Docket No. S242835
City and County of S.F. v. The Regents of the University of Cal.
IN THE SUPREME COURT OF
CALIFORNIA
CITY AND COUNTY OF SAN FRANCISCO,
Plaintiff and Appellant,
v.
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA et al.,
Defendants and Respondents.
S242835
First Appellate District, Division One
A144500
San Francisco City and County Superior Court
CPF-14-513-434
June 20, 2019
Justice Kruger authored the opinion of the court, in which
Chief Justice Cantil-Sakauye and Justices Chin, Corrigan, Liu,
Cuéllar, and Baker* concurred.
*
Associate Justice of the Court of Appeal, Second Appellate
District, Division Five, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF
THE UNIVERSITY OF CALIFORNIA
S242835
Opinion of the Court by Kruger, J.
The City and County of San Francisco (San Francisco) imposes
a tax on drivers who park their cars in paid parking lots. To enforce
the tax, the city requires parking lot operators to collect the tax from
drivers and remit the proceeds to the city. We granted review to
consider whether the California Constitution permits San Francisco
to apply this tax collection requirement to state universities that
operate paid parking lots in the city. We conclude the answer is yes.
I.
San Francisco is a consolidated city and county that has adopted
a charter for its own governance under article XI, section 3 of the
California Constitution. Exercising its constitutional power to
regulate its “municipal affairs” as a charter city (Cal. Const., art. XI,
§ 5, subd. (a)), in the early 1970’s San Francisco enacted a tax on the
cost of “rent” for any parking space at a parking lot or garage in the
city. (S.F. Bus. & Tax Regs. Code, art. 9, § 601.) Since 1980, the
parking tax rate has been set at 25%. (Id., § 602.5.
The San Francisco parking tax is imposed on drivers. But like
many taxes of its kind, the parking tax is not paid directly to the city;
drivers instead pay the parking tax to the parking lot operator, along
with the parking fee the operator charges. The operator then collects
the taxes and remits them to the city. (S.F. Bus. & Tax Regs. Code,
art. 9, § 603.) To ensure it receives the proper amounts, San Francisco
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
requires operators to document the taxes they collect and holds them
liable for any underpayments.1
By its terms, the ordinance applies to public entities and private
ones alike, though it does excuse public entity operators from some of
the requirements imposed on private parking operators, such as
1
To be more specific: The ordinance generally requires the
operator to file quarterly tax returns that document the amount of the
parking tax to be remitted, and such other information as the city may
require. (S.F. Bus. & Tax Regs. Code, art. 6, § 6.7-2, subd. (c).) The
operator must also certify in writing, under penalty of perjury, that it
has utilized machines that record all parking transactions to the city’s
specifications. (Id., art. 9, § 607, subd. (b); id., art. 22, § 2203.
If an operator does not collect the tax from drivers renting
parking space in its facilities, the operator becomes liable to the city
for the amount of the tax. (S.F. Bus. & Tax Regs. Code, art. 9, § 604,
subd. (a).) The city will excuse the operator from remitting tax on a
small percentage of lost or unaccounted-for tickets, but operators are
otherwise generally liable for the full value of the highest maximum
daily rate charged for any lost or unaccounted-for ticket. (Id., subd.
(b).) The city may consider “in its sole and absolute discretion”
whether an operator’s explanation for lost tickets or canceled
transactions is reasonable. (Id., subd. (c).
The operators’ compliance with these requirements is backed by
the threat of more significant sanctions. Under San Francisco law,
operators must post a bond and obtain a certificate of authority in
order to operate a parking lot. (S.F. Bus. & Tax Regs. Code, art. 6,
§ 6.6-1.) If an operator violates any city rule or regulation related to
the parking tax, “including but not limited to any failure to timely
collect, report, pay, or remit any tax imposed by this Code, failure to
maintain accurate registration information, failure to sign any return
or pay any tax when due, or failure to timely respond to any request
for information,” then the operator’s certificate of authority may be
suspended or revoked. (Id., subd. (g).
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Opinion of the Court by Kruger, J.
bonding and permitting requirements (S.F. Bus. & Tax Regs. Code,
art. 6, § 6.6-1, subd. (h)(2); S.F. Police Code, art. 17, § 1215, subd. (b)),
and requirements for installing devices to properly track parking
revenue and taxes (S.F. Bus. & Tax Regs. Code, art. 22, § 2202). But
public entities are still required to “collect, report, and remit” the
parking tax owed by drivers to the city (S.F. Bus. & Tax Regs. Code,
art. 6, § 6.8-1, subd. (b)). It is this requirement that has generated the
present controversy.
Defendants are the Regents of the University of California
(Regents), which oversees the University of California at San
Francisco (UCSF); the Board of Directors of Hastings College of the
Law (Hastings); and the Board of Trustees of the California State
University (CSU), which operates San Francisco State University
(SFSU) (collectively, the universities). All of the university
defendants own and operate private parking facilities in San
Francisco in order to serve the needs of their respective campuses.
Specifically, the Regents own and operate parking facilities at UCSF’s
educational and healthcare facilities for the use of faculty, staff,
students, researchers, visitors, and patients who receive care at the
clinics and hospitals on campus. UCSF uses its parking fee revenue
to fund, among other things, a shuttle bus service between its various
locations for students, faculty, and staff. Hastings operates a garage
near its law school, which is located in the Tenderloin neighborhood
of San Francisco. Hastings explains that it operates the garage at a
loss in order to maintain a safe and secure environment for its
students. CSU, for its part, operates nine parking lots on SFSU’s
campus, which is located in an urban environment where parking is
scarce.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
In 1983, San Francisco attempted to collect parking lot taxes from
UCSF, but the Regents asserted immunity and San Francisco
declined to pursue the matter. That was, for quite some time, the end
of the controversy. But in 2011, San Francisco reconsidered and
directed UCSF, Hastings, and SFSU to begin collecting and remitting
the parking tax. The universities refused. In response, San Francisco
filed a petition for a writ of mandate in the trial court to compel
compliance. San Francisco argued that it would be a minimal burden
for the universities to collect the parking tax along with whatever
parking fees they charge. San Francisco also offered to reimburse the
universities for their administrative costs in collecting and remitting
the taxes, as the trial court had ordered in another municipal tax
collection case, City of Modesto v. Modesto Irrigation Dist. (1973) 34
Cal.App.3d 504, 508–509 (City of Modesto). The trial court denied the
writ, concluding that the universities are exempt from compliance
with the parking tax ordinance. The trial court reasoned that this
result followed from the constitutional principles articulated and
applied in In re Means (1939) 14 Cal.2d 254 (Means) and Hall v. City
of Taft (1956) 47 Cal.2d 177 (Hall), which hold that a local government
may not regulate a state entity in its performance of governmental
functions unless the state consents to the regulation.
The Court of Appeal affirmed in a published opinion, agreeing
with the trial court that the Means-Hall doctrine exempts the state
agencies from collecting and remitting the parking tax. (City and
County of San Francisco v. Regents of University of California (2017
11 Cal.App.5th 1107 (City and County of San Francisco).
Justice Banke dissented. In her view, the state’s sovereignty is
“not impinged” (City and County of San Francisco, supra, 11
Cal.App.5th at p. 1149 (dis. opn. of Banke, J.)) by the “minimal
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Opinion of the Court by Kruger, J.
burden” (ibid.) of “collecting a general local tax imposed on third
parties, particularly where the costs of such are reimbursed” (id. at
p. 1146). She also observed that other authorities have, contrary to
the majority’s holding, concluded that a municipality may require a
state entity to collect a general tax imposed on third parties doing
business with the entity, at least where the municipality reimburses
the state entity for the costs of collection. (See City of Modesto, supra,
34 Cal.App.3d 504 [charter city could require state agency operating
as utility to collect utility user’s tax]; Eastern Mun. Water Dist. v. City
of Moreno Valley (1994) 31 Cal.App.4th 24, 26 (City of Moreno Valley
[relying on City of Modesto to conclude general law city could require
state agency operating as utility to collect utility user’s tax]; accord,
65 Ops.Cal.Atty.Gen. 267 (1982) [relying on City of Modesto to
conclude municipality may require state agency to collect local
occupancy tax from private users of state conference center].) While
the law on the subject “has been far from a paragon of clarity,” she
argued, the majority’s decision left the law “in some disarray.” (City
and County of San Francisco, at p. 1124 (dis. opn. of Banke, J.).) She
called on this court to “state clearly whether or not a state entity can
be asked to collect a local tax imposed on third parties doing business
with the entity, particularly where . . . the entity will be reimbursed
its costs of doing so.” (Ibid.
Hearing the call, we granted review.
II.
The general problem in this case is familiar to any constitutional
system in which two governments exercise authority within the same
territory. The specific task before us is to determine the proper
allocation of authority between a local government and state agencies
under a constitution that confers substantial powers on each.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
Many of California’s local governments predate California’s
statehood, and the framers of the 1879 California Constitution
dedicated an entire article to the subject of their powers. From the
outset, the 1879 Constitution expressly recognized the police powers
of local government, and continues to do so today: As relevant here,
any city “may make and enforce within its limits all local, police,
sanitary, and other ordinances and regulations not in conflict with
general laws.” (Cal. Const., art. XI, § 7.) The 1879 Constitution also
permitted cities of a certain size to adopt charters for their own
government. (Weekes v. City of Oakland (1978) 21 Cal.3d 386, 399
(Weekes), citing Cal. Const., art. XI, §§ 6, 8 (1879).) In 1896, voters
approved a so-called “home rule” provision granting charter cities
“supremacy over local matters.” (Weekes, at p. 399.) This provision,
as presently written, permits charter cities to “make and enforce all
ordinances and regulations in respect to municipal affairs”; with
respect to such matters, the cities’ charters “supersede all laws
inconsistent therewith.” (Cal. Const., art. XI, § 5, subd. (a).)2
2
Charter counties also enjoy home rule authority. (See Cal.
Const., art. XI, § 3 [County charters “shall supersede . . . all laws
inconsistent therewith.”].) This authority, however, is more limited
than that of charter cities; the Constitution contains no provision
giving charter counties supreme authority over “ ‘county affairs.’ ”
(Dibb v. County of San Diego (1994) 8 Cal.4th 1200, 1207–1208.) San
Francisco, as California’s only consolidated city and county, enjoys the
greater degree of autonomy that comes with charter city status. (Cal.
Const., art. XI, § 6, subd. (b).
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
This home rule authority includes the power to tax for local
purposes.3 The power to tax, we have explained, is the lifeblood of the
charter city; without it, “the municipality cannot exist, and the
municipality alone is directly concerned in its preservation.” (Ex parte
Braun (1903) 141 Cal. 204, 210.) It is this local taxation power that
San Francisco, a charter city, asserts here.
The universities in this case are agencies of the state
government whose powers and responsibilities are defined in the
Constitution, as well as in statutory law enacted by the Legislature.
The Constitution itself establishes the University of California,
vesting the Regents with “full powers of organization and
government” (Cal. Const., art. IX, § 9, subd. (a)), including “the legal
title and the management and disposition of the property of the
university and of property held for its benefit” (id., subd. (f)), and “all
the powers necessary or convenient for the effective administration of
[the University of California]” (ibid.). Hastings is statutorily
designated as the law department of the University of California (Ed.
Code, § 92201), and is charged with “afford[ing] facilities for the
acquisition of legal learning in all branches of the law” (id., § 92202).
The CSU system, too, finds explicit mention in the California
Constitution, which refers to the Legislature’s authority to create a
“state agency . . . in the field of public higher education which is
charged with the management, administration, and control of the
3
By statute, the Legislature has conferred a parallel taxation
power on “general law” cities—that is, cities that have not adopted a
charter under article XI, section 3 of the California Constitution.
(Gov. Code, § 37100.5.) We do not consider today whether this power
is coincident with charter cities’ constitutional authority.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
State College System of California.” (Cal. Const., art. XX, § 23.
Exercising that authority, the Legislature has conferred on CSU a
variety of powers, including the power “to acquire . . . real property
and to construct, operate, and maintain motor vehicle parking
facilities and other transportation facilities thereon for state
university officers, employees, students, or other persons.” (Ed. Code,
§ 89701, subd. (a); see generally id., §§ 66600 et seq., 89000 et seq.
The Board of Trustees may also prescribe the “terms and conditions
of the parking, . . . including the payment of parking fees” (id.,
§ 89701, subd. (a)), which it has done through regulation (Cal. Code
Regs., tit. 5, § 42201).
San Francisco contends that its power to raise municipal
revenue through taxation permits it to apply its tax ordinance to paid
university parking lots within San Francisco borders, just as it applies
the ordinance to other paid parking lots operated by private entities.
The universities, on the other hand, argue that their status as
agencies of the sovereign state government, engaged in duties
assigned to them by state law and addressing matters of statewide
importance, places private parties’ use of their paid parking lots
beyond the reach of San Francisco’s revenue power. No provision of
the state Constitution expressly resolves this controversy; the parties
thus rely primarily on inferences from constitutional structure and
this court’s precedent resolving other types of intergovernmental
conflicts. To answer the question, we must disentangle two separate
threads of the inquiry. First, does San Francisco have the power to
tax drivers who use paid university parking lots? Second, if so, may
San Francisco enlist the universities’ help in collecting and remitting
the taxes?
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
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Opinion of the Court by Kruger, J.
III.
We begin with the first issue, which goes to the substantive
validity of the parking tax. The answer follows from settled precedent.
As we have described it, the tax in question is not imposed on the state
universities or their property. It is, rather, imposed on private
parties—namely, drivers who use parking lots. This is a critical
distinction. Since the days of M’Culloch v. State of Maryland (1819
17 U.S. 316, it has been understood that the law forbids one
government from imposing a tax on another. But it is also understood
that the law does not forbid a government from imposing a tax on
private third parties who happen to do business with another
government (provided, that is, the tax does not discriminate against
the parties because they are doing business with the government).
(E.g., Weekes, supra, 21 Cal.3d at p. 398, citing Graves v. N. Y. ex rel.
O’Keefe (1939) 306 U.S. 466, 486–487 (Graves).) The parking tax here,
which applies to drivers in precisely the same way regardless of
whether they use the university parking lot or a private parking lot
across the street, belongs to this second category of taxes. There is no
assertion here that the drivers here stand in the shoes of the
universities themselves. Principles of governmental tax immunity do
not bar the parking tax.
The universities do not take direct aim at this settled
understanding of the limits of governmental tax immunity or their
application to this case; the primary focus of their challenge to San
Francisco’s ordinance is, rather, the requirement that they play a role
in collecting and remitting the taxes. Nevertheless, the universities
raise a series of objections to San Francisco’s tax ordinance that can
only be understood as indirect challenges to San Francisco’s power to
impose the parking tax on the third parties who pay for use of
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
university parking lots. CSU, for example, contends that it should not
be required to collect the parking tax because parking is of particular
importance to the university and the tax threatens to interfere with
CSU’s educational mission by making parking more expensive. It
explains that parking for SFSU students, staff, and visitors is scarce;
adding a parking tax would make it difficult for CSU to ensure
parking remains affordable; and CSU would lose revenue if it reduced
its parking prices by the amount of the tax. The other universities
raise similar concerns about interference with their judgments about
how to provide affordable access to their facilities and the downstream
impact on their budgets; indeed, Hastings adds that it considers
parking so important that it already operates its garage at a loss.
Although the universities offer these arguments in service of
their arguments for avoiding collection of San Francisco’s parking tax,
their true target is plainly the tax itself. If San Francisco’s parking
tax ordinance interferes with their judgments about how best to
provide affordable access for guests and affiliates, it is because of San
Francisco’s chosen tax rate as applied to the third parties who park in
university lots, not because of the requirement that parking lot
operators collect these taxes along with other parking charges.
The answers to this set of objections, however, also follow from
settled precedent. Our cases have made clear that a particular private
activity may be a matter of particular concern to the state and
nonetheless subject to municipal taxation. Even when the state has
exclusive regulatory authority in a particular area, a local tax on the
conduct of the regulated activity, without more, is not an
impermissible “ ‘interference with state affairs.’ ” (In re Groves (1960
54 Cal.2d 154, 157, quoting In re Galusha (1921) 184 Cal. 697
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
[municipality may tax attorney engaged in practice of law,
notwithstanding exclusive state regulation of legal practice].
Our cases have also held that it is permissible for a municipality
to tax such private activities even though the tax imposes an indirect
economic burden on the state government. General taxes on
government employees and contractors are prime examples. In
Weekes, supra, 21 Cal.3d 386, for example, this court upheld the
application of a municipal occupation tax to state workers
notwithstanding the clear, if indirect, impact on the state’s choices
regarding employee compensation. Similarly, in City of Los Angeles
v. A.E.C. Los Angeles (1973) 33 Cal.App.3d 933 (A.E.C. Los Angeles),
the Court of Appeal upheld the application of city business taxes to a
state contractor, calculated on the basis of the gross receipts the
contractor had obtained from the state. The court in A.E.C. Los
Angeles explained that while “local ordinances may not impose a
regulatory scheme upon private persons which operates to impinge
upon the sovereign power of the state . . . revenue measures of general
application imposing a nondiscriminatory tax upon persons doing
business in a state regulated activity or with the state, do not so
impinge.” (Id. at p. 940, citations omitted.) This is so, the court
explained, even when the economic burden can be passed on to a
“higher governmental unit,” thus indirectly affecting its operations.
(Ibid.
In elaborating these principles, these cases drew on a body of
federal case law applying similar principles to uphold similar taxes
imposed by state governments on federal employees and contractors.
(See Weekes, supra, 21 Cal.3d at p. 398; A.E.C. Los Angeles, supra, 33
Cal.App.3d at p. 940.) In Graves, for example, the United States
Supreme Court upheld a state tax on federal employees’ income,
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
rejecting the argument that the resulting burden on the federal
government is “tantamount to an interference by one government
with the other in the performance of its functions.” (Graves, supra,
306 U.S. at p. 481.) The high court has likewise upheld state taxes
even when the levy effectively draws from the public treasury, as
under cost-plus contracts that pass the entirety of the tax onto the
federal government (see United States v. Boyd (1964) 378 U.S. 39, 46–
47; Alabama v. King & Boozer (1941) 314 U.S. 1, 8 (King & Boozer)),
or other contracts under which the taxes are paid with federal monies
(see United States v. New Mexico (1982) 455 U.S. 720, 741–743 (New
Mexico)).
The relationship between the federal and state governments is
by no means identical to the relationship between state universities
and charter cities. But the federal cases nevertheless offer several
important lessons that have proved influential in our own case law.
The federal cases recognize that “inferior” governments may levy
taxes on private parties, even if the economic burden of that tax is
passed entirely to the “superior” government. That this economic
burden may make it more expensive for the superior government to
perform its mission does not create an immunity from taxation—even
when the mission is as critical as managing national railroads
(Railroad Company v. Peniston (1873) 85 U.S. 5, 33), locks and dams
on navigable rivers (James v. Dravo Contracting Co. (1937) 302 U.S.
134), army camps (King & Boozer), atomic energy plants (Boyd), or
atomic laboratories (New Mexico). The cases reason that our
federalist system is structured with overlapping governmental
jurisdictions, and each level of government must be able to raise
revenue from the constituents who benefit from its services—even
though this taxation will inevitably impose indirect economic costs on
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
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Opinion of the Court by Kruger, J.
other governments operating within that jurisdiction. This is “but a
normal incident of the organization within the same territory of two
independent taxing sovereignties.” (King & Boozer, supra, 314 U.S.
at p. 9.
California cases adopting this general view have not been
limited to the realms of employment or contracting. For example, in
Board of Trustees v. City of Los Angeles (1975) 49 Cal.App.3d 45
(Board of Trustees), the court upheld a municipal permitting
requirement as applied to a circus held on CSU property. The court
noted the ordinance would affect CSU “only in whatever manner
enforcement might affect the revenue production” of the property,
which was insufficient to bar the tax under preemption or sovereign
immunity principles. (Id. at p. 49.) And in Oakland Raiders v. City
of Berkeley (1976) 65 Cal.App.3d 623 (Oakland Raiders), the court
upheld a city gross receipts tax on the Oakland Raiders for
professional football games played in California Memorial Stadium at
the University of California, Berkeley. The court acknowledged “the
University of California is not subject to local regulations with regard
to its use or management of the property held by the Regents in public
trust.” (Id. at p. 626.) Nonetheless, the court concluded, “[a] tax upon
the operation of a business by a lessee of publicly owned property
constitutes a tax upon the privilege of performing the business rather
than a tax upon the property.” (Id. at p. 627.) And “ ‘where it merely
appears that one operating under a government contract or lease is
subjected to a tax with respect to his profits on the same basis as
others who are engaged in similar businesses, there is no sufficient
ground for holding that the effect upon the Government is other than
indirect and remote. . . .’ [citation]; the fact that a tax may constitute
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
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Opinion of the Court by Kruger, J.
an indirect burden upon an organ of government does not invalidate
the tax.” (Ibid.
The only municipal tax case in which we have invalidated a
city’s assertion of the power to tax parties regulated by or doing
business with the state is California Fed. Savings & Loan Assn. v.
City of Los Angeles (1991) 54 Cal.3d 1 (California Federal). Not
surprisingly, the universities rely heavily on California Federal, but
it does not help them. In California Federal, we held that a state
statute imposing a tax on banks and financial corporations in lieu of
all other taxes and licenses preempted a municipal business tax that
the City of Los Angeles, a charter city, sought to collect from a savings
and loan association operating within its jurisdiction. The core of the
ruling concerned the conflict between the municipal tax and the state
taxation law, which had been designed to displace all other taxation
laws. (Id. at pp. 18–19.) We explained that although taxation is a
“necessary and appropriate power of municipal government, aspects
of local taxation may under some circumstances acquire a
‘supramunicipal’ dimension, transforming an otherwise intramural
affair into a matter of statewide concern warranting legislative
attention.” (Id. at p. 7.) “In the event of a true conflict between a state
statute reasonably tailored to the resolution of a subject of statewide
concern and a charter city tax measure, the latter ceases to be a
‘municipal affair’ to the extent of the conflict and must yield.” (Ibid.
This case involves no similar conflict between the Legislature’s
resolution of a matter of statewide concern and a charter city tax
measure; the Legislature has enacted no overriding statutory regime
designed to displace municipal parking taxes as applied to university
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
students, staff, or other guests.4 CSU, pointing to the unique
provisions of its governing statute, does argue that the Legislature
impliedly displaced San Francisco’s parking tax by giving CSU the
power to build parking facilities (Ed. Code, § 89701, subd. (a)), and
giving the Board of Trustees the power to prescribe “the payment of
parking fees in the amounts and under the circumstances determined
by the trustees” (ibid.). But the argument is unpersuasive; San
Francisco’s tax does not hinder CSU’s ability to build parking facilities
or charge the fees of its choice, any more than the municipal licensing
tax at issue in Weekes hindered the state employer’s ability to hire
employees or set the salary of its choice. We discern no “true conflict”
that would require the tax measure to yield. (California Federal,
supra, 54 Cal.3d at p. 7.
To the extent CSU or the other universities argue San
Francisco’s parking tax is impliedly preempted because it imposes an
economic burden that threatens interference with the universities’
4
The Regents argue that California Federal should be read for
the broader proposition that municipal tax measures applicable to
transactions with state agencies should be reviewed with the same
degree of scrutiny as substantive regulations of those transactions.
They rely for this argument on a sentence that reads: “[C]harter city
tax measures are subject to the same legal analysis . . . as charter city
regulatory measures.” (California Federal, supra, 54 Cal.3d at p. 7.
But as the surrounding context makes clear, this sentence meant only
that charter city taxes are not “invariably,” and thus uniquely,
“immune from state legislative supremacy” in the preemption context.
(Id. at p. 6.) In other words, a charter city tax—like a charter city
regulation—may be preempted by a state statute in appropriate
circumstances. But as we explain, there is no preemptive state statute
applicable to the circumstances of this case.
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Opinion of the Court by Kruger, J.
performance of their assigned duties, we have already explained that
the law is to the contrary; indirect economic consequences alone are
insufficient to invalidate a nondiscriminatory municipal tax on third
parties doing business with the state or its agencies. This is, in
substance, the same argument that was rejected in Oakland Raiders.
And it is an argument inconsistent with the basic principles we
applied in Weekes. Any municipal tax will produce economic ripples
that reach every significant market participant. If state agencies
could invalidate municipal taxes based on these indirect effects on
their operations, little would be left of the city’s revenue power.
Rather than attempt to draw granular distinctions based on the
degree to which a tax on third parties affects government operations,
the law instead generally confers on municipal governments the
power to tax third parties, provided the tax is nondiscriminatory—and
provided the tax satisfies the test against which the validity of all
taxes are judged, namely, that it bears the necessary “ ‘fiscal relation
to protection, opportunities and benefits given.’ ” (Weekes, supra, 21
Cal.3d at p. 398.
Applying these principles here, we conclude that the San
Francisco parking tax ordinance is not invalid as applied to drivers
who park in paid university parking lots even though the tax will have
secondary effects on the universities. This conclusion in no way calls
into question the genuineness or importance of the universities’
interest in providing accessible parking to staff, students, and guests,
while minimizing the impact on their own budgets. We instead
conclude that such interests, important though they may be, are not
a sufficient basis for setting aside a nondiscriminatory municipal tax
where the legal incidence falls on private parties who do not actually
16
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
“ ‘stand in the Government’s shoes.’ ” (New Mexico, supra, 455 U.S. at
p. 736.
To put the matter simply: Private parties transacting on state
property may not appropriate to themselves the state’s immunity from
local taxation, and state agencies may not nullify local taxes on
account of unfavorable secondary economic effects. (See Oakland
Raiders, supra, 65 Cal.App.3d at p. 627; Board of Trustees, supra, 49
Cal.App.3d at p. 49; A.E.C. Los Angeles, supra, 33 Cal.App.3d at
p. 940.) Affirming San Francisco’s power to tax drivers who park in
paid university lots does not answer whether San Francisco has the
further power to order the universities to collect and remit those taxes.
It does, however, sharpen the inquiry. If San Francisco has exceeded
its authority, it is because there is something constitutionally
improper about the particular burden of requiring state employees to
perform tax collection on behalf of municipalities. We must evaluate
this burden separately from the universities’ opposition to the parking
tax itself.
IV.
We turn then, to the crux of the case before us: whether the
California Constitution permits San Francisco to require the state
university parking lot operators to collect the parking tax and remit
the proceeds to the city.
As an initial matter, we note there is nothing unusual about San
Francisco’s general requirement that parking lot operators collect and
remit the parking taxes on its behalf. Such arrangements are
standard operating procedure in many areas of tax law. As this court
observed decades ago: “The field of taxation is replete with examples
of a government entity making businesses generally its agent in tax
collections and prescribing certain regulations in the accounting
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
therefor . . . such as withholding taxes and social security taxes for the
United States government, unemployment taxes and numerous excise
taxes for the state—‘a familiar and sanctioned device.’ ” (Ainsworth
v. Bryant (1949) 34 Cal.2d 465, 477 (Ainsworth).) When a
governmental entity lays a tax on a particular type of transaction, it
often tasks one party to the transaction with the duty to see the tax is
paid. Without such arrangements, a great many valid tax laws—
including this one—would simply go unenforced. (Ibid.
What makes this case unusual is that one government has
sought to impose such a requirement on another. While governments
have often agreed among themselves to lend such assistance (see, e.g.,
5 U.S.C. § 5517 [authorizing federal employers to withhold state
income taxes]; Rev. & Tax. Code, § 7204 [authorizing the State Board
of Equalization to remit sales and use taxes collected on behalf of local
governments]), here no such agreement has been reached. The
universities contend that principles of “hierarchical sovereignty”
embodied in the California Constitution forbid a municipality from
imposing any sort of requirement on the sovereign state or state
agencies engaged in their assigned functions—including a
requirement to collect and remit local taxes from users of their
facilities—unless the state consents to the imposition.
The centerpiece of the universities’ argument is a series of cases
holding that otherwise legitimate exercises of municipal regulatory
power cannot be enforced against state agencies engaged in pursuit of
their constitutionally or statutorily assigned duties. The line of cases
begins with Means, supra, 14 Cal.2d 254, which concerned the
constitutionality of applying a municipal plumber certification
ordinance, which required plumbers to sit for examination and deliver
a bond, against a state employee working on state property. (Id. at
18
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
pp. 256–257.) We held the ordinance could not be constitutionally
applied to the state employee, explaining that when setting
qualifications for its employees, the state “acts in an exclusive field
[citations], and is not subject to the legislative enactments of
subordinate governmental agencies.” (Id. at p. 258.) Thus, “[i]f one
who has been employed by the state may not work on state property
within a municipality without the consent of the municipality
obtained after examination, the city has, in effect, added to the
requirements for employment by the state, and restricted the rights
of sovereignty.” (Ibid.
In so holding, Means outlined a set of general limits on a charter
city’s power over “municipal affairs.” The rule, we explained, “is not
entirely a geographical one. Under certain circumstances, an act
relating to property within a city may be of such general concern that
local regulation concerning municipal affairs is inapplicable.” (Means,
supra, 14 Cal.2d at p. 259.) For example, maintenance of city streets
ceases to be a municipal affair if the Legislature designates a street
as a secondary state highway; so, too, regulations that require
construction to be overseen by local supervisors ceases to be a
municipal affair once they are applied to state buildings. (Ibid.) In
each example, the municipality’s exercise of power results in a “direct
conflict of authority.” (Id. at p. 260.) “Upon fundamental principles,”
we concluded, “that conflict must be resolved in favor of the state.”
(Ibid.
We addressed a similar issue in Hall, supra, 47 Cal.2d 177, in
which we held that a school district organized under state laws was
exempt from building regulations promulgated by a nonchartered city.
We explained that under the California Constitution, “[t]he public
schools of this state are a matter of statewide rather than local or
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
municipal concern” (id. at p. 179); furthermore, we observed, the state
has occupied the field of the construction of school buildings (id. at
pp. 184, 188). Citing Means, we explained that, as a general rule,
when the state “engages in such sovereign activities as the
construction and maintenance of its buildings . . . it is not subject to
local regulations unless the Constitution says it is or the Legislature
has consented to such regulation.” (Hall, at p. 183.) So, too, with the
construction of school buildings by school districts that act as state
agencies for the operation of the local school system. (Ibid.; see id. at
p. 181.
The Courts of Appeal have applied the principles articulated in
Means and Hall to exempt state agencies from the regulatory reach of
a wide array of local ordinances. In City of Santa Ana v. Board of Ed.
of City of Santa Ana (1967) 255 Cal.App.2d 178 and Laidlaw Waste
Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Cal.App.4th 630,
for example, the courts held that school districts were exempt from
local garbage collection regulations. In City of Orange v. Valenti
(1974) 37 Cal.App.3d 240, the court held that the state unemployment
insurance office did not have to comply with a local parking ordinance
prescribing the number of parking spaces that must be available. (Id.
at pp. 242–244.) In Regents of University of California v. City of Santa
Monica (1978) 77 Cal.App.3d 130, 136–137, the court held the city
could not enforce a construction fee against the Regents, because “the
University of California is not subject to local regulations with regard
to its use or management of the property held by the Regents in public
trust.”
20
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UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
This line of cases does not articulate quite as broad a rule as the
universities suggest.5 The cases concern substantive regulatory
requirements that interfered with the state’s substantive judgments
about how to perform its assigned functions. Means and Hall tell us
that in the event of a conflict between a municipality’s view of, say,
how best to build a parking lot, and the state’s ability to decide for
itself what sort of parking lot would best serve its needs, the state’s
prerogatives must prevail. But the Means-Hall cases do not hold that
state agencies are categorically beyond the reach of any local law, no
matter how inobtrusive, including one that does no more than require
assistance in collecting a concededly valid tax on third parties. No
such scenario was presented in those cases, and we did not answer the
question.
5
The Court of Appeal understood this line of cases to distinguish
between municipal regulations that operate on state agencies in their
performance of “proprietary” activities—which are permissible—and
those regulations that instead operate on state agencies in their
performance of “governmental functions.” The court concluded that
the operation of the parking lots in question is a “governmental”
function, and for that reason deemed San Francisco’s collection
requirement unconstitutional as applied. (City and County of San
Francisco, supra, 11 Cal.App.5th at p. 1114; see Board of Trustees,
supra, 49 Cal.App.3d 45; City of Modesto, supra, 34 Cal.App.3d 504.
Although the parties continue to debate whether operation of paid
parking lots is better described as a “proprietary” or a “governmental”
function, both sides agree that the proper result in this case does not
turn on this matter of characterization. We agree. Because this case
does not require us to decide how the distinction between
governmental and proprietary functions might inform our assessment
of the state’s interest, if at all, we decline to do so.
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UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
The universities’ argument for an absolutist view of
“hierarchical sovereignty” also draws on an intuition derived from
federal constitutional law, where the high court has held that one
sovereign—namely, the federal government—cannot conscript
officials of another sovereign—state governments—for its own
purposes. (See Murphy v. National Collegiate Athletic (2018) 584 U.S.
___ [138 S.Ct. 1461]; Printz v. United States (1997) 521 U.S. 898.) But
it is not clear that even those cases, which concern the unique
federalism principles embodied in the United States Constitution, are
properly read to adopt a rule of categorical immunity from any and all
ministerial requirements one government might impose on another.
(See Printz, at p. 936 (conc. opn. of O’Connor, J.) [reserving question
whether anticommandeering doctrine invalidates ministerial
reporting requirements].
And outside of the context of federal-state relations, the high
court has concluded that one government—the state—does have the
authority to require another government—an Indian tribe—to bear
“ ‘minimal burdens’ ” in collecting any applicable state taxes on its
behalf, even though the tribe is in no way answerable to the state.
(Oklahoma Tax Comm’n v. Chickasaw Nation (1995) 515 U.S. 450,
459.
Having exhausted the relevant precedent in this area, it
remains to consider whether the structure of our state Constitution
requires us to erect a rigid bar against the sort of intergovernmental
tax collection assistance requirement at issue here. We conclude that
it does not. In matters concerning the structural division of authority
under our Constitution, we have generally avoided the type of
absolutist approach the universities urge in favor of a more flexible
one, capable of adaptation to the practical imperatives of governance.
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UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
(See, e.g., People v. Bunn (2002) 27 Cal.4th 1, 14 [recognizing that
while our Constitution divides power among three coequal branches,
“the branches share common boundaries [citation], and no sharp line
between their operations exists. [Citations.] . . . [¶] Indeed, the
‘sensitive balance’ underlying the tripartite system of government
assumes a certain degree of mutual oversight and influence.
[Citations.]”
In questions concerning the division of authority between the
state and charter cities, in particular, we have recognized the need to
maintain a sensitive balance between competing prerogatives. In
California Federal, we emphasized the fact- and circumstance-specific
nature of the determination whether an ordinance governs a
“ ‘municipal affair,’ ” (California Federal, supra, 54 Cal.3d at p. 17
over which charter cities maintain ultimate authority (Cal. Const.,
art. XI, § 5, subd. (a)), or a “ ‘statewide concern,’ ” which means the
charter city measure must yield in the face of conflicting state
interests (California Federal, at p. 17). “In cases presenting a true
conflict between a charter city measure—whether tax or regulatory—
and a state statute,” we said, “the hinge of the decision is the
identification of a convincing basis for legislative action originating in
extramunicipal concerns, one justifying legislative supersession based
on sensible, pragmatic considerations.” (California Federal, at p. 18.
Courts may invalidate an otherwise valid charter city measure only
where, “under the historical circumstances presented, the state has a
more substantial interest in the subject than the charter city.” (Ibid.
This state interest must be demonstrated through a “fact-bound
justification,” for deferring to the mere assertion of a state prerogative
would “ ‘ultimately all but destroy municipal home rule.’ ” (Ibid.
23
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
Here, too, we conclude that the constitutional task before us
calls for a sensitive balancing of constitutional interests, rather than
a simple invocation of constitutional rank. To be sure, this is not a
preemption case like California Federal; we are not asking whether
an ordinance that would otherwise represent a lawful exercise of the
charter city’s powers is invalid, either on its face or as applied, because
the Legislature has claimed the relevant regulatory area exclusively
for the state. But the basic task is similar. Here, much as in
California Federal, we are called on to “adjust[] the political
relationship between state and local governments in discrete areas of
conflict.” (California Federal, supra, 54 Cal.3d at p. 18.) Our
emphasis on pragmatic balancing and factual context in the
preemption analysis translates cleanly to the present dispute, and
contradicts the kind of categorical, sweeping rule urged by the
universities. A state agency’s generalized offense at the notion of
taking orders from a local government cannot alone be dispositive; we
must consider and pragmatically weigh the substantive constitutional
interests on both sides of the balance.
Here, on the state’s side of the balance, we recognize the
universities’ objection rests on more than just generalized offense;
they worry that if municipalities begin to impose legal requirements
on them, their attention will inevitably be diverted from their
missions. The concern is a legitimate one, but it bears emphasis that
the case before us does not concern just any kind of legal requirement;
it concerns a requirement to collect parking taxes along with the
university’s parking fees. Even so, we agree with the dissenting
opinion in the Court of Appeal that “requiring a state entity to collect
a local tax brings the respective sovereign spheres of the state and a
municipality within harrowingly close proximity.” (City and County
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
of San Francisco, supra, 11 Cal.App.5th at p. 1146 (dis. opn. of Banke,
J.).) But as a practical matter, the burdens associated with the
particular tax-collection requirement at issue here are minimal.6 The
only disruptions the universities have been able to identify with any
specificity are the secondary economic effects that San Francisco’s tax
will impose on their parking operations. As we have already
explained, however, “the fact that a municipal tax is imposed in a
fashion which permits its ultimate economic burden to be passed on
to a higher governmental unit does not invalidate it.” (A.E.C. Los
Angeles, supra, 33 Cal.App.3d at p. 940.
On the other side of the balance, the city’s interest in enforcing
the collection requirement is considerable. San Francisco has a
legitimate interest in the millions of dollars in contested tax money,
and a tax is effective only if it can be collected. It is precisely for that
reason that we have repeatedly held in other contexts that the power
to tax includes the power to order steps necessary to collect the tax,
including the recruitment of third parties who would otherwise be
beyond the charter city’s regulatory power. In Ainsworth, supra, 34
Cal.2d 465, for example, a liquor retailer challenged San Francisco’s
sales tax, arguing it was inconsistent with a constitutional provision
vesting the state with the exclusive power to regulate liquor within
the state. (Id. at p. 468; see Cal. Const., art. XX, § 22.) San Francisco’s
6
And indeed, to avoid any question on the score, San Francisco
has conceded that it may be required to reimburse the universities for
their costs of collection and remittance. While it is clear that there is
no significant burden on a sovereign when these administrative costs
are reimbursed, the parties have not asked us to decide whether the
burden could be significant where reimbursement is not provided.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
ordinance required the retailer to collect a sales tax from the
purchaser at the time of sale, to register with the tax collector, to keep
records, and to make quarterly returns. (Ainsworth, at pp. 468–469.
We held that the effect of the constitutional provision should not be
extended to reduce “the plenary power of taxation possessed by a
chartered municipality as an essential attribute of its existence.” (Id.
at p. 472.) Because the tax was a valid exercise of the city’s authority,
we further held that the collection, recordkeeping, and remittance
requirements “appear reasonably adapted to insure the collection and
proper remission of the tax, and as so premised, they constitute the
maintenance of an accounting standard coincident with the city’s
taxing power rather than a regulation exclusively reserved to the state
in the exercise of its police power over the liquor traffic.” (Id. at
p. 476.) The conclusion that a collection requirement is not a
“regulation” reserved to the state, we said, “seems wholly clear when
it is remembered that the city’s power to levy such tax would include
the power to use reasonable means to effect its collection.” (Ibid.
Similarly, in Rivera v. City of Fresno (1971) 6 Cal.3d 132,
disapproved on other grounds by Yamaha Corp. of America v. State
Bd. of Equalization (1998) 19 Cal.4th 1, consumers sought to
invalidate an ordinance requiring utility companies to collect and
remit a municipal utility tax. (Rivera, at p. 135.) We held that the
tax was consistent with the charter city’s “home rule” powers, and was
not preempted by the state’s law regulating local sales and use taxes
or its laws regulating public utilities. (Id. at pp. 135–136, 139–140.
“[W]hether or not the state has occupied the field of regulation,” we
said, “cities may levy fees or taxes solely for revenue purposes, as was
done by the Fresno utility users’ tax.” (Id. at p. 139.) “Further, the
requirement that the utility company supplying a particular utility
26
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
service collect the utility users’ tax and remit to the city does not
constitute forbidden or conflicting regulation of the utility.” (Ibid.
Similar principles are in play here, though the subject of the collection
requirement is a state agency rather than a private entity subject to
exclusive state regulation.
This conclusion accords with the only appellate decision to
consider this issue before the Court of Appeal decision in this case. In
City of Modesto, supra, 34 Cal.App.3d 504, Modesto, a charter city,
sought to compel irrigation districts—state agencies that distribute
and sell electrical energy—to collect utility taxes owed by the service
user. The irrigation districts conceded the utility users’ tax was a
“valid exercise of a chartered city’s power to tax for revenue purposes.”
(Id. at p. 506.) But much like the universities here, the irrigation
districts argued “that they cannot be compelled to collect the city’s tax
because the ordinance, to the extent that it applies to them, impinges
on the state’s sovereignty over local entities; they assert that the
collection requirement of the city ordinance is a regulation and that
this regulation, if extended to state agencies, contravenes the almost
universal rule throughout this country that the activities of the state
and its agencies cannot be controlled or regulated by local entities in
the absence of legislative consent.” (Ibid.
The Court of Appeal rejected this argument. The court held, as
an initial matter, that a collection requirement that affects a state
agency in its “proprietary” capacity does not impinge on state
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UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
sovereignty. (City of Modesto, supra, 34 Cal.App.3d at pp. 506–507.)7
But the court then proceeded to “affirm the judgment for another
reason.” (Id. at p. 508.) Recognizing that the city “has no practical
nor economical means of collecting such a tax without the cooperation
of the supplier of the utility service,” the court concluded: “It is basic
that the power to tax carries with it the corollary power to use
reasonable means to effect its collection; otherwise, the power to
impose a tax is meaningless. (Ainsworth[, supra,] 34 Cal.2d [at p.] 476
[211 P.2d 564].) It is also basic that if there is a conflict between the
California Constitution and a law adopted by the Legislature, the
California Constitution prevails. While irrigation districts may be
state agencies, they are nevertheless creatures of the Legislature, and
like the Legislature must submit to a constitutional mandate; the
California Constitution is the paramount authority to which even
sovereignty of the state and its agencies must yield. It follows that
the collection requirement of respondent’s ordinance, though
applicable to state agencies, is a reasonable exercise of the city’s
constitutional power to tax for revenue purposes.” (City of Modesto,
at p. 508.) In so holding, the court emphasized that the irrigation
districts “are merely conduits for the collection of the city’s tax; they
are not liable for the tax itself or the cost of collection; the trial court
has ordered the city to reimburse the districts for all costs incurred in
7
As noted above, we do not rely on the distinction between
proprietary and governmental activities in reaching our conclusion in
this case. (See ante, fn. 5.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
the collection process.” (Id. at pp. 508–509.)8 The same is true here,
and the same result should obtain.
Our conclusion is also, as noted, consistent with high court
precedent holding that the power to tax includes the power to require
reasonable collection efforts from a fellow government. In Moe v.
Salish & Kootenai Tribes (1976) 425 U.S. 463 (Moe), the court
adjudicated a series of disputes between the asserted taxing power of
the State of Montana and the immunity claimed by an Indian tribe.
As relevant here, although states have no power to regulate Indian
tribes, the court upheld a state cigarette tax imposed on reservation
sales to non-Indians. The court went on to consider whether the state
could require an Indian retailer on the reservation (including the tribe
itself) to collect a state cigarette tax imposed on sales to non-Indians.
The tribe argued “that to make the Indian retailer an ‘involuntary
agent’ for collection of taxes owed by non-Indians is a ‘gross
interference with [its] freedom from state regulation.’ ” (Id. at p. 482.
But, the court recognized, “[w]ithout the simple expedient of having
the retailer collect the sales tax from non-Indian purchasers, it is clear
that wholesale violations of the law by the latter class will go virtually
unchecked.” (Ibid.) The court further explained that the “State’s
8
In City of Moreno Valley, supra, 31 Cal.App.4th 24, the court
relied on City of Modesto to hold that the city could require a
municipal water district to collect and remit utility taxes. Unlike in
City of Modesto, however, the district in City of Moreno Valley did not
claim that the ordinance impinged on the state’s sovereignty; it
argued only that no statute authorized the city to impose the collection
requirements on it. (See City of Moreno Valley, at p. 30.
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
requirement that the Indian tribal seller collect a tax validly imposed
on non-Indians is a minimal burden designed to avoid the likelihood
that in its absence non-Indians purchasing from the tribal seller will
avoid payment of a concededly lawful tax.” (Id. at p. 483.) This
collection requirement, the court said, did not frustrate tribal self-
government or run afoul of any congressional enactment. (Ibid.
Thus, “the State may require the Indian proprietor simply to add the
tax to the sales price and thereby aid the State’s collection and
enforcement thereof.” (Ibid.)9
Here, balancing the relevant interests of the concerned
governments, we reach a similar conclusion. The municipal interests
at stake are weighty. As a charter city, San Francisco has the
9
The court sounded a similar theme in Rainier Nat. Park Co. v.
Martin (W.D.Wn. 1937) 18 F.Supp. 481, affd. sub nom. Rainier Nat.
Park Co. v. Martin (1938) 302 U.S. 661, which we cited in Ainsworth.
A corporation operating in a national park in the State of Washington
challenged the validity of various taxes levied by the state, including
a retail sales tax that the state required the corporation to collect on
merchandise sold to tourists, on the grounds that it was an
instrumentality of the United States and immune from taxation.
(Rainier Nat. Park, supra, 18 F.Supp. at p. 487.) The court held that
Washington did possess the authority to impose the contested taxes,
and “[w]hen the state reserved the right to tax, it also reserved the
right to collect or enforce the tax. The former without the latter would
be an empty gesture, which is not the purpose of the reservation. If
the collection or enforcement incidentally constituted a regulation of
plaintiff’s business, it was valid, nevertheless, if the means adopted
for the collection or enforcement are reasonable. It has long been held
that the imposition of the duty to collect the tax upon a person, and
thus constitute such person an agent of the state, is a reasonable
means for collection of the tax.” (Id. at p. 488.
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UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
constitutional power to raise revenue through taxes. This power is an
“essential attribute of its existence” (Ainsworth, supra, 34 Cal.2d at
p. 472), and it would be “meaningless” (City of Modesto, supra, 34
Cal.App.3d at p. 508) if the city was prohibited from taking reasonable
steps to collect the tax. Frequently, the city will have no practical
means of collecting the tax itself (see City of Modesto, at p. 508), and
requiring consumers to self-report their tax liability would simply
invite extensive fraud (see Moe, supra, 425 U.S. at p. 482).
The interests of the state agency tasked with collection are, by
contrast, less compelling. Receiving and remitting the particular tax
at issue in this case is a “minimal burden” (Moe, supra, 425 U.S. at
p. 483), particularly where, as in City of Modesto, the agency tasked
with collection is reimbursed by the city for all of its associated
administrative costs (City of Modesto, supra, 34 Cal.App.3d at
pp. 508–509). Neither the universities’ ability to pursue their broadly
defined educational mission nor their ability to construct and manage
on-campus parking operations depends on whether state employees
collect a parking tax or the city undertakes the expense to collect the
tax itself.
For these reasons, we conclude that San Francisco’s parking tax
collection requirement, as applied to the state universities, does not
violate principles of state sovereignty embodied in the California
Constitution. The universities maintain the autonomy to manage
their property as they wish, and the universities have failed to
demonstrate that the minimal burden associated with collecting and
remitting the parking tax poses a risk of substantial interference with
their ability to carry out their governmental functions. We must, in
any event, recall that it is ultimately the People of the State of
California who are its “highest sovereign power.” (Oakland Paving
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CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
Co. v. Hilton (1886) 69 Cal. 479, 514.) The universities exercise those
powers granted to them by the People of this state, just as the charter
cities exercise those powers granted to them by the People. If San
Francisco’s tax collection requirement offends state sovereignty, it
must be because the requirement in some way offends or
disadvantages the People’s interests. For reasons already explained,
that is not the case here.
V.
We conclude charter cities may require state agencies to assist
in the collection and remittance of municipal taxes. Levying taxes to
raise revenue is an archetypal municipal affair, and a power secured
by the home rule provision of the state Constitution. Requiring public
parking lot operators to collect municipal taxes along with parking
fees, and to remit the taxes owed, represents no more than a de
minimis administrative burden on the state agencies. San Francisco’s
collection requirement is a valid exercise of its power, from which the
universities are not immune.
32
CITY AND COUNTY OF SAN FRANCISCO v. THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
Opinion of the Court by Kruger, J.
We reverse the judgment of the Court of Appeal and remand for
further proceedings consistent with this opinion.
KRUGER, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CHIN, J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
BAKER, J.*
*
Associate Justice of the Court of Appeal, Second Appellate
District, Division Five, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
33
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion City and County of San Francisco v. Regents of University of California
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 11 Cal.App.5th 1107
Rehearing Granted
Opinion No. S242835
Date Filed: June 20, 2019
Court: Superior
County: San Francisco
Judge: Ernest H. Goldsmith and Marla J. Miller
Counsel:
Dennis J. Herrera, City Attorney, Jean H. Alexander, Chief Tax Attorney, Christine Van Aken, Chief of
Appellate Litigation, and Peter J. Keith, Deputy City Attorney, for Plaintiff and Appellant.
Colantuono, Highsmith & Whatley, Michael G. Colantuono and Aleks R. Giragosian for League of
California Cities as Amicus Curiae on behalf of Plaintiff and Appellant.
Jarvis, Fay, Doporto & Gibson, Jarvis, Fay & Gibson, Benjamin P. Fay, Gabriel McWhirter; Elise
Traynum; Charles F. Robinson, Karen J. Petrulakis and Margaret L. Wu for Defendant and Respondent
Board of Directors of Hastings College of the Law.
Margaret L. Wu; Munger, Tolles & Olson, Bradley S. Phillips, Benjamin J. Horwich and Dila Mignouna
for Defendant and Respondent The Regents of the University of California.
Kamala D. Harris and Xavier Becerra, Attorneys General, Edward C. DuMont, State Solicitor General,
Janill L. Richards, Principal Deputy State Solicitor General, Gonzalo C. Martinez, Deputy State Solicitor
General, Geoffrey H. Wright, Associate Deputy State Solicitor General, Paul D. Gifford, Assistant
Attorney General, Joyce E. Hee, David Lew and Robert E. Asperger, Deputy Attorneys General, for
Defendant and Respondent Board of Trustees of the California State University.
David A. Carrillo; Benbrook Law Group, Bradley A. Benbrook and Stephen M. Duvernay for California
Constitution Center as Amicus Curiae on behalf of Defendants and Respondents.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Peter J. Keith
Deputy City Attorney
1390 Market Street, Sixth Floor
San Francisco, CA 94102
(415) 554-3908
Janill L. Richards
Principal Deputy State Solicitor General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA 94102
(415) 510-3920
Opinion Information
| Date: | Docket Number: |
| Thu, 06/20/2019 | S242835 |
