Filed 6/29/20
                       CERTIFIED FOR PUBLICATION

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         FIRST APPELLATE DISTRICT

                                    DIVISION TWO


 HOWARD JARVIS TAXPAYERS
 ASSOCIATION et al.,
         Plaintiffs and Appellants,                A157598

 v.                                                (San Francisco County
 BAY AREA TOLL AUTHORITY et al.,                    Super. Ct. No. CGC18567860)
         Defendants and Respondents.

 RANDALL WHITNEY,
         Plaintiff and Appellant,                  A157972
 v.
                                                   (San Francisco County
 METROPOLITAN TRANSPORTATION
                                                    Super. Ct. No. CPF18516276)
 COMMISSION,
         Defendant and Respondent.

       These consolidated appeals challenge a toll increase for seven Bay Area
bridges that was submitted to the voters as Regional Measure 3 in 2018, and
approved by a 55 percent majority. Revenue from the toll increase is to be
applied toward various designated highway and public transit improvement
projects and programs. Appellants contend that most of the revenue will not
be used for the benefit of those who use the bridges and pay the toll but
rather for the benefit of those who use other means of transportation. For
this reason, they maintain the toll increase is a tax for which the California
Constitution requires a two-thirds majority vote, and therefore is invalid.



                                         1
The trial court granted motions for judgment on the pleadings in favor of
respondents. We affirm.
                               BACKGROUND
      Respondent Metropolitan Transportation Commission (MTC) is a “local
area planning agency” created by the Legislature “to provide comprehensive
regional transportation planning for the region comprised of the City and
County of San Francisco and the Counties of Alameda, Contra Costa, Marin,
Napa, San Mateo, Santa Clara, Solano, and Sonoma.” (Gov. Code, § 66502.)
Respondent Bay Area Toll Authority (BATA) is a “public instrumentality
governed by the same board as that governing” the MTC, but “a separate
entity from” the MTC. (Sts. & Hy. Code, § 30950.) 1 BATA “is responsible for
the administration of all toll revenues from state-owned toll bridges within
the geographic jurisdiction of” the MTC. (§ 30950.2, subd. (a).)
      In 2017, the Legislature passed Senate Bill No. 595 (Sen. Bill 595) by
margins of 67 percent in the Senate and 54 percent in the Assembly. The bill
stated the Legislature’s intent “to require the Metropolitan Transportation
Commission to place on the ballot a measure authorizing the voters to
approve an expenditure plan to improve mobility and enhance travel options
on the bridges and bridge corridors to be paid for by an increase in the toll
rate on the seven state-owned bridges within its jurisdiction.” (Stats. 2017,
Sen. Bill 595 (2017–2018 Reg. Sess.), ch. 650, § 1.) Senate Bill 595 enacted
statutes directing the Board of Supervisors for the City and County of San
Francisco and Counties of Alameda, Contra Costa, Marin, Napa, San Mateo,
Santa Clara, Solano, and Sonoma to call a special election at which a
proposed toll increase for the seven state-owned Bay Area bridges would be


      1Further statutory references will be to the Streets and Highways
Code except as otherwise specified.


                                       2
submitted to the voters as “Regional Measure 3” (RM3). (§ 30923, subds. (a),
(b) & (c).) 2 BATA was directed to “select an amount of the proposed increase
in the toll rate, not to exceed three dollars” and “determine the ballot
question, which shall include the amount of the proposed toll increase
selected pursuant to subdivision (a) and a summary of the Regional Measure
3 expenditure plan.” (§ 30923, subd. (c)(2).) The “Regional Measure 3
expenditure plan,” set forth in section 30914.7, described 35 specific projects
and programs for improvements to highways and public transportation that
“have been determined to reduce congestion or to make improvements to


      2   These subdivisions of section 30923 provide:
       “(a) For purposes of the special election to be conducted pursuant to
this section, the authority shall select an amount of the proposed increase in
the toll rate, not to exceed three dollars ($3), for vehicles crossing the bridges
described in Section 30910 to be placed on the ballot for approval by the
voters.
      “(b) The toll rate for vehicles crossing the bridges described in Section
30910 shall not be increased by the rate selected by the authority pursuant to
subdivision (a) prior to the availability of the results of a special election to be
held in the City and County of San Francisco and the Counties of Alameda,
Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma to
determine whether the residents of those counties and of the City and County
of San Francisco approve the toll increase.
       “(c)(1) Notwithstanding any provision of the Elections Code, the Board
of Supervisors of the City and County of San Francisco and of each of the
counties described in subdivision (b) shall call a special election to be
conducted in the City and County of San Francisco and in each of the
counties that shall be consolidated with a statewide primary or general
election, which shall be selected by the authority.
      “(2) The authority shall determine the ballot question, which shall
include the amount of the proposed toll increase selected pursuant to
subdivision (a) and a summary of the Regional Measure 3 expenditure plan.
The ballot question shall be submitted to the voters as Regional Measure 3
and stated separately in the ballot from state and local measures.”


                                         3
travel in the toll bridge corridors,” to be funded by toll bridge revenues in an
amount specified for each of the lists projects and programs. (§ 30914.7.)
      On January 24, 2018, BATA adopted Resolution No. 123, calling for the
counties to place RM3 on the ballot for the June 5, 2018, election. The ballot
question posed in RM3 was as follows: “BAY AREA TRAFFIC RELIEF
PLAN. Shall voters authorize a plan to reduce auto and truck traffic, relieve
crowding on BART, unclog freeway bottlenecks, and improve bus, ferry,
BART and commuter rail service as specified in the plan in this voter
pamphlet, with a $1 toll increase effective in 2019, a $1 increase in 2022, and
a $1 increase in 2025, on all Bay Area toll bridges except the Golden Gate
Bridge, with independent oversight of all funds?” On June 5, 2018, voters
approved RM3 by a 55 percent margin (<https://mtc.ca.gov/our-work/fund-
invest/toll-funded-investments/reginional-measure-3> [as of 6/29/20]). 3
      Appellants Howard Jarvis Taxpayers Association (HJTA) and three
named individuals filed a complaint against BATA and the California
Legislature, seeking to invalidate the toll increases. The first cause of action
alleged the toll increase was a tax that Senate Bill 595 “authoriz[ed] BATA to
impose” and both Senate Bill 595 and the toll increase were invalid due to
failure to comply with article XIII A, section 3, subdivision (a), of the
California Constitution: “Any change in state statute which results in any
taxpayer paying a higher tax must be imposed by an act passed by not less
than two-thirds of all members elected to each of the two houses of the



      3 Appellants ask us to take judicial notice of BATA’s Resolution No. 123
(calling for the special election) and Resolution No. 126 (confirming receipt
and acceptance of the election results), and we do so. We additionally take
judicial notice of the statutes attached as exhibits 3, 4, and 5 to appellants’
request for judicial notice, and the table published on MTC’s website attached
as exhibit 3 to the request for judicial notice.


                                        4
Legislature.” (Cal. Const., art. XIII A, § 3, subd. (a).) 4 The second cause of
action alleged the toll was a local tax imposed by BATA, and was invalid for
failure to comply with article XIII C, § 2, subdivision (d): “No local
government may impose, extend, or increase any special tax unless and until
that tax is submitted to the electorate and approved by a two-thirds vote.”
      Separately, respondent Randall Whitney filed a lawsuit against MTC
alleging Senate Bill 595 and RM3 were unconstitutional for failure to comply
with the two-thirds vote requirement of article XIII C.
      BATA and the Legislature each moved for judgment on the pleadings
against the HJTA complaint on the basis that the bridge toll increase was
imposed by the Legislature in Senate Bill 595, with certain aspects of
implementation delegated to BATA, and was not a tax as defined by the
California Constitution, but rather a charge for entrance to and use of state-
owned property (art. XIII A, § 3). These motions were granted without leave
to amend. As to the first cause of action, the court held the Legislature “met
its burden to show the applicability of the exception for ‘entrance to or use of
state property’ from the general definition of ‘tax’ in article XIII A, section
3(b)(4),” and therefore the toll increase was not a tax subject to the two-thirds
vote requirement. The court granted BATA’s motion as to the second cause of
action because the definition of tax in article XIII C applies only to local
governments and the toll increase was imposed by the Legislature, with
BATA “charged with implementing that state mandate.”
      MTC also moved for judgment on the pleadings, arguing it was not a
proper defendant because the Legislature, not MTC, enacted Senate Bill 595
and mandated the special election seeking voter approval for the increased


      4Unspecified references to “article” will refer to the California
Constitution.


                                         5
tolls. The trial court granted this motion, too, without leave to amend,
because the Legislature imposed the toll increase and MTC’s responsibility
“merely consists of overseeing transportation projects funded by the bridge
toll revenues after they are collected and preparing a summary of the
expenditure plan under Regional Measure 3.” The court noted that Whitney’s
“conflation of [MTC] with” BATA did not help his argument because BATA
had only limited areas of discretion and was “required to carry out the
increase enacted by the Legislature.”
      HJTA and Whitney each appealed. Whitney, who had represented
himself in the trial court, substituted HJTA’s counsel for the appeal. We
granted appellants’ unopposed motion to consolidate the appeals.
                                 DISCUSSION
      “ ‘A judgment on the pleadings in favor of the defendant is appropriate
when the complaint fails to allege facts sufficient to state a cause of action.
(Code Civ. Proc., § 438, subd. (c)(3)(B)(ii).) A motion for judgment on the
pleadings is equivalent to a demurrer and is governed by the same de novo
standard of review.’ (Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th
667, 672.) ‘All properly pleaded, material facts are deemed true, but not
contentions, deductions, or conclusions of fact or law. . . .’ (Ibid.) Courts may
consider judicially noticeable matters in the motion as well. (Ibid.)” (People
ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777.)
      Appellants argue that the toll increase at issue here is a tax, and is
invalid because Senate Bill 595 was not approved by a two-thirds majority of
the Legislature and RM3 was not approved by a two-thirds majority of the
electorate. Pursuant to article XIII A, section 3, subdivision (a), “[a]ny
change in state statute which results in any taxpayer paying a higher tax
must be imposed by an act passed by not less than two-thirds of all members



                                        6
elected to each of the two houses of the Legislature . . . .” 5 Article XIII C,
section 2, requires that all tax increases imposed by local governments be
approved by the voters. 6 A “general tax”—“any tax imposed for general
governmental purposes”—may be approved by a majority vote. (Art. XIII C,
§ 3, subd. (b).) A “special tax”—one imposed “for specific purposes” or by
“special purpose districts or agencies”—requires approval by a two-thirds
vote. (Art. XIII C, §§ 2, subd. (a), 3, subd. (d).)
      Appellants’ case turns on the definition of “tax” in the California
Constitution, which in turn depends on whether the increase was imposed by
the Legislature (art. XIII A, § 3, subd. (b)) or by local government (art. XIII C,
§ 1, subd. (e)). Under article XIII A, section 3, subdivision (b), “ ‘tax’ means

      5 “Article XIII A was enacted by the voters in 1978 and is commonly
referred to as Proposition 13. It is comprised of four major elements, a real
property tax rate limitation (§ 1), a real property assessment limitation (§ 2),
a restriction on state taxes (§ 3) and a restriction on local taxes (§ 4).
(Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization
(1978) 22 Cal.3d 208, 231.) These four elements form an interlocking
package deemed necessary by the initiative’s framers to assure effective real
property tax relief. (Ibid.)” (Brydon v. East Bay Mun. Utility Dist. (1994) 24
Cal.App.4th 178, 187.)
      6 Article XIII C was adopted by the voters in 1996 as part of Proposition
218. “The initiative measure’s findings and declaration of purpose stated:
‘The people of the State of California hereby find and declare that Proposition
13 was intended to provide effective tax relief and to require voter approval of
tax increases. However, local governments have subjected taxpayers to
excessive tax, assessment, fee and charge increases that not only frustrate
the purposes of voter approval for tax increases, but also threaten the
economic security of all Californians and the California economy itself. This
measure protects taxpayers by limiting the methods by which local
governments exact revenue from taxpayers without their consent.’ (Ballot
Pamp., Gen. Elec. (Nov. 5, 1996) text of Prop. 218, § 2, p. 108, see Historical
Notes, 2A West’s Ann. Cal. Const. (2013 supp.) foll. art. XIII C, § 1, p. 171.)”
(Schmeer v. County of Los Angeles (2013) 213 Cal.App.4th 1310, 1320
(Schmeer).)


                                          7
any levy, charge, or exaction of any kind imposed by the State, except” five
enumerated exceptions. Article XIII C, section 1, subdivision (e), defines
“tax” as “any levy, charge, or exaction of any kind imposed by a local
government, except” seven enumerated exceptions. Accordingly, we must
first determine whether the toll increase was imposed by the Legislature, as
the trial court found, or by BATA, as appellants maintain, and then
determine whether the increase was in fact a “tax” within the applicable
definition. 7



      7 Respondents argue that appellants waived the issue of which entity
imposed the toll increase by failing to object to the trial court’s tentative
decision on this point. As reflected in the reporter’s transcript of the hearing
after the trial court issued its tentative decision finding the Legislature
imposed the increase, appellants’ counsel told the court, “we’re not
challenging the court’s decision that the toll increase was imposed by the
State. It was not imposed by [BATA], so I imagine that excuses [BATA] from
the case, and we won’t need to hear from [counsel for BATA].”
       Appellants maintain they challenged the tentative ruling only as to the
issue of whether the toll increase was a tax because counsel did not believe he
could change the court’s mind about which entity imposed the toll increase.
They argue they did not have an opportunity to review the reporter’s
transcript before it was finalized, and the transcript is inaccurate in that the
italicized language quoted above should have read “for today.” As evidence
appellant’s attorney did not have an opportunity to review the transcript,
appellants point out that his name is spelled incorrectly throughout the
transcript, as “Biddle” rather than “Bittle.”
      We will give appellants the benefit of the doubt. If appellants had not
challenged the tentative ruling at all, they could have appealed all the issues
decided by the trial court. “Submission on a tentative ruling is neutral; it
conveys neither agreement nor disagreement with the analysis.” (Mundy v.
Lenc (2012) 203 Cal.App.4th 1401, 1406.) Absent the challenged reference to
BATA being excused “from the case,” appellants’ attorney’s remarks are
easily read as stating acceptance of the court’s ruling that the Legislature
imposed the toll increase for purposes of the hearing on objections to the
tentative ruling, not a concession that the tentative ruling was correct on that

                                       8
                                         I.
      Arguing that the toll increase was imposed by BATA, appellants
maintain that Senate Bill 595 was not self-executing, contrasting it with a
toll increase imposed in 1997 to fund seismic retrofitting. Section 31010,
subdivision (a), enacted by Senate Bill No. 60 in 1997, provides, “There is
hereby imposed a seismic retrofit surcharge equal to one dollar ($1) per
vehicle for passage on the bay area bridges, except for vehicles that are
authorized toll-free passage on these bridges.” (Italics added.) Appellants
emphasize that Senate Bill 595 does not contain the italicized language,
describing the legislation as instead having “granted authority to BATA to
propose a toll” conditioned on voter approval (§ 30923, subd. (b)), 8 and
maintaining that if BATA took no action or the voters rejected the measure,
there would have been no toll increase.
      The language of Senate Bill 595 belies appellants’ characterization of it
as having simply delegated authority to BATA to decide whether to impose a
toll increase.
      Preliminarily, the Legislature’s findings and declarations in section 1 of
Senate Bill 595 include the statement, “[t]o improve the quality of life and
sustain the economy of the San Francisco Bay area, it is the intent of the
Legislature to require the Metropolitan Transportation Commission to place


point. In any event, the issue is a question of law, which this court can and
will decide.
      8 “The toll rate for vehicles crossing the bridges described in Section
30910 shall not be increased by the rate selected by the authority pursuant to
subdivision (a) prior to the availability of the results of a special election to be
held in the City and County of San Francisco and the Counties of Alameda,
Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma to
determine whether the residents of those counties and of the City and County
of San Francisco approve the toll increase.” (§ 30923, subd. (b).)


                                         9
on the ballot a measure authorizing the voters to approve an expenditure
plan to improve mobility and enhance travel options on the bridges and
bridge corridors to be paid for by an increase in the toll rate on the seven
state-owned bridges within its jurisdiction.” (Stats. 2017, ch. 650, § 1,
subd. (m).)
      Senate Bill 595 added section 30923, which required the board of
supervisors in each of the specified Bay Area counties to call a special
election: “Notwithstanding any provision of the Elections Code, the Board of
Supervisors of the City and County of San Francisco and of each of the
counties described in subdivision (b) shall call a special election to be
conducted in the City and County of San Francisco and in each of the
counties that shall be consolidated with a statewide primary or general
election, which shall be selected by [BATA].” (§ 30923, subd. (c)(1), italics
added.) 9
      Senate Bill 595 required BATA to select the amount of the toll increase
to be proposed, up to the $3 maximum set by the Legislature, and to submit
the proposed increase to the voters together with the expenditure plan
specified by the Legislature: “For purposes of the special election to be
conducted pursuant to this section, [BATA] shall select an amount of the
proposed increase in the toll rate, not to exceed three dollars ($3) . . . .”
(§ 30923, subd. (a), italics added.) “[BATA] shall determine the ballot
question, which shall include the amount of the proposed toll increase
selected pursuant to subdivision (a) and a summary of the Regional Measure

      9The counties listed in subdivision (b) of section 30923 are San
Francisco, Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara,
Solano, and Sonoma.
     The text of Senate Bill 595 and statutes refer to the “ ‘Authority,’ ”
which is defined as BATA. (§ 30910.5.)


                                         10
3 expenditure plan.” (§ 30923, subd. (c)(2).) Senate Bill 595 amended section
30916, which sets forth the base toll rates for state-owned bridges within
MTC’s jurisdiction, by adding a new subdivision (c)(1): “If the voters approve
a toll increase, pursuant to Section 30923, [BATA] shall increase the base toll
rate for vehicles crossing the bridges described in subdivision (a) from the toll
rates then in effect by the amount approved by the voters pursuant to Section
30923.” (§ 30916, subd. (c)(1), italics added.)
      These provisions impose mandatory obligations upon BATA; nothing in
Senate Bill 595 indicates the Legislature merely authorized BATA to impose
a toll increase, or that BATA had any power to choose not to place a proposed
toll increase on the ballot or to not implement a toll increase approved by the
voters. Consistent with BATA’s role as the entity “responsible for the
administration of all toll revenues from state-owned toll bridges within the
geographic jurisdiction of the Metropolitan Transportation Commission”
(§ 30950.2, subd. (a)), Senate Bill 595 required imposition of a toll increase of
up to $3, subject to approval by the voters, and specified in great detail the
uses to which the resulting revenue would be put 10 and certain




      10 As indicated above, Senate Bill 595 enumerated the specific projects
and programs to which funds raised by the toll increase were to be applied,
with specific dollar amounts for each listed project or program. (§ 30914.7,
subd. (a).) It further specified a maximum percentage of revenue generated
by the toll increase to be made available annually for operating assistance for
specified public transportation purposes, subject to specified procedures.
(§ 30914.7, subd. (c).)


                                       11
administrative requirements, 11 while leaving some details of the
implementation and administration of the toll increase to BATA. 12
      Appellants point to subdivision (f) of section 30923 as providing that if
the voters approved the toll increase, BATA could adopt it, but was not
required to do so. The subdivision states, “If a majority of all the voters
voting on the question at the special election do not approve the toll increase,
the authority may by resolution resubmit the measure to the voters at a
subsequent statewide primary or general election. If a majority of all of the
voters vote affirmatively on the measure, the authority may adopt the toll
increase and establish its effective date and establish the completion dates



      11For example, BATA “shall reimburse each county and city and county
participating in the election for the incremental cost of submitting the
measure to the voters” from toll revenues (§ 30923, subd. (g)(2)); if the toll
increase is approved by the voters, BATA “shall establish an independent
oversight committee within six months of the effective date of the toll
increase to ensure that any toll revenues generated pursuant to this section
are expended consistent with the applicable requirements set forth in Section
30914.7,” with specified requirements for the representatives to and
responsibilities of this committee (§ 30923, subd. (h)(1)); if the toll increase is
approved by the voters, BATA “shall annually prepare a report to the
Legislature . . . on the status of the projects and programs funded pursuant to
Section 30914.7” (§ 30923, subd. (i)); BATA “shall” proportionately adjust the
funding assigned to each project and program if it selected a toll increase less
than the maximum $3 (§ 30914.7, subd. (b)).
      12 For example, BATA “shall select an amount of the proposed increase
in the toll rate, not to exceed three dollars ($3)” (§ 30923, subd. (a)); BATA
“shall determine the ballot question,” although that question “shall include
the amount of the proposed toll increase selected pursuant to subdivision (a)
and a summary of the Regional Measure 3 expenditure plan” and “shall be
submitted to the voters as Regional Measure 3 and stated separately in the
ballot from state and local measures” (§ 30923, subd. (c)(2)); if the increase is
approved by the voters, BATA “may phase in the increased toll schedule
consistent with subdivision (c) of Section 30916” (§ 30923, subd. (e)).


                                        12
for all reports and studies required by Sections 30914.7 and 30950.3.”
(§ 30923, subd. (f), italics added.)
      Appellants read the second sentence of subdivision (f) out of context.
As described above, section 30916, subdivision (c)(1), requires BATA to
increase the toll discussed in section 30923 if the increase is approved by the
voters: “If the voters approve a toll increase, pursuant to Section 30923,
[BATA] shall increase the base toll rate for vehicles crossing the bridges
described in subdivision (a) from the toll rates then in effect by the amount
approved by the voters pursuant to Section 30923.” (§ 30916, subd. (c)(1),
italics added.) Appellants’ interpretation of section 30923, subdivision (f),
ignores and directly conflicts with section 30916, subdivision (c)(1).
      Under established rules of statutory construction, “ ‘statutes or
statutory sections relating to the same subject must be harmonized, both
internally and with each other, to the extent possible.’ (Dyna–Med, Inc. v.
Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386–1387.)”
(McCarther v. Pacific Telesis Group (2010) 48 Cal.4th 104, 110.) Subdivision
(f) of section 30923 begins with the scenario in which the proposed toll
increase does not garner a majority vote of the electorate; in this situation,
BATA “may by resolution resubmit the measure to the voters at a subsequent
statewide primary or general election.” The next sentence states, “[i]f a
majority of all of the voters vote affirmatively on the measure, [BATA] may
adopt the toll increase . . . .” The most reasonable interpretation of this
second sentence is that it follows from the first: If the measure initially
submitted to the voters does not pass, BATA “may” resubmit it at a
subsequent election, and if it passes at this subsequent election, BATA “may”
adopt the increase. This interpretation avoids conflict with section 30916,
subdivision (c)(1). If the proposed toll increase section 30923 requires BATA



                                       13
to submit to the voters is approved, section 30916, subdivision (c)(1), requires
BATA to impose it (“shall increase the base toll rate”); if the proposed toll
increase section 30923 requires BATA to submit to the voters is not approved,
BATA has authority to resubmit the measure but is not required to do so
(“may by resolution resubmit”), and if the resubmitted measure passes,
BATA has authority to impose the increase.
      This reading of subdivision (f) is also consistent with the immediately
preceding subdivision of section 30923, which references section 30916.
Section 30923, subdivision (e), provides, “The county clerks shall report the
results of the special election to [BATA]. If a majority of all voters voting on
the question at the special election vote affirmatively, the authority may
phase in the increased toll schedule consistent with subdivision (c) of Section
30916.” This language does not offer BATA the option of not implementing
the approved increase, but allows BATA to implement it in stages. Section
30916, subdivision (c)(1), after stating that BATA “shall” increase the base
toll rate in the amount of the increase approved by the voters, provides that
BATA “may, beginning six months after the election approving the toll
increase, phase in the toll increase over a period of time.”
      Appellants rely upon Howard Jarvis Taxpayers Assn. v. Fresno
Metropolitan Projects Authority (1995) 40 Cal.App.4th 1359 (Fresno), which
they say considered language similar to Senate Bill 595 and concluded the
tax at issue was imposed by the local entity. The legislation at issue was
former Government Code section 68059.7, which provided that the Fresno
Metropolitan Projects Authority (Authority), “subject to the approval of a
majority vote by the voters, may impose a retail transactions and use tax at a
maximum rate of one-tenth of 1 percent under this title.” (Fresno, at
p. 1373.) The statute further directed: “ ‘[T]he authority at the next



                                       14
municipal election, or upon a majority vote of the authority, at any municipal
or countywide election prior to December 31, 1994, shall submit to the voters
within its geographical boundaries the question of whether the authority shall
be authorized to levy and collect transactions and use taxes for the purpose
stated in this title. . . .’ (Italics added.)” (Ibid.)
      Fresno was not concerned with any question about which governmental
entity imposed the tax at issue. The problem in that case was that the
Authority was held to be a private body because 11 of its 13 members were
chosen “by private entities who have no public accountability.” (Fresno,
supra, 40 Cal.App.4th at p. 1388.) Accordingly, the court held the
Legislature’s delegation to the Authority of the power to levy a tax violated
the state Constitution’s proscription against such delegation to a private
entity. (Fresno, at p. 1362; Cal. Const., art. XI, § 11, subd. (a).)
      There was no suggestion in Fresno that the Legislature itself imposed
the tax at issue. 13 The question the Legislature required to be submitted to
the voters was not whether the specified tax should be imposed but
“ ‘whether the authority shall be authorized to levy and collect transactions
and use taxes for the purpose stated in this title.’ ” (Fresno, supra, 40
Cal.App.4th at p. 1373.) The Legislature authorized the Authority to impose
the tax (“may impose”), subject to the voters’ approval of the tax and of the
Authority’s authority to levy and collect such taxes. (Fresno, at p. 1373.) The
issues addressed in that case are entirely different from those before us.
      Appellants view section 30923, subdivision (j), as evidence the toll
increase was imposed by BATA, not the Legislature. Section 30923,
subdivision (j) states that, with specified exceptions, “the toll increase


       The court rejected the suggestion that the voters levied the tax upon
      13

themselves. (Fresno, supra, 40 Cal.App.4th at pp. 1363, 1373–1374.)


                                           15
adopted by [BATA] pursuant to this section shall not be changed without
statutory authorization by the Legislature.” Appellants emphasize the
language “adopted by [BATA],” having previously stated that the California
Supreme Court has said “[w]hen article XIII C uses the term ‘impose’ it
means ‘adopt’ or ‘enact.’ (California Cannabis Coalition v. City of Upland
(2017) 3 Cal.5th 924, 944.)” California Cannabis Coalition discussed the
terms “impose” and “enact” being used interchangeably in the context of
rejecting an argument that “impose” includes collection of taxes. (Id. at
p. 944.) The opinion did not specifically address the meaning of “adopt.”
       “Enact” is defined by the Merriam Webster Dictionary as “to establish
by legal and authoritative act” (<merriam-webster.com/dictionary/enact> [as
of 6/29/20]). “Impose” is defined as “to establish or apply by authority”
(<merriam-webster.com/dictionary/impose> [as of 6/29/20]). By contrast,
“adopt” is defined as “to take up and practice or use” and “to accept formally
and put into effect” (<merriam-webster.com/dictionary/adopt> [as of
6/29/20]). 14
       Read in context, subdivision (j) of section 30923 clearly uses “adopted”
in the sense of “accept formally and put into effect” rather than “enact” or
“impose.” Subdivision (j) refers to the toll increase “adopted by the authority
pursuant to this section.” Section 30923 requires BATA to select (“shall
select”) an amount not to exceed $3 (§ 30923, subd. (a)), and to submit (“shall



       14Black’s Law Dictionary defines these terms similarly. “Enact” means
“[t]o establish by law; to perform or effect; to decree” (<freelawdictionary.org/
?s=enact> [as of 6/29/20]); “impose” means “to place a tax or a levy or a
burden on a person” (<freelawdictionary.org/?s=impose> [as of 6/29/20]); and
“adopt” means “[t]o accept, appropriate, choose, or select” and “[t]o accept,
consent to, and put into effective operation” (<the freelawdictionary.org/
adopt/> [as of 6/29/20]).


                                       16
submit”) that amount to the voters in a special election as a proposed toll
increase (§ 30923, subd. (c)(1)), and prohibits BATA (“shall not”) from
increasing the toll prior to approval by the voters (§ 30923, subd. (b)); once so
“adopted,” the toll increase “shall not” be changed without statutory
authorization (§ 30923, subd. (j)). Following the steps described in section
30923, BATA did not enact the toll increase; it implemented the toll increase
the Legislature enacted and made conditional upon approval by the voters—
consistent with BATA’s statutory responsibility for “administration of all toll
revenues from state-owned toll bridges” within MTC’s jurisdiction.
(§ 30950.2, subd. (a).)
      Appellants find proof the toll increase was imposed by BATA, not the
Legislature, in Schmeer, supra, 213 Cal.App.4th at pages 1326–1329, which
they describe as holding that “a tax is ‘imposed’ by a governmental entity if it
is paid to that entity or remitted to that entity.” Here, appellants urge,
revenue from the toll increase is collected by BATA, deposited into BATA’s
account, and spent by BATA, with oversight by a committee established by
BATA rather than oversight by the state. (§§ 30911, 30914.7, subd. (a),
30923, subd. (h).)
      Schmeer involved a county ordinance prohibiting retail stores from
providing plastic carryout bags and requiring stores to charge 10 cents for
each paper bag provided to a customer. The ordinance was challenged as a
tax imposed without the voter approval required by article XIII C, section 2.
Schmeer held the paper bag charge was not a tax because it was payable to
and retained by the retail store, was not remitted to the county, and raised no
revenue for the county. (Schmeer, supra, 213 Cal.App.4th at p. 1329.)
      The situation in the present case is completely different. Pursuant to
section 30911, subdivision (a), BATA must maintain accounts “necessary and



                                       17
appropriate to document toll revenue and operating expenditures in
accordance with generally accepted accounting principles.” Section 30911
describes the order in which BATA must direct revenue to projects and
programs specified in enumerated statutes. (§ 30911, subd. (b)(1).) The
“independent oversight committee” Senate Bill 595 requires BATA to
establish, which must include two representatives from each county within
the jurisdiction of the MTC, is required to “ensure that any toll revenues
generated pursuant to this section are expended consistent with the
applicable requirements set forth in Section 30914.7,” and to annually
“review the expenditure of funds by [BATA] for the projects and programs
specified in Section 30914.7” and report its findings “to the transportation
committee of each house of the Legislature.” (§ 30923, subd. (h)(2).) Unlike
the situation in Schmeer, there is no question that the toll increase revenues
are remitted to a governmental entity. Again, the role assigned to BATA
with respect to the revenue generated pursuant to Senate Bill 595 is
consistent with BATA’s statutory role as the administrative arm of the state
responsible for implementing the toll increase imposed by the Legislature
according to the detailed parameters set by the Legislature.
      Appellants contend the fact that Senate Bill 595 required an election
before the toll increase could be imposed is proof the Legislature did not
impose the increase itself, because it could have imposed the increase without
voter approval. The premise of this argument is faulty. “ ‘[U]nlike the
United States Congress, which possesses only those specific powers delegated
to it by the federal Constitution, it is well established that the California
Legislature possesses plenary legislative authority except as specifically
limited by the California Constitution.’ ([Marine Forests Society v. California
Coastal Com. (2005) 36 Cal.4th 1, 31.) Lying at the core of that plenary



                                        18
authority is the power to enact laws. (California Redevelopment Assn. v.
Matosantos (2011) 53 Cal.4th 231, 254.) It has been said that pursuant to
that authority, ‘[t]he Legislature has the actual power to pass any act it
pleases,’ subject only to those limits that may arise elsewhere in the state or
federal Constitutions. (Nougues v. Douglass (1857) 7 Cal. 65, 70.)” (Howard
Jarvis Taxpayers Assn. v. Padilla (2016) 62 Cal.4th 486, 497–498 (Padilla).)
That the Legislature had the power to enact legislation without submission of
the question to the voters does not preclude the Legislature from choosing to
make the legislation conditional upon voters’ approval. (People ex rel. Graves
v. McFadden (1889) 81 Cal. 489, 495 (Graves) [act to create County of
Orange, conditioned upon assent of two thirds of the electors, not an invalid
delegation of legislative authority].) 15 Appellants identify no constitutional
impediment to the Legislature imposing a regional toll increase conditional
upon approval of the region’s voters. 16

      15 The Graves court, referring to a legal treatise, stated, “No doubt the
Legislature had the power to create a new county without submitting the
question to a vote of the people, as Congress had the power to admit
California into the Union without an enabling act; but as the burdens of the
new local government were to be mainly borne by the people within the
territory, it was, in the language of Mr. Cooley, ‘with propriety referred to the
voters for decision,’ and they were permitted, and by pursuing the course
prescribed by the terms of the act enabled, to assume the position of a county
in the state, and the burdens of a county government, or not, as they should
elect; just as four states were at about the same time permitted and enabled
to assume the position and burdens of states in the Union, or not, as the
people thereof respectively should at the polls decide.” (Graves, supra, 81
Cal. at p. 495.)
      16 Appellants offer Padilla as an example of the Legislature being
“constitutionally authorized” to place a statewide advisory measure on the
ballot “in certain cases,” then argue “this is not one of those cases.” No one
has suggested it is. But as indicated above, Padilla itself reiterates the rule
that the Legislature’s power to enact legislation is limited only by the state
and federal Constitutions. (Padilla, supra, 62 Cal.4th at p. 498.) That

                                       19
      Appellants offer two examples in their reply brief for the proposition
that the Legislature requiring a local agency to hold an election does not
mean the resulting voter-approved proposal was enacted by the Legislature.
First, appellants’ point to the Los Angeles County Flood Control Act (Wat.
Code App., ch. 28, § 28-1 et seq.), which requires the county board of
supervisors, after adopting an engineers’ report on a flood control plan, to call
a special election, submit a bond proposal to the voters with specified
information about the purposes and costs of the proposal. (Id., §§ 28-4, 28-5.)
If approved by the voters, the bonds “shall be issued and sold” and the board
of supervisors “shall levy a tax” each year upon taxable property in the
district sufficient to pay the interest on and portion of the principal of the
bonds to become due. (Id., § 28-10.)
      Quoting Inglewood v. County of Los Angeles (1929) 207 Cal. 697, 698–
699 (Inglewood), appellants state, “Although the ‘Los Angeles County Flood
Control District was created by an act of the Legislature of the State of
California . . . [t]hese special assessments were levied by the county officials
of said County of Los Angeles, acting for and on behalf of the Los Angeles
Flood Control District.’ ” Appellants emphasize that, as with Senate Bill 595,
the Flood Control Act required the local government to determine the amount
of the proposed bonds, call a special election, submit the question to the
voters with specified information and, if approved by the voters, issue the
bonds and levy a tax to cover the payments on the bonds.
      Senate Bill 595, however, differs significantly from the Flood Control
Act at issue in Inglewood. The Flood Control Act expressly directed the local



Senate Bill 595 is not the type of legislation found permissible in Padilla in
no way suggests Senate Bill 595 was not a valid exercise of legislative
authority.


                                        20
governmental entity to “levy” the assessment. There was no question in the
case as to which entity imposed the levy; the statement quoted above was
simply a description of the facts of the case. The disputed issue was whether
certain property in the district was subject to the assessment.
      A grant of authority from the Legislature “is an essential prerequisite
to all local taxation, because local governments have no inherent power to
tax.” (Santa Clara County Local Transportation Authority v. Guardino
(1995) 11 Cal.4th 220, 247–248.) And while the Legislature “may authorize
local governments to impose” taxes for local purposes, it may not impose local
taxes itself. (Santa Clara County Local Transportation Authority, at p. 247;
Cal. Const., art. XIII, § 24.) The Flood Control Act listed among the Flood
Control District’s powers, “ ‘to cause taxes to be levied and collected for the
purpose of paying any obligation of the district in the manner hereinafter
provided.’ ” (Los Angeles County Flood Control Dist. v. Hamilton (1917) 177
Cal. 119, 122; Wat. Code App., ch. 28, § 28-2, subd. 8.) The legislation
creating BATA did not give it authority to levy taxes (Sts. & Hy. Code,
§ 30951), and Inglewood does not help resolve whether the Legislature in
Senate Bill 595 provided BATA with authority to impose the toll increase, or
imposed the toll increase itself, to be implemented by BATA.
      Appellants’ second example is the San Diego County Regional Justice
Facility Financing Act (Act). (Former Gov. Code, § 26250 et seq.) The
Legislature, in recognition of the need for improved courtrooms and jails in
San Diego County, passed this legislation creating the San Diego County
Regional Justice Facility Financing Agency and charging it with adopting a
tax ordinance imposing a supplemental sales tax of one-half of one percent in
order to finance construction of such facilities. (Rider v. County of San Diego
(1991) 1 Cal.4th 1, 5 (Rider).) The legislation “provided for a countywide



                                       21
election held for the purpose of approving the tax ordinance by simple
majority vote” and limited the agency’s tax power to the specified sales tax.
(Rider, at p. 5.) The Act required the agency to adopt a tax in accordance
with former Government Code section 26275, which provided that “[t]he
agency, subject to the approval of the voters, may impose a tax rate of one-
half of 1 percent,” and set maximum for the combined rate of local sales or
transactions and use taxes in the county (former Gov. Code, §§ 26273, 26276).
Appellants state that despite the “state-created agency” being required by the
Legislature “to do all of the same things that BATA and MTC were required
or authorized to do under Senate Bill 595,” the Rider court “deemed the tax
increase a locally-imposed levy.”
      The Rider court did not “deem” the tax increase a locally imposed levy;
the case presented no question as to what entity imposed the tax, and the
court did not address any such question. The issue in Rider was whether the
Legislature created the agency in a deliberate attempt to circumvent the
requirement of article XIII A, section 4, that special taxes imposed by special
districts must be approved by a two-thirds majority of the electorate. 17
Concluding that the record supported the trial court’s “finding of ‘purposeful

      17 Article XIII A, section 4, provides: “Cities, Counties and special
districts, by a two-thirds vote of the qualified electors of such district, may
impose special taxes on such district, except ad valorem taxes on real
property or a transaction tax or sales tax on the sale of real property within
such City, County or special district.” In Los Angeles County Transportation
Com. v. Richmond (1982) 31 Cal.3d 197, 205–207 (Richmond)), the California
Supreme Court held that the “special districts” to which this constitutional
requirement applies are only those “which have the power to levy a tax on
real property.” The dissent in that case predicted this holding would lead to
efforts to avoid the constitutional supermajority requirement by having the
Legislature create special districts without power to impose property taxes.
(Richmond, at p. 213, diss. opn. of Richardson, J.) This was the problem
confronted in Rider. (Rider, supra, 1 Cal.4th at p. 8.)


                                       22
circumvention’ ” and that the framers of article XIII A, section 4, and voters
who adopted it would not have intended to adopt a definition of special
district “that could so readily permit circumvention of section 4,” Rider held
that “special district” includes “any local taxing agency created to raise funds
for city or county purposes to replace revenues lost by reason of the
restrictions of Proposition 13.” (Rider, supra, 1 Cal.4th at p. 11.) Rider held
the tax invalid because it had not been approved by two-thirds of the
electorate.
      Appellants’ reliance upon Inglewood and Rider as support for finding
BATA imposed the toll increase in the present case is misplaced. Neither
addressed any question as to whether the taxes at issue in those cases were
imposed by the Legislature or by the local governmental entity.
      We agree with the trial court that the Legislature, not BATA, imposed
the toll increase in Senate Bill 595.
                                        II.
      As indicated above, section 3, subdivision (a), of article XIII A provides
that “[a]ny change in state statute which results in any taxpayer paying a
higher tax must be imposed by an act passed by not less than two-thirds of all
members elected to each of the two houses of the Legislature, except that no
new ad valorem taxes on real property, or sales or transaction taxes on the
sales of real property may be imposed.”
      Section 3, subdivision (b), of article XIII A, adopted by Proposition 26 in
2010, provides the applicable definition of “tax”:
      “As used in this section, ‘tax’ means any levy, charge, or exaction of any
kind imposed by the State, except the following:
      “(1) A charge imposed for a specific benefit conferred or privilege
granted directly to the payor that is not provided to those not charged, and



                                        23
which does not exceed the reasonable costs to the State of conferring the
benefit or granting the privilege to the payor.
      “(2) A charge imposed for a specific government service or product
provided directly to the payor that is not provided to those not charged, and
which does not exceed the reasonable costs to the State of providing the
service or product to the payor.
      “(3) A charge imposed for the reasonable regulatory costs to the State
incident to issuing licenses and permits, performing investigations,
inspections, and audits, enforcing agricultural marketing orders, and the
administrative enforcement and adjudication thereof.
      “(4) A charge imposed for entrance to or use of state property, or the
purchase, rental, or lease of state property, except charges governed by
Section 15 of Article XI [allocation of vehicle license fees].
      “(5) A fine, penalty, or other monetary charge imposed by the judicial
branch of government or the State, as a result of a violation of law.” (Art.
XIII A, § 3, subd. (b).)
      Section 3, subdivision (d), of article XIII A provides, “The State bears
the burden of proving by a preponderance of the evidence that a levy, charge,
or other exaction is not a tax, that the amount is no more than necessary to
cover the reasonable costs of the governmental activity, and that the manner
in which those costs are allocated to a payor bear a fair or reasonable
relationship to the payor's burdens on, or benefits received from, the
governmental activity.”
      Prior to the adoption of Proposition 26, “case law distinguish[ed]
between taxes subject to the requirements of article XIII A, . . . on the one
hand, and regulatory and other fees, on the other.” (City of
San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191,



                                        24
1210 (City of San Buenaventura).) As the Supreme Court has described this
distinction, “ ‘[i]n general, taxes are imposed for revenue purposes, rather
than in return for a specific benefit conferred or privilege granted.’ ” (Ibid.,
quoting Sinclair Paint Co. v. State Bd. of Equalization (1997) 15 Cal.4th 866,
874.) Accordingly, “a fee does not become a tax subject to article XIII A
unless it ‘ “ ‘exceed[s] the reasonable cost of providing services . . . for which
the fee is charged’ ” ’ ” and “ ‘ “the basis for determining the manner in which
the costs are apportioned” ’ should demonstrate that ‘ “charges allocated to a
payor bear a fair or reasonable relationship to the payor’s burdens on or
benefits from the regulatory activity.” ’ ” (City of San Buenaventura, at
p. 1210, quoting Sinclair Paint Co., at pp. 876, 878.)
      Proposition 26, which “expanded the definition of taxes so as to include
fees and charges, with specified exceptions,” was an “effort to close perceived
loopholes” in prior efforts to restrict taxation. (Schmeer, supra, 213
Cal.App.4th at p. 1322; California Building Industry Assn. v. State Water
Resources Control Bd. (2018) 4 Cal.5th 1032, 1047.) Proposition 26
“addressed the problem of state and local governments disguising taxes as
fees, with the burden on the government to prove that the so-called fee is not
in fact a tax.” (Johnson v. County of Mendocino (2018) 25 Cal.App.5th 1017,
1033.)
      The trial court concluded the toll increase is not a tax because it is a
“charge imposed for entrance to or use of state property” under the exception
stated in paragraph (4) of article XIII A, section 3, subdivision (b) (“exception
4”). The court further concluded that the reasonable cost requirement of
article XIII A, subdivision (d), did not apply to exception 4 based on the plain
meaning of the language used in section 3. Because the first three exceptions
to the general definition of “tax” contain language limiting the charge to



                                         25
reasonable costs and the fourth and fifth exceptions do not, the court
concluded it could not read the limitation into the latter exceptions.
      Appellants argue the trial court’s ruling “is a perversion of Proposition
26, which was intended to reinforce and strengthen existing taxpayer
protections by closing loopholes,” not to “open new ones” and provide the
Legislature with a “free pass” for charges collected at the entrance to state
property that make it “easier for the government to hide taxes within fees.”
      We construe provisions added to the California Constitution pursuant
to the same principles governing construction of a statute. (Professional
Engineers in California Government v. Kempton (2007) 40 Cal.4th 1016, 1037
(Professional Engineers); Schmeer, supra, 213 Cal.App.4th at p. 1316.) “We
first examine the language of the initiative as the best indicator of the voters’
intent. (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 321.) We give
the words of the initiative their ordinary and usual meaning and construe
them in the context of the entire scheme of law of which the initiative is a
part, so that the whole may be harmonized and given effect. (Professional
Engineers, supra, at p. 1037; State Farm Mutual Automobile Ins. Co. v.
Garamendi (2004) 32 Cal.4th 1029, 1043.) [¶] If the language is
unambiguous and a literal construction would not result in absurd
consequences, we presume that the voters intended the meaning on the face
of the initiative and the plain meaning governs. (Professional Engineers,
[supra,] at p. 1037; Coalition of Concerned Communities, Inc. v. City of Los
Angeles (2004) 34 Cal.4th 733, 737.) If the language is ambiguous, we may
consider the analyses and arguments contained in the official ballot pamphlet
as extrinsic evidence of the voters’ intent and understanding of the initiative.
(Professional Engineers, supra, at p. 1037.)” (Schmeer, at pp. 1316–1317.)




                                       26
      In the trial court, appellants argued that the toll increase would come
within exception 4 only if the state demonstrated that the charge met the
requirements of article XIII A, subdivision (d) of section 3, including that the
amount was not more than necessary to “cover the reasonable costs of the
governmental activity” and that it was “fairly allocated based on each payer’s
burden on or benefit from the governmental activity.” Appellants portrayed
subdivision (d) as requiring a nexus between the entrance charge and use to
which the collected revenue would be put, without which the fee would
become a tax.
      Appellants acknowledged that applying the “reasonableness”
requirement of section 3 of article XIII A, subdivision (d) to half of exception 4
(the purchase, rental, or lease of state property) or to exception 5 (fines or
penalties imposed due to violations of law) would “produce an absurd result,”
but argued the requirement nevertheless should be applied to the first half of
exception 4, charges “for entrance to or use of state property.” Not applying
subdivision (d) at all, appellants argued, would be even more absurd, because
it would mean there was no limit on the amount of the charge the state could
impose for entrance to or use of bridges and parks and no requirement of a
nexus between the charge and use of the revenue, which would contravene
the intention of Proposition 26 to eliminate taxes disguised as fees.
      We agree with the trial court’s rejection of this argument. The first
three exceptions to the general definition of “tax” contain language limiting
the charge to reasonable costs; the fourth and fifth exceptions do not. The
absence of “reasonable cost” language in the latter exceptions, when it is
present in the first three, strongly suggests the limitation does not apply
where it is not stated. And, as the trial court concluded, reading article
XIII A, subdivision (d) of section 3 as applicable to all of the subdivision (b)



                                        27
exceptions would render the express reasonableness language in the first
three exceptions surplusage. “ ‘A construction making some words
surplusage is to be avoided.’ ” (McCarther v. Pacific Telesis Group (2010) 48
Cal.4th 104, 110, quoting Dyna–Med, Inc. v. Fair Employment & Housing
Com., supra, 43 Cal.3d at p. 1387.)
      Appellants have changed their argument on this appeal. Now
disavowing any argument that the reasonableness provisions of section 3 of
article XIII A, subdivision (d), apply to exception 4, appellants describe
subdivision (d) as imposing three burdens—proving the levy, charge, or other
exaction is not a tax, proving the amount is no more than necessary to cover
the reasonable costs of the governmental activity, and proving the allocation
of costs bears a reasonable relationship to the burden on or benefit to the
payer—only the first of which applies to exception 4. In a point of agreement
with respondents, they now maintain the second and third burdens apply
only to the first three exceptions in section 3, subdivision (b), while the first
burden applies to all five exceptions. Appellants argue, however, that to
meet its burden of proving the toll increase is not a tax pursuant to exception
4, the state must not only identify exception 4 as the exception that makes
the toll increase not a tax but must prove the toll increase is “ ‘for entrance to
or use of state property,’ ” not “ ‘for” some other purpose unrelated to the
payer’s entrance to or use of state property.” Judgment on the pleadings was
improper, they argue, because they raised a factual question with their
allegations that the funds resulting from the toll increase are to be used for
improvements to public transit and other programs they do not use when
they drive across state-owned bridges.
      Appellants say their “for’ argument does not seek to apply the
reasonable cost burdens of section 3 of article XIII A, subdivision (d) to



                                        28
exception 4, but in effect that is just what it does. In arguing the toll increase
is “for” the purpose of funding projects and programs “unrelated” to crossing
the bridges, appellants are arguing that the toll increase is not limited to the
cost of making the bridges available for crossing and/or not reasonably tied to
the benefit the toll payer obtains in crossing the bridges. Four of the five
exceptions in subdivision (b) are defined by reference to what the levy,
charge, or exaction is “for”—a benefit or privilege, a service or product,
regulatory costs, and entrance to or use of state property or purchase, rental
or lease of state property. The direct referent of “for” is the action of the
state, not the use to which revenues will be put: The levy, charge or exaction
is “for” the state conferring a benefit or granting a privilege; providing a
service or product; issuing a permit or performing an investigation;
permitting access to or use of, or selling, renting or leasing state property.
The first three exceptions expressly limit the amount of the charge; the last
two do not. Notably, the reasonable costs of the state activities at issue in the
first three exceptions can be determined by direct reference to the benefit
offered, service provided, or administrative action taken. There is no
similarly self-defining reference point for determining the reasonable cost of
allowing entry onto or use of state-owned property, which might include
anything from obvious repairs and upkeep to myriad enhancements of the
user’s experience. And, as appellants conceded in the trial court, a
reasonable costs limitation makes no sense with respect to the state’s sale or
rental of property or determination of fines and penalties for violations of
law.
       Article XIII, section 3, subdivision (d), is a burden shifting provision; it
does not impose substantive requirements in addition to the those stated in
subdivision (b). “Proposition 26 shifted to the state or local government the



                                         29
burden of demonstrating that any charge, levy, or assessment is not a tax.
(Schmeer[, supra], 213 Cal.App.4th at p. 1322.) This shift in the burden of
proof ‘was largely a response to Sinclair Paint[, supra,] 15 Cal.4th [at p. 878],’
in which the Supreme Court held that a plaintiff who challenges a fee bears
the burden of making a prima facie showing that the fee is invalid. (Schmeer,
[at p.] 1322.)” (Templo v. State of California (2018) 24 Cal.App.5th 730, 738.)
Appellants’ attempt to turn subdivision (d) into a substantive requirement for
proof of the applicability of an exception to the definition of “tax” is not
persuasive. 18


      18
         In the recently decided Zolly v. City of Oakland (2020) 47
Cal.App.5th 73 (Zolly), our colleagues in Division One came to a different
conclusion in construing analogous constitutional provisions applicable to
local government. Subdivision (e) of section 1 of article XIII C, the local
government analog to article XIII A, section 3, subdivision (d), provides: “The
local government bears the burden of proving by a preponderance of the
evidence that a levy, charge, or other exaction is not a tax, that the amount is
no more than necessary to cover the reasonable costs of the governmental
activity, and that the manner in which those costs are allocated to a payor
bear a fair or reasonable relationship to the payor’s burdens on, or benefits
received from, the governmental activity.” As under article XIII A, section 3,
subdivision (b), for the state, article XIII C, section 1, subdivision (e), defines
“tax” as “any levy, charge, or exaction of any kind imposed by a local
government” with specified exceptions. The first five of these mirror the
exceptions to the state-imposed charges described in article XIII A, section 3,
subdivisions (b)(1) through (b)(5), with an express reasonableness
requirement in the first three but not in the exception for “[a] charge imposed
for entrance to or use of local government property, or the purchase, rental,
or lease of local government property.” (Art. XIII C, § 1, subd. (e)(5).)
      Zolly concluded that “a franchise fee, arguably subject to the fourth
exemption in article XIII C, section 1, subdivision (e), must still be reasonably
related to the value of the franchise. (Jacks [v. City of Santa Barbara (2017)]
3 Cal.5th [248,] 267.) Only that portion with a reasonable relationship may
be exempt from the ‘tax’ definition. (See City of San Buenaventura[, supra,] 3
Cal.5th at p. 1214 [‘it is clear from the text [of Proposition 26] itself that
voters intended to adopt two separate requirements: To qualify as a nontax

                                        30
                                DISPOSITION
      The judgments are affirmed.




“fee” under article XIII C, as amended, a charge must satisfy both the
requirement that it be fixed in an amount that is “no more than necessary to
cover the reasonable costs of the governmental activity,” and the requirement
that “the manner in which those costs are allocated to a payor bear a fair or
reasonable relationship to the payor’s burdens on, or benefits received from,
the governmental activity” ’ (some italics added, italics omitted)].)” (Zolly,
supra, 47 Cal.App.5th at p. 88.)
       The Zolly court viewed the burden of proof provision of article XIII C,
subdivision (e), as “requir[ing] that a charge be ‘no more than necessary to
cover the reasonable costs of the governmental activity’ ” and, because the
provision is silent as to whether it applies to all the exemptions from the
definition of “tax” or only the first three, which explicitly include a
reasonableness requirement, found it ambiguous. (Zolly, supra, 47
Cal.App.4th at p. 87.) The court therefore based its decision on the voters’
intent, in passing Proposition 26, to “expand the definition of ‘tax’ to require
more types of fees and charges be approved by two-thirds of the Legislature
or by local voters.” (Zolly, at p. 88.) The Zolly court did not engage in the
textual analysis that leads us to conclude subdivision (d) of article XIII A,
section 3, does not impose a substantive requirement of reasonableness
beyond that stated in subdivision (b) of this section. While we respectfully
disagree with Zolly on the interpretation of the burden of proof provision, we
of course express no opinion on the court’s ultimate conclusion as to whether
and when a franchise fee constitutes a tax.


                                       31
                                 _________________________
                                 Kline, P.J.


We concur:


_________________________
Stewart, J.


_________________________
Miller, J.




(A157598, A157972)




                            32
Trial Court:                San Francisco County Superior Court

Trial Judge:                Hon. Ethan P. Schulman

Attorneys for Appellant:    Howard Jarvis Taxpayers Foundation
                            Jonathan M. Coupal
                            Timothy A. Bittle
                            Laura E. Dougherty

Attorneys for Respondent:   Orrick Herrington & Sutcliffe
                            Brian P. Goldman
                            Michael C. Weed
                            Megan McCauley

                            Adrienne D. Weil

                            Remcho, Johansen & Purcell
                            Robin B. Johansen
                            Thomas A. Willis
                            Margaret R. Prinzing




                             33
