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JUL-25-2011 12:59 From:SENATOR ANDERSON 9164479008 To: 3274003
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Honorable Joel Anderson Room 2054, State Capitol
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BUDGET TRAILER BILL: EFFECT OF REFERENDUM
Dear Senator Anderson:
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You have asked us, In the event that a referendum measure proposing to repeal Assembly Bill No. 28 of the 2011-12 First Extraordinary Session (Ch. 7, 2011-12 First Ex. Sess.; hereafter ABX1 28) qualifies for the ballot, whether the operation of that statute would be suspended during the period between the certification of the referendum measure and the date of the election on the referendum measure. For the reasons discussed below, we are of the opinion that the operation of the statute would be suspended during that time period. ABX1 28 made certain changes to state law to implement compliance-related mechanisms pertaining to existing taxes. Specifically, the bill expanded the definition of "retailer engaged in business in this state" for purposes of Section 6203 of the Revenue and Taxation Code, thereby broadening the scope of retailers who are required to collect use tax on sales of tangible personal property to California consumers, The effect of this change was to require an out-of-state retailer that has a business relationship with an affiliate in California to collect use tax on sales to California residents. In addition, ABX1 28 was identified as a bill related to the budget in the Budget Act of2011 (see Sec. 39.00, Ch. 33, Stars, 2011) and went, into immediate effect as a bill providing for an appropriation related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution.l ABX1 28 was passed by the Legislature on June 15, 2011; signed by the Governor on June 28, 2011; chaptered by the Secretary of State on June 29, 2011; and thereupon went into immediate effect. On July 8, 2011, application was made to the Attorney General for a circulating title and summary for a proposed referendum measure that would reject the substantive tax provisions of ABXl 28. On July 18, 2011, the Attorney General issued a circulating title and summary, and the measure is now eligible for circulation by petition (Sec.
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All further article references are
the California Constitution.
12:59 From:SENATOR ANDERSON
Honorable Joel Anderson -
# 1123523 -
9006, Elec. C.). Under the general provisions of law governing the referendum process, the proponent is required to gather the requisite number of signatures and file the petition for certification "within 90 days after the enactment date of the statute" (subd. (b), Sec. 9, Art. II; see also Sec. 9014, Elec. C., requiring the petition be filed within "90 days from the date the legislative bill was chaptered by the Secretary of State"). The measure would then be placed on the ballot if the petition is certified to have been signed by electors equal in number to 5 percent of the votes for all candidates for Governor at the last gubernatorial election (subd. (b), Sec. 9, Art. II). If the measure is so certified, it would be placed on the ballot at the next general election held at least 31 days after it qualifies or at any special statewide election held prior to that general election (subd. (c), Sec. 9, Art. II). The question you have asked raises the threshold issue of whether a statute that takes immediate effect as a bill providing for an appropriation related to the Budget Bill is
subject to referendum.
Proposition 25, an initiative measure approved by the voters at the
November 2, 2010, statewide general election, amended Section 12 of Article IV to provide anex:ceptiOfl frorl1 the two-thirds vote requiretnel1t for appropriations from the General Fund for the Budget Bill and for other bills providing for appropriations related to the budget (subd. (d), Sec. 12, Art. IV). In addition, Proposition 25 provided that the Budget Bill and those other related bills shall, after passage by a majority vote in each house of the Legislature, "take effect immediately upon being signed by the Governor or upon a date specified in the legislation." (subd. (e), Sec. 12, Art. IV). Prior to November 2, 2010, the California Constitution provided for only four categories of statutes, passed by the Legislature and enacted into law, that go into immediate effect: (1) urgency statutes, (2) statutes calling elections, (3) statutes providing for tax levies, and (4) statutes providing for appropriations for the usual current expen~es of the state (para. (3), subd. (c), Sec. 8, Art. IV). Thus, the effect of Proposition 25 was to add two new categories of legislative statutes that go into immediate effect-namely, the Budget Bill and "other bills providing for appropriations related to the budget bill." The referendum is the power of the voters to approve or reject statutes or parts of statutes (subd. (a), Sec. 9, Art. II). That is, the referendum is the means by which the electorate is entitled, pursuant to the state constitution, to approve or reject measures passed
by a legislative body (Empire Waste Management v. Town of Windsor (1998) 67 CaLAppAth 714, 717). Furthermore, the scope of the referendum power is generally treated as coextensive with the scope of legislative authority (Ibid.). Thus, any legislative decision made by the Legislature is subject to referendum, unless the legislative act is specifically exempted from referendum by the California Constitution (Ibid.). The California Constitution expressly identifies four specific categories of statutes that are not subject to referendum: (1) urgency statutes, (2) statutes calling elections, (3) statutes providing for tax levies, and (4) statutes providing for appropriations for the usual current expenses of the state (subd. (a), Sec. 9, Art. II). Those are the same four categories of statutes that, prior to the enactment of Proposition 25, comprised the list of immediate-effect statutes. A question is presented, therefore, as to whether that list of statutes that are exempt from the referendum should be construed to include the two new categories of
Honorable Joel Anderson -
Request #1123523 -
immediate-effect statutes created by Proposition 25-the Budget Bill and bills related to the Budget BilL The plain language of the provisions of the California Constitution relating to referendum makes no such exception for Budget Bills and bills related thereto (see subd. (a), Sec. 9, Art. II). In this regard, the interpretation of a constitutional provision should begin with the plain language of the provision (Rossi v. Brown (1995) 9 Ca1.4th 688, 694-695). The provision must be applied according to its own terms, without reading into it exceptions or qualifications that are not supported by the language of the provision (Ibid.). Where the language is clear, it must be followed (Ibid.). Furthermore, the California Supreme Court has long and consistently required that a statute fall squarely within one of the four exemptions identified above before it will be found to be exempt from the power of the referendum (see, e.g., Assembly v. Deukmejian (1982) 30Ca1.3d 638, 654-657; Boggs v. Jordan (1928) 204 Cal. 207, 220). Unless an "express provision" of the California Constitution excludes a particular type of statute from the reach of the referendum process, the statute is subject to referendum (Assembly v. Deukmejian, supra, at P: 657).' narrow readil1gof thereferertdi.lm-exemptiotl provisioriSdeflves from the judicial directive that constitutional provisions be construed liberally in favor of the people's right to exercise the reserved power of the referendum (Rossi v. Brown, supra, at P: 695). The courts have declared it their duty to "jealously guard this right of the people," as the power of the referendum is "one of the most precious rights of our democratic process" (Ibid.). Thus, it has long been "judicial policy to apply a liberal construction to this power wherever it is challenged in order that the right not be improperly annulled" (Ibid.). Any doubts must be reasonably resolved in favor of preserving the referendum power (Ibid.). Here, Proposition 25 did not expressly expand the categories of statutes that are exempt from referendum, as identified in subdivision (a) of Section 9 of Article II. While the measure expanded the categories of immediate-effect statutes, it left untouched the categories of statutes that are excluded from referendum. In our view, the courts, we believe, will assume that this was a deliberate and conscious choice by the voters in proposing and enacting Proposition 25 (see Amador Valley Joint Union High Sch. Dist. v. State Bd. oJ Equalization (1978) 22 Ca1.3d 208, 243 (it is assumed "that the voters who approved a constitutional amendment have voted intelligently upon an amendment to their organic law"); RichardsonTunnell v. School Ins. Program Jar Employees (SIPE) (2007) 157 Cal.AppAth 1056, 1066 (it is assumed voters are mindful of preexisting law in voting on ballot measures)). In our view, the courts, on that basis, will not read into that list of exempted statutes any further exceptions or qualifications. Thus, after the enactment of Proposition 25, the constitutional list of statutes that are exempt from referendum remains limited to the four categories identified above. Absent any express language in Proposition 25 indicating an intent of the people to limit the power of the referendum with respect to the Budget Bill and related bills, we believe that, under the plain language of Proposition 25 and related constitutional provisions, the power of the referendum does apply to those two new categories of immediate-effect statutes. Therefore, it is our opinion that a statute that goes into immediate effect solely by virtue of
13: 00 From: SENATOR ANDERSON
Honorable Joel Anderson -
Request #1123523 -
the provisions of Proposition 25, and not by virtue of any of the provisions of paragraph (3) of subdivision (c) of Section 8 of Article IV, is subject to referendum. Assuming, then, that a referendum measure to reject a statute providing for an appropriation related to the Budget Bill within the meaning of subdivision (e) of Section 12 or Article IV qualified for the ballot, you have asked whether the operation of the statute would be suspended between the time the referendum measure qualified and the date of the election on the measure. This is a matter of first impression, because the existing constitutional mechanisms for conducting a referendum assume that referendum proceedings will be initiated only as to a statute that has not yet gone into effect. As noted above, urgency statutes, statutes calling elections, statutes providing for tax levies, and statutes providing for appropriations for the usual current expenses of the state are exempt from referendum (subd. (a), Sec. 9, Art. II). Prior to the approval of Proposition 25, those were the only categories of immediate-effect statutes. Therefore, before Proposition 25, the referendum was applicable only to statutes that did not go into effect immediately. The referendum to havebeen designed to be initiated during the time between the enactment of a statute and the effective date of the statute. In an evennumbered year, a statute enacted in regular session does not go into effect until the next January 1 following a 90-day period from the date of enactment of the statute (para. (1), subd. (c), Sec. 8, Art. IV). In an odd-numbered year, a statute enacted in regular session does not go into effect until the next January 1 unless before January 1 a copy of a referendum petition affecting the statute is submitted to the Attorney General for a circulating title and summary, in which event the statute shall go into effect on the 91st day after enactment unless the referendum measure is certified for the ballot (para. (2), subd. (c), Sec. 8, Art. IV). A statute enacted in special session does not go into effect until the 91st day after adjournment of the special session (para. (1), subd. (c), Sec. 8, Art. IV). Therefore, with respect to all statutes that do not go into immediate effect-that is, every statute to which the referendum was applicable before Proposition 25-there is always a period of at least 90 days between the enactment of the statute and the effective date of the statute to allow for the initiation of a referendum measure. Moreover, if a referendum measure is certified for the ballot during that 90-day period, the certification of the measure operates to stay implementation of the statute until an election is held on the referendum measure. There is currently no provision in the California Constitution that expressly stays the implementation of a statute while a referendum on the statute is pending. An explicit stay provision was contained in a predecessor to Section 10 of Article II, which provided that in the event a referendum measure is certified with respect to an act of the Legislature "no such act shall go into effect until and unless approved by a majority of the qualified electors voting thereon" (former Sec. 1, Art. IV). That provision was repealed in 1966, though, and the California Constitution now has no express provision staying the operation of a statute scheduled for referendum. Nevertheless, the California Supreme Court has held that the California Constitution continues to contain an implied stay provision (Assembly v. Deukmejian, supra, at pp. 654-657), As the court noted, the California Constitution provides that" [iJf a referendum petition is filed against a part of a
Honorable joel Anderson - Request #1123523 - Page 5
statute the remainder shall not be delayed from going into effect" (subd. (a), Sec. 10, Art. II). This language, the court found, gives rise to a clear negative implication that those parts of the statute that are being challenged by referendum are delayed from going into effect while the referendum is pending (Assembly v. Deukmejian, supra, at p. 656). Thus, "under the mandate of article II of the state Constitution, the filing of a valid referendum challenging a statute normally stays the implementation of that statute until after the vote of the electorate," and "[rjhe statute takes effect only if approved by the voters" (Id., at pp. 656-657). Therefore, prior to Proposition 25, the constitutional design of the referendum process assumed that a referendum measure would be initiated after a statute was enacted but before it took effect, that the implementation of the statute would be stayed upon the certification of a referendum petition, and that the statute would not go into effect, if at all, until after an election was held on the referendum measure. This process would be necessarily altered if a stay were to apply in the case of a statute that has gone into immediate effect pursuant to Proposition 25. Under those circumstances, the statute would have e already gO!1...i!l.toeffeC:.Lb.efor~tb~refere!1.dtlrnproc:~se couldbeinitiated. H()\'Iever, \yego not think that this factor should otherwise vary the referendum process as outlined in the California Constitution and as construed by the court in Assembly v. Deukmejian, supra. The ruling of the court in that case was clear-a statute that is the subject of a certified referendum measure is suspended until the election on the referendum measure. We see no basis to conclude that this rule should not apply with equal force to a statute that has already gone into effect by the time the referendum measure is certified. Of course, the courts would not give an initiative measure, such as Proposition 25, a literal interpretation if doing so would result in absurd consequences that the voters did not intend (Shaw v. People ex reI. Chiang (2009) 175 Cal.AppAth 577, 598). Furthermore, the referendum power should not be construed in such a way as to seriously impair essential governmental functions by disrupting Or interfering with the administration of the state's fiscal powers and policies (Geiger v. Board of Supervisors (1957) 48 Ca1.2d 832, 839-840). Here, while our conclusion leaves open the possibility that the Budget Bill or one or more bills implementing the Budget Bill could be suspended or ultimately even repealed by referendum, we do not think that would be deemed an absurd consequence not intended by the voters, or a serious impairment of governmental functions. On many occasions, a Budget Bill has not been enacted until well past the commencement of the fiscal year, forcing the state and its various departments to operate without a duly enacted budget. Moreover, the option continues to be available to the Legislature to pass the Budget Bill or a bill providing for appropriations related to the Budget Bill as an urgency measure (see subd. (d), Sec. 8, Art. IV), in which event the referendum power would not apply (subd. (a), Sec. 9, Art. II). Finally, the suspension of a statute by referendum does not preclude the enactment of another statute addressing the same subject in a different manner (Rubalcava v. Martinez (2007) 158 Cal.AppAth 563, 569). In sum, in this case we do not think that a court would disregard the plain meaning of these constitutional provisions pursuant to an "absurd consequence" rationale.
13: 01 From: SENATORANDERSON
Honorable Joel Anderson -
Request #1123523 -
Thus, in the case of a statute, such as ABX1 28, that has gone into immediate effect pursuant to Proposition 25, the proponent of a referendum measure would have 90 days to circulate a petition for signatures and submit the petition for certification, just as with any other statute. During that 90-day period, the statute would remain in effect and be operative, as provided by its terms. However, if the referendum measure were certified to have a sufficient number of signatures, the statute immediately would be stayed and would remain stayed until an election is held for the referendum measure. Thereafter, the statute would go back into effect only if it is approved by the voters. Accordingly, we are of the opinion that, in the event a referendum measure proposing to repeal Assembly Bill No. 28 of the 2011-12 First Extraordinary Session (Ch. 7, 2011-12 First Ex. Sess.) qualifies for the ballot, the operation of that statute would be suspended during the period between the certification of the referendum measure and the date of the election on the referendum measure.
yours, Diane F. Beyer-Vine Legislative Counsel
Deputy Legislative Counsel