979 wrote that Proposition 8 decline in value “will result in a substantial revenue loss to local governments from the levels established by Prop. 13, which themselves were substantially reduced from pre-Prop. 13 law.” The legislative task force recommended the law be revamped to permit “recapturing.” There was never any discussion of getting the People’s consent through an election for the Legislature’s illicit action. Now it appears that property taxpayers are stuck with that bum steer!
We earlier said that County of Orange v. Bezaire is at an end in the California court system. Whether Ms. Bezaire and Mr. Pool wish to seek to move the case onto the United States Supreme Court’s docket is a matter that they have until October 21, 2004 to decide. Review by the U.S. Supreme Court is not guaranteed. Rather, it is a discretionary appeal, and one that is rarely granted.
In the meantime, California taxpayers are not entirely without some hope still. There is another “recapturing” case still pending before the Court of Appeal in northern California. Gangloff, Gangloff & Pool is not handling that case, entitled Titus v. County of Marin, case no. A103960 in the First Appellate District, Division Two, California Court of Appeal. We are, however, in close contact with the attorney representing the homeowners in that case. A decision in the Titus case most likely will not occur until sometime in 2005. Time will reveal how the Titus case fares in the appellate court, and whether the California Supreme Court may yet find the political courage to address the merits of “recapturing,” regardless of its fiscal implications.
When the California Supreme Court originally upheld the constitutionality of Proposition 13 in its first court challenge back in 1978, former Associate Justice Frank W. Richardson wrote for the nearly unanimous Court:
“It is our solemn duty to jealously guard the initiative power, it being one of the most precious rights of our democratic process.”
Let us all do whatever we can to hold our elected government officials to that very high standard.