Personal Liberties

Citizens for Fair REU Rates v. City of Redding, California

A tax by any other name would smell as rotten

The Redding City Council adopted a budget that included a “payment in lieu of taxes” to be paid by its municipally-owned utility to the city’s general fund. Taxpayers sued the city on the basis that the “payment” was an unconstitutional tax because it paid for general services and was enacted absent the voter approval required by the state’s Proposition 26. An appellate court agreed with the taxpayers that the “payment” was a tax requiring voter approval unless the city proved that the amount collected was necessary to cover the reasonable costs of providing electrical service. The California Supreme Court agreed to review the case and PLF filed an amicus brief supporting the taxpayers.

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