In Jacks v. City of Santa Barbara, the Supreme Court today holds that money collected for the City of Santa Barbara by Southern California Edison from its customers is not necessarily a tax that must be approved by the voters. The court’s opinion by Chief Justice Tani Cantil-Sakauye concludes that, to the extent the money is a franchise fee for Edison’s right to use City property, it’s not a tax, but only if “the charges bear a reasonable relationship to the value of the property interests.”
The opinion is not unanimous. Justice Ming Chin dissents, concluding the fee is a tax because “[t]he electricity users upon whom the City imposes the charge, and who actually pay it, do not receive the franchise, any franchise rights, or any property interests.” He says the majority’s “reasonable relationship” test is “vague, unprecedented, unworkable, and standardless.”
The court affirms in part, but mostly reverses the Second District, Division Six, Court of Appeal. The Court of Appeal held the fee was a tax; that is reversed. However, the Court of Appeal also held the City was not entitled to judgment on the pleadings; this is affirmed because, the Supreme Court decides, it still needs to be adjudicated whether the fee bears a reasonable relationship to the value of the franchise.
