Appeals Court Finds S.D. Tax for Jails Legal

Proposition A, the half-cent sales tax that San Diego County voters narrowly approved more than two years ago to build new jails and courts, was ruled legal Tuesday by a unanimous appellate court that said it was properly enacted.

Reversing a lower-court ruling, a three-judge panel of the 4th District Court of Appeal in San Bernardino ruled that, although the measure barely passed--with 50.6% of the vote--a majority vote was enough to make it legal.

In a complex ruling, the court said the measure did not need to garner the two-thirds approval required for new taxes under either Proposition 13, the landmark 1978 tax-cutting initiative, or a 1986 tax initiative, Proposition 62. For technical reasons in the tax laws, Proposition 13 simply did not apply and neither did the other measure, the court said.

The ruling validated a ballot measure that proponents have hailed as the financial answer to the county’s longstanding problems of jail crowding and a badly overextended court system.

The ruling also has statewide implications as other counties have closely watched the San Diego case for guidance on meeting criminal justice funding needs. In Orange County, for example, supervisors have been considering putting a similar sales tax before voters to pay for much-needed new jails, but were not certain they could gain a two-thirds approval.

Even with the decision, however, Proposition A--and the $160 million that already has been collected while the case has dragged through the courts--remains in legal limbo pending a further appeal to the California Supreme Court, lawyers and county officials said Tuesday.

And an appeal is certain, said Louis Katz, one of the attorneys for leaders of the San Diego County Libertarian Party, on whose behalf the suit was brought. Katz said he remains convinced that the tax is unconstitutional.

“We feel they’re wrong,” Katz said, referring to the 4th District Court’s ruling. “We’re going to appeal it. We’re going to the Supreme Court. We think we’re eventually going to prevail. It’s that simple.”

If the Supreme Court does not take the case, the money--precisely $160,140,314.84 as of Tuesday, all of it sitting in an interest-bearing account--will be available immediately, said Rich Robinson, director of the county’s Office of Special Projects, the agency that since 1986 has directed planning for local jails and courts.

If the court grants a hearing, however, the money will remain in the account while the court considers the case, Robinson said. If it finds that the tax is illegal, the tax would be temporarily rolled back to enable San Diego consumers to recoup the funds illegally collected under Proposition A.

Lawyers said Tuesday that there is no way to predict whether the Supreme Court will take the case. Still, San Diego officials were jubilant Tuesday at the prospect of finally gaining access to the mountains of money the measure has generated.

County Supervisor John McDonald, one of the current members of the agency that Proposition A created to spend the revenue, the San Diego County Regional Justice Facility Financing Agency, said, “It’s probably the best news I’ve had for a long time.

“It now gives us the opportunity to move seriously ahead with planning for the courts and jails.”

City Councilman Wes Pratt, another member of the financing agency, said the ruling means officials “will now be able to move forward and start constructing the facilities we need to keep criminals off the streets.”

“Certainly there’s a great need for additional courts,” he added. “The $160 million will help, but a lot more still needs to be done.”

Robinson, who is the acting director of the financing agency, said the panel already has put together a master plan that calls for the cash to be spent on four projects:

* Addition of 754 beds at the county’s East Mesa jail near the U.S.-Mexico border, 7 miles east of Interstate 805.

Building for the first 754 beds is under way and is expected to be completed by spring, Robinson said.

The cash-strapped county has insufficient funds to operate even the first unit when it opens, Robinson said. But, up to 25% of Proposition A funds can be spent for operating costs, he said.

* Construction of a new central booking facility to replace the aging County Jail downtown.

County officials are under court order to reduce the number of inmates at the downtown jail, which has been hovering at about 1,000 inmates for most of 1990, to 750 by Oct. 29, or face fines and jail sentences themselves.

The reduction at the downtown jail was ordered Aug. 20 by El Cajon Superior Court Judge James Malkus after the county reported in July that it had lowered inmate populations at five outlying jails.

* Expansion or replacement of the downtown County Courthouse, home to the San Diego Superior and Municipal courts.

* Expansion of the North County courthouse in Vista, which also holds Superior and Municipal courts.

If the money was available, Robinson said, progress “could be made very quickly on all of them.”

“It’s been a long time coming,” Robinson said, referring to the 4th District court’s ruling. “We have remained steadfastly optimistic that we would get a fair hearing. I think we got that.”

Sheriff John Duffy, who runs the county jails, said he hopes opponents of the tax “would have a change of heart” regarding an appeal. He added: “The responsible thing to do is for them to say, ‘We tried, and we didn’t make it.’ ”

Over its 10-year life, the half-cent sales tax, which raised the local sales tax to 7% beginning Jan. 1, 1989, is projected to generate $1.6 billion for new jails and courtrooms.

By the slim 50.6% margin, voters approved the measure in June 1988. The suit challenging the measure was filed the next month.

The case was heard in Riverside County because of San Diego judges’ conflict of interest in a matter affecting courtroom space.

Lawyers for the county and for the financing agency argued that the 1987 state legislation that set the stage for the measure stated that a majority vote was sufficient for passage.

Katz--and the six other attorneys who filed the lawsuit for the Libertarians--contended, however, that the legislation was a sham that violated both the letter and spirit of Proposition 13.

In a March 1989 decision, Riverside Superior Court Judge Gordon Burkhart sided with opponents of the measure.

But the 4th District court said Tuesday that Proposition 13 had no bearing on the case.

Proposition 13 applies only to agencies that can levy taxes, Justice Thomas E. Hollenhorst said. The financing agency set up by Proposition A has the power only to spend money, not levy taxes, he said.

The financing agency is designed to spend its funds in accord with plans developed and approved by county supervisors. So the measure’s opponents said it is not an independent agency but an alter ego of the county board--which assuredly is subject to the two-thirds provision.

But Hollenhorst said this argument also failed. The proper place to address any loopholes like that, he said, is the Legislature, not in a court case.

Katz and the other lawyers also charged that the tax violates Proposition 62, an initiative approved in November 1986 that prohibits governmental entities from imposing any “special tax” for “special purposes” without a two-thirds vote.

Opponents claimed that Proposition A was a “special tax,” and that funds clearly earmarked for courts and jails are for “special purposes.”

Hollenhorst, however, said Proposition 62 also did not apply, saying its two-thirds requirement is like a referendum on local taxing power. The California Constitution, he said, does not permit local governments to hold a referendum on local tax measures.

Justices Howard M. Dabney and F. Douglas McDaniel concurred in the opinion.

Times Staff Writers H.G. Reza and Richard A. Oppel Jr. contributed to this story.