Justices Uphold Bids to Challenge Prop. 13 Ruling

The California Supreme Court, rejecting pleas from state and local officials, declined Thursday to reconsider a ruling on Proposition 13 that authorities warned could jeopardize billions of dollars of projects being financed with special sales taxes.

The justices, with two dissents, refused to bar challenges to enacted tax measures similar to a San Diego tax the high court struck down Dec. 19. The validity of those other measures must be considered on a case-by-case basis, the justices said.

Thursday’s action came as a sharp setback to a group of 18 transit agencies--including the Los Angeles County Transportation Commission--that had urged a rehearing. The coalition had warned that uncertainty over the scope of the December ruling casts a cloud over contracts issued for projects and could impair the sale of bonds.

A lawyer for the agencies, G. Kip Edwards of San Francisco, expressed disappointment but said he hoped that any tax challenges could be defeated in other proceedings--because they were filed too late or because they would inflict undue hardships on current projects.

Lewis A. Wenzell of San Diego, attorney for the successful challengers of the San Diego tax, welcomed Thursday’s action and said it “certainly will advance the position of taxpayers” in recent challenges to other state sales tax measures.

The high court in December struck down a half-cent sales tax enacted in San Diego County to build courts and jails, finding that the measure lacked the two-thirds voter approval required for special taxes under Proposition 13. The aim of the two-thirds vote requirement was to limit the ability of local governments to sidestep the initiative’s restrictions on property taxes by imposing a different kind of tax.

That ruling sent shock waves through local government agencies that in recent years had enacted similar measures--without two-thirds approval--to finance public works projects.

The high court, in striking down the San Diego tax, left unclear whether its ruling could be applied to similar taxes passed by less than two-thirds vote.

Doubts about the legality of those tax measures could jeopardize about $24 billion in transit projects around the state, the group noted.

Among the localities that could be affected is Los Angeles County, which by a bare majority vote last November approved Proposition C, a 20-year, $8-billion transit plan to be financed with a half-cent sales tax. A challenge to the Los Angeles tax is pending before a state Court of Appeal. A quarter-cent sales tax increase approved by San Francisco voters last fall to raise money for schools also is being opposed in court.

Thursday’s denial of a rehearing came in a brief order signed by Chief Justice Malcolm M. Lucas. Justices Stanley Mosk and Joyce L. Kennard, the dissenters in the December ruling, voted to grant reconsideration.

State Atty. Gen. Dan Lungren, in a letter on behalf of Gov. Pete Wilson and Treasurer Kathleen Brown, joined in asking the high court to reconsider the December ruling. The ability of governmental agencies to sell bonds could be inhibited by uncertainties over the effect of the court’s decision, Lungren said.