1.4.6 Special Taxes

Special taxes are taxes levied by local governmental entities for special purposes or are taxes levied by local governmental entities that are not general purpose governmental entities (e.g., school districts and special districts). A tax levied for a special purpose is a special tax even if tax proceeds are deposited in the governmental entity’s general fund and special taxes may not be ad valorem real property taxes. The proceeds of special taxes may be used solely for the voter approved purpose or service for which the tax was imposed. Common types of special taxes include the following:

Parcel taxes
Mello Roos taxes for services
Public library service taxes

Taxes that would be general taxes may be special taxes if the proceeds are to be used for a specific purpose or specific purposes (e.g., a sales tax to be used solely to finance transportation projects).

APPROVAL REQUIREMENTS FOR NEW, EXTENDED OR INCREASED SPECIAL TAXES – Special taxes must be approved by the governing body of the taxing entity or placed on the ballot by an initiative petition and must be approved by voters. A special tax is not “increased” if it is imposed at a rate not higher than previously approved.

GOVERNING BOARD APPROVAL REQUIREMENT – Majority vote (two-thirds vote for add on sales taxes)

VOTER APPROVAL REQUIREMENT – Two-thirds. A recent California Supreme Court decision suggests that approval may be by majority vote in the case of a special tax proposed by initiative.52 Certain Mello-Roos taxes may be approved by a landowner vote.

DEBT FINANCING IMPACT – Special taxes are pledged to secure debt and used to pay debt service on bonds issued for the purpose for which the special tax is imposed. See Section 3.3.7.2, Mello-Roos Bonds (Community Facilities Districts).