San Francisco  Babies & Families Fund (Prop C) Upheld in Court

Judge Ethan Schulman of the San Francisco Superior Court rejected all of the arguments that the Howard Jarvis Taxpayers Association and various business groups made to challenge the validity of Proposition C, the city’s Early Care and Education initiative.  In the decision issued on July 5, 2019, Judge Schulman found that Proposition C was a valid citizens’ initiative, and that neither the City Charter nor the California Constitution required a two-thirds vote for its passage.  A citizens’ initiative to enact a special tax needs a simple majority to pass.

This is the first time that a trial court has addressed the question of what is the proper vote margin for a citizen’s initiative since the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland (2017) 3 Cal. 5th 924. That decision held that other procedural limits on a local government’s ability to adopt a special tax did not apply to citizens’ initiatives.

The Court first found that the City Charter does not require a two-thirds majority vote to pass an initiative.  The Charter limits the subject matters that the Board of Supervisors or the electorate can act on, but does not place procedurallimits on the power of voters to raise taxes by initiative petition. The Court noted that this argument had already been rejected in the California Cannabis decision.

The Court next looked to the language of Proposition 218, which requires a two-thirds vote margin to approve actions by “local government” to enact a special tax. The term “local government” was clearly defined and did not include the voters. The citizens’ initiative, which is at the core of our state constitutional democracy, must be interpreted broadly and Proposition 218 did not contain any language specifically applying the two-thirds majority requirement to citizens’ initiatives.

Nor was the Court persuaded that because Supervisor Yee was also the proponent of the measure, this was truly a tax by local government. The Court pointed to the different procedures under the state Election Code when a legislative body, such as the Board of Supervisors, adopts a measure, compared to the process of getting a citizens’ initiative on the ballot. The Court cited several examples of local and state legislators taking a position, or being the proponent of, a ballot measure, without that converting a citizens’ initiative to a legislative one.  Finally, the Court expressed strong disapproval of HJTA’s “intemperate political rhetoric, which has no place in contested litigation involving important issues. A lawsuit is not a political campaign.”

Everyone in our city benefits when all kids and families are supported with child care and preschool. Now that Judge Schulman has upheld our democratic process and rejected the effort by businesses to avoid paying their fair share, our community will be stronger.

Voters approved Prop C and created the Babies and Families Fund in San Francisco in June 2018. The fund provides child care and preschool to all children in families who earn 200% of the Area Median Income or less. It will also fund coordinated developmental services for children under 6 years old, and better wages for child care professionals. The City anticipates revenues from Prop C to be about $100 million each year.

To read the full decision and order, click here.