Did Sacramento break the law in transportation tax rush?

los-angeles-freewaysDid lawmakers break the law when they passed Senate Bill 1, the transportation tax increase?

There’s a quaint provision in the California Constitution that reads, “A person who seeks to influence the vote or action of a member of the Legislature in the member’s legislative capacity by bribery, promise of reward, intimidation, or other dishonest means, or a member of the Legislature so influenced, is guilty of a felony.”

By the time Gov. Jerry Brown finished twisting arms and greasing palms to pass a massive transportation tax hike, that antique language was on the curb like a broken grandfather clock waiting for a bulky-item pickup.

Brown and legislative leaders promised a billion dollars for specific local projects in the districts of wavering lawmakers, and one termed-out Republican senator made a deal for a law to protect people in his profession — civil engineering, not the profession you’re thinking of — from liability in construction lawsuits.

It’s not easy to prove a quid pro quo, Latin meaning “something for something.” People don’t typically leave a written record that says, “I’ll vote for this if you vote for that.”

But one thing is different this time. In November, California voters passed Proposition 54, a measure aimed at guaranteeing transparency in state lawmaking. Prop. 54 says bills must be in print and online in their final form 72 hours before the Legislature votes on them.

The transportation tax increase, SB1, was posted online on April 3. If the Legislature was going to meet its self-imposed deadline to pass the bill on April 6, not one word of it could be changed before the vote.

So all the wheeling, dealing, greasing, and “promise of reward” had to go into a separate bill.

And it did.

SB132 contains a billion dollars of “that” which was negotiated in exchange for a vote on “this.”

Not only is it in writing, there are many statements on the record from lawmakers that their vote for the transportation tax was explicitly tied to a promise from the governor and legislative leaders that the “thats” would be delivered.

Are the deals spelled out in SB132 a violation of the law under Proposition 54? They are effectively amendments to SB1 that were written into a different bill. If that’s legal, then the 72-hour requirement that voters just added to the state constitution has already been thrown to the curb with the rest of the grandfather clocks.

Before the truck comes to pick up the garbage, we should retrieve that language about bribery and reward and see if it applies to outgoing Sen. Anthony Cannella’s deal to condition his vote for SB1 on the passage of SB496, a bill Cannella authored to protect “design professionals,” including civil engineers, from lawsuits stemming from future work. “Anthony is a civil engineer,” Cannella’s official bio states.

Maybe you’re thinking it won’t pass. He was ahead of you. Language was added to the billion-dollar spending bill, SB132, to make it “operative” only if SB496 is enacted.

In addition to the billion dollars of “reward” written into SB132 on April 6, the bill was amended on April 5 to add $1 billion for “augmented employee compensation.”

Yes, another $1 billion of “compensation increases and increases in benefits” for state workers was slipped in while everyone was wondering where the state spent all our transportation taxes.

Talk about being taken for a ride.

Susan Shelley is a columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

State Agencies and Their Role in Public Policy

Photo courtesy Franco Folini, flickr

Photo courtesy Franco Folini, flickr

California’s agencies, as well as the departments, boards and commissions under them, engage in a tremendous amount of public policy making through both the rulemaking process and their interpretation and enforcement of existing statutes and regulations. These agencies are the ones who generally run the day-to-day operations of state government and implement the statutes adopted by the Legislature and signed by the governor.

With over 200 of these entities in California government, these state agencies influence policy by adopting regulations and implementing statutes. Moreover, they engage in policy making when these agencies issue guidelines, legal opinions, management memos, and other written documents that interpret the laws and implementing regulations.

Practitioners should be aware of the California Constitution Article III, Section 3.5. It provides that an administrative agency has no power to declare a statute unenforceable, or refuse to enforce a statute, on the basis of it being unconstitutional unless an appellate court has made such a determination. And agencies have no power to declare a statute unconstitutional.

This, for instance, when a Los Angeles Superior Court recently held that various teacher tenure and dismissal statutes were unconstitutional, local school districts, the Superintendent of Public Instruction, and the Department of Education were without authority to implement this decision. Without an appellate court ruling on the matter of constitutionality, local and state agencies must continue to abide by the challenged law.

When dealing with a given state agency, it is important first of all to know whether it is a plural executive, independent, or governor’s line authority agency. Generally speaking, the governor has less control over “plural executive” and “independent” agencies. These separate agencies are generally able to manage their daily affairs and conduct rulemaking without supervision or oversight from the governor. On the other hand, the governor has considerable authority to manage line authority agencies, including the ability to direct or restrict their rulemaking activities.

It is also important to know that state agencies within the executive branch of government consist of three major varieties:

  • Plural executive agencies” that are under the direction of an official elected on a statewide basis. For example, the Attorney General heads the Department of Justice, the Superintendent of Public Instruction heads the Department of Education, and the Insurance Commissioner heads the Department of Insurance. There are nine of these agencies in California headed by constitutional officers that are elected by statewide voters every four years.
  • “Independent agencies” that operate outside of the line control of the governor by virtue of constitutional provision, statute or common law. Some of the major independent agencies and their governing bodies include the University of California, governed by the Board of Regents; the California State University, governed by the Board of Trustees; the California Community Colleges, governed by the Board of Governors; the Public Utilities Commission, governed by the Public Utilities Commission; and the California State Lottery, governed by the Lottery Commission.
  • “Line agencies” include all the other agencies and departments within the executive branch that are under the line control and authority of the governor. Most state agencies and departments (more than 90 percent of them) within the executive branch of government are of this type. Many of these line authority agencies and departments have been organized into a hierarchy of major agencies or departments. The heads of these major agencies and departments sit on the governor’s cabinet.

When dealing with agencies that are under the line authority of the governor, it is important to know where they fit in terms of the organizational hierarchy. Departments or agencies that are under larger agencies or departments are subject to supervision and coordination by those agencies or departments. Their interactions with the governor also tend to be limited.

However, when it comes to rulemaking (i.e., the adoption of regulations under the state’s Administrative Procedures Act), the supervising or coordinating agencies usually allow significant latitude to the agency or department that is directed by statute to adopt such regulations.

Generally speaking, the authority of state agencies to adopt policy (by their rulemaking ability) is defined and restricted by statute. State statutes usually prescribe each agency’s authority to adopt policy; and, it is an established principle of administrative law that an agency cannot go beyond its legally-prescribed authority to regulate.

On the other hand, many statutes confer broad powers to some state agencies regarding matters that directly affect the general public (such as the Department of Motor Vehicles, the Air Resources Board, and the Department of Fair Employment and Housing). The regulations and administrative practices of these agencies affect millions of Californians in their daily lives.

Interested parties have significant access to the rulemaking activities of state agencies by virtue of the California Administrative Procedure Act (APA). In addition, every state agency is required to annually adopt a “rulemaking calendar” (Government Code Section 11017.6) that describes regulatory actions the agency anticipates taking during the calendar year. The APA is overseen by the Office of Administrative Law (OAL).

The OAL website includes helpful information for interested parties to track pending and adopted regulations. OAL also produces a guidebook on the rulemaking process that is of value to those who are getting acquainted with the APA process or those participating in the rulemaking process for the first time. In either instance, it is important to understand the rulemaking process and the role of state agencies.

A list of state agencies that have adopted regulations can be found on OAL’s website, which also provides direct access to the California Code of Regulations (CCR), which is organized under various subject matter titles. The following are the 28 titles comprising the CCR:

Title 1 – General Provisions

Title 2 – Administration

Title 3 – Food and Agriculture

Title 4 – Business Regulations

Title 5 – Education

Title 6 – Governor’s Regulations (currently has no regulations)

Title 7 – Harbors and Navigation

Title 8 – Industrial Relations

Title 9 – Rehabilitative and Developmental Services

Title 10 – Investment

Title 11 – Law

Title 12 – Military and Veterans Affairs

Title 13 – Motor Vehicles

Title 14 – Natural Resources

Title 15 – Crime Prevention and Corrections

Title 16 – Professional and Vocational Regulations

Title 17 – Public Health

Title 18 – Public Revenues

Title 19 – Public Safety

Title 20 – Public Utilities and Energy

Title 21 – Public Works

Title 22 – Social Security

Title 23 – Waters

Title 24 – Building Standards Code

Title 25 – Housing and Community Development

Title 26 – Toxics

Title 27 – Environmental Protection

Title 28 – Managed Health Care

An interesting phenomenon is that businesses cannot rely in good faith upon the written determinations issued by state agencies. For example, even if a business asks for and receives written guidance from a state agency as to how a law is interpreted, the business does not have any legal protection against a liability suit. This is an instance where the state agency’s written interpretation is not given any legal weight by a reviewing court. The courts can consider these determinations, but they do not provide an affirmative defense to those receiving them.

In other words, despite being charged with interpreting, implementing and enforcing California statutes and regulations, individuals and businesses that obtain written guidance from state agencies have no protection from legal liability even if they follow that guidance. However, there are a few agencies that provide limited protections.  For example, the Fair Political Practices Commission has advice letters to requesters that provide immunity from liability. The Franchise Tax Board and the Board of Equalization each have Chief Counsel Rulings that provide protection to taxpayers.

State agencies play a key role in public policy development in California through their rulemaking activities, as well as their interpretation and enforcement of statutes and regulations. There are both public (through interested parties) and private (administration with line control agencies) influences on these agencies in their policy role.

Thomas Nussbaum is the former Chancellor of the California Community Colleges.  Chris Micheli is a lobbyist with Aprea & Micheli, Inc. Both are Adjunct Professors of Law at McGeorge School of Law.

‘Right to Vote on Taxes’ Case Now Before California Supreme Court

TaxesLast week the California Supreme Court agreed to hear a case that could determine whether the right to vote on local taxes, which is constitutionally guaranteed by both Propositions 13 and 218, will cease to exist.

The case, California Cannabis Coalition v. City of Upland, at first glance seems limited to a narrow technical question: When a local initiative seeks to impose a new tax, does the issue need to be put to the voters at the next general election or can the proponents, relying on other laws, force a special election? But in answering that question, the lower court ruled that taxes proposed by initiative are exempt from the taxpayer protections contained in the state constitution, such as the provision dictating the timing of the election.

The Howard Jarvis Taxpayers Association (HJTA), which filed the petition seeking Supreme Court review, was alarmed because the constitution’s taxpayer protections include the right to vote on taxes. If local initiatives are exempt from those protections, then public agencies could easily deny taxpayers their right to vote on taxes by colluding with outside interests to propose taxes in the form of an initiative, then adopting the initiative without an election.

The import of the case was not lost on those who dislike Proposition 13’s requirement that local special taxes – those imposed for specific purposes – receive a two-thirds vote of the local electorate. For example, backers of a tax to subsidize a new sports arena in San Diego were hoping that the lower court ruling would allow them to impose a special tax with only a simple majority vote.

Some legal scholars suggested that the lower court decision was not as far-reaching as feared by HJTA. But the fact that the Supreme Court granted review, which it does in only a fraction of cases it receives, validates the concern about the potential scope of the lower court ruling.

By way of background, the case began when the California Cannabis Coalition (CCC) circulated an initiative petition to legalize medical marijuana dispensaries in the City of Upland. The initiative requires each dispensary to pay the City an annual $75,000 tax. CCC collected enough signatures to qualify for a special election. But a provision of Proposition 218, the Right to Vote on Taxes Act, part of the California Constitution approved by voters in 1996, requires tax proposals to be presented at a general election for city council candidates. (This forces candidates to identify for or against the tax, which helps voters choose the taxpayer-friendly candidates.)

The Court of Appeal ruled that taxes proposed by a local initiative are not subject to Proposition 218. The ruling, however, was not limited to Proposition 218’s election date requirement. The Court said taxes proposed by initiative are exempt from all of 218.

HJTA, having sponsored Proposition 218, was so concerned by the decision, it offered to represent the City of Upland at no cost to take the case to California’s highest court. It was HJTA’s petition on behalf of the City of Upland that was granted.

Taxpayers of all stripes and interests will be watching this case very closely. California is already a hostile place for taxpayers so losing the right to vote on local taxes would simply be adding to the pain.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by HJTA.org