Lawsuit Leaves Tax Funds for Jails in Limbo

When San Diego County voters narrowly approved a half-cent sales tax for new jails and courtrooms last spring, jubilant county officials congratulated themselves for having successfully made a difficult case to the public.

Little did they suspect at the time that they would also have to make their case to a Superior Court judge. Now, however, seven months after voters agreed to raise the local sales tax to 7%--an increase that took effect Jan. 1--county officials are fighting to preserve in court what they won at the polls.

The legal battle is an outgrowth of the electoral war that concluded last June with San Diegans’ slim 50.6% approval of Proposition A, hailed by proponents as the answer to the county’s longstanding problems of jail overcrowding and a badly overextended court system. Over its 10-year life, the half-cent sales tax is projected to generate about $1.6 billion to build new jails--where inmate populations currently exceed 250% of official capacity--and additional courtrooms.

County officials’ post-election euphoria ended abruptly last July when opponents of Proposition A filed a lawsuit seeking to invalidate the election on the grounds that the sales-tax increase violated Proposition 13 and other laws requiring a two-thirds vote for approval of new taxes.

Although confident that they will prevail in court, county officials acknowledge that the lawsuit already has delayed some jail-building plans and put administrative planning by the body set up to oversee the sales-tax funds far behind schedule. While distressed over those specific delays, the frustration felt by county leaders also stems from having to continue fighting a battle that they considered already won.

“I’d always viewed Proposition A as the light at the end of the tunnel,” Sheriff John Duffy said. “Now we find out that light might be a train coming straight at us. It seems like every time you get a glimmer of hope on this thing, you get run over. What’s aggravating is, I don’t think the opponents can win this case, but they certainly can delay us from going ahead.”

The lawsuit was heard in Riverside Superior Court last month, with that site having been selected because of San Diego judges’ obvious conflict of interest on a matter affecting future courtroom space.

While Judge Gordon Burkhart has until late April to issue his ruling, both sides, noting that the judge appreciates the urgency in “fast-tracking” the case, hope for a decision as early as next month. However, with an appeal all but certain, county officials concede that the case may not be resolved until more than a year after voters’ decision in last June’s primary.

“We haven’t just been sitting back waiting for the case to be settled, but it’s certainly put us behind where we could have been by now,” said Chuck Pennell, an analyst in county Chief Administrative Officer Norman Hickey’s special projects office. “We had a lot of momentum right after the passage last June and were eager to get things going. But this really slowed things down. That head of steam is gone.”

Although collection of the extra half-cent sales tax began only 2 1/2 weeks ago, the lawsuit’s delay of the funds’ expenditure cannot be measured only from Jan. 1.

Were it not for the lawsuit, the San Diego County Regional Justice Facility Financing Agency, the seven-member board that administers the funds generated by Proposition A, could have secured a tax-anticipation loan last summer to begin hiring staff and proceed with certain projects.

“When people know you’re going to be receiving $25 million or so every three months for the next 10 years, it’s pretty easy to get a loan,” said Rich Robinson, head of the county’s special projects office.

The uncertainty posed by the lawsuit, however, eliminated that option, leaving the Financing Agency, as Duffy put it, “stuck at square one” with its budget and plans on hold.

Barring an unfavorable court ruling, the agency expects to receive the first quarterly tax check from the state Board of Equalization early this spring. However, unless the lawsuit is settled in its favor by then, the agency’s hands still would be tied in terms of spending the money.

“It’s too risky to spend anything until the case is over, because there’s always the chance that whatever we spend now might ultimately come out of our own hides,” Robinson explained.

With no current budget, the Financing Agency, which consists of two representatives of the Board of Supervisors, a Municipal and Superior Court judge, the sheriff and one representative each from the City of San Diego and a smaller incorporated city, has been unable to hire an executive director or fill other administrative positions.

No Way of Paying

“It’s kind of hard to hire a consultant with no way of paying him,” said Supervisor George Bailey, who serves on the Financing Agency along with Supervisor Susan Golding. “It’s a little hard for us to even have an attorney to represent us in court.”

The Financing Agency’s attorney is Lynn McDougal, who said he realized when he accepted the case that if he lost it, the agency would be unable to pay him. What makes that scenario even more disturbing, McDougal said, only half-jokingly, is the prospect of facing local judges after losing a case that prevented them from getting new quarters.

After initially meeting twice monthly, the Financing Agency has met infrequently since last summer, as the lawsuit left the directors with a dearth of activity.

“Pretty soon, we realized that there was nothing to do except talk about the lawsuit, and that was depressing,” Duffy said.

One beneficial side effect to the delay is that it has given officials additional time to develop a proposed master plan on how to spend the sales-tax revenues--in particular, how to divide the funds among jails, courts and operational expenses.

“We’re getting a chance to fine tune this to a degree we rarely do on anything,” Pennell said. The master plan may be ready for preliminary review by county administrators next month, he added.

Arguably the most critical consequence of the lawsuit to date, however, has been that it derailed a plan to expedite construction of nearly 1,000 jail beds at the county’s planned East Otay Mesa detention facility.

The East Mesa facility is expected to include 6,000 beds by the early 21st Century, with the first 1,224--968 jail beds and 256 Probation Department honor camp beds--scheduled to be completed by December, 1990. During that first stage of construction, the entire site will be graded to prepare for the planned future expansions.

County and Financing Agency officials originally hoped that Proposition A’s approval would enable them to accelerate the timetable for a second 968-bed addition at East Mesa. With the grading and other preliminary planning work completed, Pennell explained, it would have been relatively simple to “piggyback” that second phase with the first, so that nearly 2,220 beds would have been finished by early 1991.

“But that window of opportunity has closed,” Pennell said, noting that the lawsuit forced the Financing Agency to proceed with bids for simply the first phase of the project, funded with pre-Proposition A dollars.

As a result, even assuming the half-cent sales tax is upheld by the courts, its impact on the county’s jail overcrowding crisis probably will not be felt until the early-to-mid-1990s.

As of last week, the inmate populations in five county jails--a sixth, in Vista, is closed for expansion--totaled 3,746, more than 2 1/2 times their official capacity of 1,470.

The overcrowding will be eased somewhat later this month when sheriff’s deputies begin to move inmates into a $5.6-million, 580-bed temporary men’s detention facility in Santee adjacent to the Las Colinas women’s jail, which itself has been expanded by 192 beds. The barracks-style Las Colinas jail, originally scheduled to open last November, is envisioned as a stopgap measure needed until completion of the East Mesa facility.

This summer, another 542 beds will become available when the Vista facility reopens. Even so, that will leave the county with only slightly more than half as many jail beds as inmates--a gap that is expected to dramatically widen throughout the 1990s.

“We haven’t caught up with where we are right now, much less where we’ll be in the future,” Duffy said. Based on current population growth rates, county officials estimate that San Diego jails will need to house 10,000 inmates within 10 years and 28,000 in 20 years.

To address those needs, Duffy said, the county needs both “a giant warehouse”--the East Mesa facility--and a new pre-arraignment detention facility to replace the downtown jail. That new pretrial jail, which Duffy favors placing on county-owned land in Kearny Mesa, could house as many as 2,750 prisoners.

The financing of those jails, extra courtrooms and other criminal-justice facilities, however, hinges upon the outcome of the lawsuit.

Characterizing the suit as an attempt by the measure’s opponents to accomplish in court what they could not gain at the ballot box, county leaders dismiss it as essentially a legal regurgitation of political arguments heard during last spring’s campaign. State legislation that paved the way for Proposition A, they stress, specified that only a simple majority vote was required for its passage. Opponents’ resurrection of that and other related issues, they add, seems like little more than sour grapes.

7 Lawyers Behind Suit

Although the lawsuit was filed on behalf of two Libertarian Party members and a leader of the 100-member United Taxpayers of San Diego, the major figures behind it are seven local defense lawyers who contend that the half-cent sales tax is unconstitutional.

In the suit, attorney Louis Katz describes the 1987 state legislation that set the stage for last June’s Proposition A campaign as a “sham” that illegally circumvents both the spirit and the letter of Proposition 13, the landmark 1978 tax-cutting initiative, and other laws requiring a two-thirds vote for imposition of taxes.

Under the 1987 law, the revenues generated by Proposition A were to be administered by the Regional Justice Facility Financing Agency. The funds, in turn, would be spent in accord with plans developed and approved by the Board of Supervisors.

The primary purpose behind the creation of that agency, Katz and the other attorneys contend, was to “exploit loopholes” in Proposition 13 created by California Supreme Court decisions exempting local agencies not authorized to levy property taxes from the two-thirds vote requirement. County and state officials sought that “back-door method” for approval of Proposition A, Katz added, after a similar five-year, half-cent jails tax on the November, 1986, ballot failed when it drew a narrow 50.7% majority, far short of the then-required two-thirds margin.

But Katz argues that Proposition A still should have been subject to the two-thirds requirement because the seven-member agency “is not an independent governmental entity,” but rather is “merely an agency and alter ego of the County of San Diego and the . . . Board of Supervisors.”

“This agency is just a device to do the county’s bidding, a figment of the county’s imagination used to get around the two-thirds requirement,” added lawyer Lewis Wenzell, one of Katz’s colleagues.

Broadening that argument, the lawyers charge that the sales-tax measure also violates Proposition 62, an initiative approved in November, 1986, that prohibits governmental entities from imposing any “special tax” for “special purposes” without a two-thirds vote.

With Proposition A funds being clearly earmarked for the construction and maintenance of new jails and courtrooms, the measure “is clearly subject to Proposition 62 limitations,” Katz said.

Both McDougal and County Counsel Lloyd Harmon, however, argue that proceeds from the half-cent sales tax will finance “general governmental purposes” administered by the Financing Agency, a critical semantic distinction that would again exempt it from the two-thirds requirement.

“If the county had proposed a tax to be used only for jails and courts, it would be a special tax, because the county’s scope of governmental functions is so broad that, of course, jails and courts are only a small part of the overall picture,” McDougal said. “But with a body like the Financing Agency, whose sole governmental duty is to build courts and jails, if you levy a tax and put it in the general fund of that agency, that’s a general tax.”

Another Key Question

In addition to the dispute over whether sufficient public votes were cast for Proposition A to be legally enacted, another key question is whether the Financing Agency itself properly voted to place the issue on the ballot in the first place.

Under Proposition 62, two-thirds of an agency must approve the placement of any proposed tax on the ballot. However, when the Regional Justice Facility Financing Agency unanimously approved a resolution and ordinance dealing with the proposed half-cent sales tax last January, only four of its seven members were present--short of the five votes needed for a two-thirds majority.

McDougal, who did not represent the Financing Agency at the time, concedes that that vote did not comply with Proposition 62’s provisions. However, he argues that the agency later met that requirement when, at a March, 1988, meeting, all seven members voted to forward the ordinance to the county Registrar of Voters for placement on the ballot.

Not so, Wenzell responds.

“They didn’t do it the way the law says they have to do it,” Wenzell said. “They can say this is just a technicality, but that’s what all law is. In the eye of the beholder, a law you want to obey is a moral imperative. If you don’t want to obey it, it’s a technicality.”

Well familiar with the legal system’s sometimes frustrating pace, San Diego Presiding Superior Court Judge Michael Greer said that, while waiting for the lawsuit to be settled, he and other county officials can do little other than “continue planning as if it’s going to happen and hope for the best.”

“It’s just part of the system,” Greer said, taking a philosophical attitude toward the delay. “We’ve managed to keep our heads above water so far, so I guess we can do it a while longer. But we’re getting some pretty tired people over here.”

Under state Judicial Council standards, San Diego should have 91 Superior Court judges, but currently is authorized to have only 71 judges and five referees, Greer said. But 13 of those judgeships were approved only last month and, thus, remain vacant. That fact, combined with upcoming retirements and promotions, will reduce the number of sitting Superior Court judges to only 53 at the end of this month, Greer added.

More Judges Than Courtrooms

Even so, the county has more judges than courtrooms, creating, by Greer’s own description, “dancing judges” who move from courtroom to courtroom to establish temporary residence in the chambers of their vacationing colleagues.

“If (the suit) is settled in the next three to four months, it will have had no practical effect on the courts,” Greer said. “If it’s any longer, then there might be some questions. But we’re a secondary issue at this point anyway. Jails are the primary concern now.”

Concurring with that assessment, Duffy called the lawsuit “a travesty . . . that wasted time we didn’t have to waste.”

“With our jails as overcrowded as they are now, every single day we have to wait hurts,” Duffy said. “This is something that average Joe Citizen out there has trouble understanding. People realize they’ve begun paying an extra tax, but they don’t see anything happening with jails. And when they ask me what’s happening, it aggravates me to have to say, ‘Right now, not much.’ ”