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Jon Coupal- Columnist

Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization with offices in Los Angeles and Sacramento. [go to website] [go to Coupal index]

Wringing More from Telephone Users
Finding new ways to tax by a "911 fee"...
[Jon Coupal] 7/29/04

The door bell rings and two small voices call out "Trick or treat!" Looking out, you see a witch and a ghost standing on your doorstep. You check your calendar, and seeing that it is October 31, you probably open the door and make an offering of candy.

But what do you do when it's not Halloween and masked visitors demand money? The equivalent is happening in a number of communities throughout the state where officials are attempting to put a "mask" on a new tax by calling it a "911 fee."

I recently spoke before the Sacramento County Board of Supervisors and told them their efforts to disguise a proposed $2-(or more)-per-month telephone tax, by calling it a fee, was like putting "lipstick on a pig." The result is that the underlying animal remains the same. The supervisors didn't care for the analogy, but they couldn't refute it.

The difference between a tax and a fee, for taxpayers, is important. If it is a tax, Propositions 13 and 218 require that the new levy be placed on the ballot for voter approval. This is why local officials may try to convince the public, and ultimately the courts, that the new charge is actually a fee for services, so as to avoid a popular vote and the likely rejection that would follow.

If we've learned anything since the passage of Proposition 13, it is that when it comes to taxes, politicians and government lawyers will gravitate to the path of least resistance. After Proposition 13 limited property taxes and required a public vote to increase most other local taxes, tax raisers sought to expand the use of assessment districts, since these were not covered. Assessment districts went from being used to construct sidewalks and sewer lines that provide direct benefits to property, to being used to pay for landscaping, street lighting, parks, open space and other items that benefit the entire community. One legal expert voiced the opinion that the uses of assessment districts that hit property owners were limited only by the "limits of human imagination," and they became the scheme of choice for circumventing Proposition 13.

Since the Howard Jarvis Taxpayers Association closed the door on these abuses with Proposition 218, approved by voters in 1996, the taxraisers have been unrelenting in seeking new loopholes that will allow them to wring more from taxpayers. Right now, the most popular tax increase technique is the "fee."

Although Proposition 218 limits the use of fees imposed as an incidence of property ownership, fees for direct services are not as restricted. In the general, what is required by law is that the amount of a fee be related to the actual cost of providing a service.

In the case of 911 fees, the proposals do not charge for actually using the service, but merely because the service is available. Since telephone users are not getting an additional or new service, and they are not being charged for using the service, what they are being asked to pay is a tax.

Communities are claiming they are broke and need more money. But in many cases they have struck sweetheart deals with public employee unions and now are being forced to keep their promises. Therefore, they are pushing the creativity envelope regarding any new scheme to fleece taxpayers to support these overly generous public employee salaries and benefits that most comparable workers in the private sector can only dream about.

The end result is that taxpayers are likely to butt heads with a number of communities in court. However, taxpayers in some cities are not waiting for what could be a long legal war. In Santa Cruz and Watsonville, taxpayers have used Section 3 of Proposition 218 -- which allows citizens to put existing tax measures on the ballot by gathering signatures -- to place their local 911 taxes up for a final decision by voters in November. CRO

copyright 2004 Howard Jarvis Taxpayers association

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