1.4.2 What Is a Tax?
For purposes of Article XIIIC of the California Constitution, “any levy, charge, or exaction of any kind imposed by a local government” is a tax, except the following:
a) “A charge imposed for a specifc beneft conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the beneft or granting the privilege.” Examples include neighborhood parking permits and parade permits.
b) “A charge imposed for a specifc government service or product directly to the payor that is not provided to those not charged, and which does not exceed the local government’s reasonable cost of service to the fee payor.” Examples 1-16 include municipal utility charges for water, sewer, and electricity service, ambulance transportation fees, and public records copying fees.
c) “A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits; performing investigations, inspections, and audits; enforcing agricultural orders, and the administrative enforcement and adjudication thereof.” Examples include permitting and inspection of regulated businesses, enforcement activities, and pet licenses.
d) “A charge imposed for entrance to or use of local government property or the purchase, rental, or lease of local government property.” Examples include zoo and museum admissions, golf course green fees, athletic feld and equipment rentals, and metered parking.
e) “A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law.” Examples include parking tickets and late payment fees.
f) “A charge imposed as a condition of property development.” Examples include building permit fees, development impact fees, and environmental mitigation cost recovery.
g) “Assessments and property-related fees imposed in accordance with [California Constitution] Article XIIID.” Tese are discussed in Section 1.4.7, Assessments and Section 1.4.9, Property-Related Fees and Charges.
Article XIIIC further provides, “The local government bears the burden of proving by a preponderance of evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bears a fair and reasonable relationship to the payor’s burdens on, or benefits received from, the government activity.” Cost and benefit determinations, therefore, need to be made and documented. These may be challenging and a study by an independent expert is often advisable.