HomeMy WebLinkAbout06/01/2010, C8 - AMENDMENT TO THE SAN LUIS OBISPO MUNICIPAL CODE REQUIRING CITY TAXES TO BE PAID PRIOR TO CLAIMANTS council ,
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CITY OF SAN LUI S OBISPO
FROM: J. Christine Dietrick, City Attorney
SUBJECT: AMENDMENT TO THE SAN LUIS OBISPO MUNICIPAL CODE
REQUIRING CITY TAXES TO BE PAID PRIOR TO CLAIMANTS
SEEKING JUDICIAL RELIEF
RECOMMENDATION
Introduce the attached Ordinance to require that a City tax be paid before a person contesting the
validity or the amount of the tax may seek judicial relief.
DISCUSSION
The California Constitution prohibits a taxpayer from seeking judicial relief with respect to a tax
until the tax has been paid. A recent appellate court case held that this provision did not apply to
cities in the absence of a "pay first, litigate later" ordinance. The attached ordinance will add
such a provision to the Municipal Code, thereby requiring any person wishing to challenge a tax,
interest or penalty to pay the tax first before litigating the matter.
The California Constitution, Article XIII, Section 32 requires that persons seeking a refund of
taxes or fees pay the tax or fee first before filing judicial proceedings to seek a refund. This "pay
first, litigate later" rule is intended to allow the State to predict and manage its finances and
prevent persons who, for whatever reason, dispute the tax from withholding payment. The
provision has long been thought by local government attorneys to apply to cities, counties and
special districts. Recently, however, an appellate court held to the contrary and said that in the
absence of a city's having an express "pay first, litigate later" ordinance, a person contesting the
validity of a local tax did not have to pay the tax in order to challenge it.
To ensure that the City continues to have the benefit of this long standing procedural rule, staff
has prepared the attached ordinance. If adopted, the ordinance will provide assurances that the
City will continue to receive timely its tax revenues. Cities and counties around the State have
adopted similar ordinances in response to the appellate court decision.
FISCAL IMPACT
Adoption of the attached ordinance will best assure the City will receive its tax revenues in a
timely manner.
ATTACHMENT
Ordinance
G:Wgenda-Ordinances-Resol\City Tar Py,mt Prior to Claim for Refund.CAR.dot Cg l
ATTACHMENT
ORDINANCE NO. (2010 Series)
AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO ADDING SECTION 1.08.150
TO CHAPTER 1.08 OF THE MUNICIPAL CODE TO CLARIFY THE REQUIREMENT
THAT A TAX FIRST MUST BE PAID BEFORE FILING FOR A REFUND OR
JUDICIAL RELIEF
WHEREAS, California Constitution Article XIII, Section 32 requires that a taxpayer
must first pay a tax before seeking a refund or judicial relief; and
WHEREAS, the courts have consistently held that this "pay first, litigate later" rule was
applicable to both the State and local entities; and
WHEREAS, in a recent California Court of Appeal case it was held that Article XIII,
Section 32 applies to the State but not to local entities; and
WHEREAS, adoption of a clear"pay first, litigate later" rule is in the City's best interest.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Section 1.08.150 is added to Chapter 1.08 to read as follows:
1.08.150 Payment of Taxes prior to refund or judicial relief.
No legal or equitable process shall be issued in any proceeding in any court against the City or
any officer to prevent or enjoin the collection of any tax. After payment of a tax claimed to be
illegal, not due and/or owing, and/or incorrectly calculated, an action may be maintained to
recover the tax paid, provided that prior to any judicial action all administrative remedies shall be
exhausted.
SECTION 2. A summary of this ordinance, together with the names of Council
members voting for and against, shall be published at least five(5) days prior to its final passage,
in The Tribune, a newspaper published and circulated in this City. This ordinance shall go into
effect at the expiration of thirty (30) days after its final passage.
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ATTACHMENT
Ordinance No. (2016 series)
Page 2
INTRODUCED on the day of 2010 AND FINALLY
ADOPTED by the Council of the City of San Luis Obispo on the day of 2010, on the
following vote:
AYES:
NOES:
ABSENT:
Mayor David F. Romero
ATTEST:
Elaina Cano
City Clerk
APPROVED AS TO FORM:
hristine Dietrick
City Attorney
G:Wgenda-Ordinances-Resol\City Tax Payment Prior to Claim for Refund.doc
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