Pugh v. City of Sacramento

Opinion

CARR, J.

This is an appeal from a judgment of dismissal entered after the demurrer of respondent City of Sacramento (City) to appellants’ class action complaint was sustained without leave to amend.

The sole issue on appeal is whether the provisions of article XIII A of the California Constitution, prohibiting a city from enacting an ordinance imposing a transaction or sales tax on the sale of real property within such city, took effect on June 7,. 1978, the day after the election in which it was enacted, or July 1, 1978.

On June 6, 1978, the California electorate voted to add article XIII A (commonly known as Prop. 13). On June 29, 1978, respondent City enacted an ordinance

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imposing a tax of one-fourth of 1 percent of the

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value of the consideration on all sales or transfers of real property in the City (§ 41.128.) On or about June 18, 1979, appellants purchased a home in Sacramento; pursuant to the ordinance, a transfer tax of $103.13 was imposed. The Pughs paid the tax, but filed with City a claim for a refund on behalf of themselves and the class of transferrors or transferees similarly situated, who have paid the tax imposed by the ordinance. The claim was deemed rejected by the failure of the City to act on the claim and this action ensued.

Article XIII A is comprised of six sections. The first and second respectively limit tax rates and provide assessment standards for real property. Section 3 limits the method of changes in

state

taxes: “From and after the effective date of this article, any changes in State taxes enacted for the purpose of increasing revenues collected pursuant thereto whether by increased rates or changes in methods of computation must be imposed by an Act passed by not less than two-thirds of all members ... 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 4 imposed similar restrictions upon local entities: “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.”