California court of appeal redefines taxes to evade Prop 13

Today the California Court of Appeal issued this disappointing ruling in Morning Star Packing Co. v. California Air Resources Board. Our clients are challenging the state’s greenhouse gas emissions allowance auction under Proposition 13, which requires a supermajority vote for new taxes.

We are profoundly disappointed that a majority of the Court of Appeal panel held today that the billions in revenue that California is collecting through the Cap and Trade allowance auction are not taxes under Proposition 13. Under the majority’s reasoning, California’s gasoline taxes are not really taxes, because the state does not compel you to buy gasoline, and you get something of value for it paying the tax: a gallon of gas. Under this decision, the state’s taxpayers are deprived of the protections which Prop 13 was intended to provide.

We are consulting with our clients to determine the next step in this case, which obviously includes consideration of filing a petition for review with the California Supreme Court.