Water Rate Schedule Is A Legislative Decision That’s Subject to Referendum

In Wilde v. City of Dunsmuir, the City of Dunsmuir established a new water rate master plan, which Ms. Wilde sought to challenge by referendum.  She gathered the requisite number of signatures, but the City refused to put the referendum on the ballot on the basis that the water rates were an administrative decision subject to initiative, but not to referendum.  Ms. Wilde accordingly changed tactics and gathered signatures to put her own initiative on the ballot.  At the same time, she filed a petition for writ of mandate to place the referendum on the ballot.  The trial court denied the writ and the voters rejected Ms. Wilde’s initiative. 

On appeal, the Third District Court of Appeal overturned the trial court.  The trial court was required to issue a peremptory writ of mandate ordering the City to place Wilde’s referendum on the ballot.

As a procedural matter, the City argued on appeal that the appeal was moot because Ms. Wilde’s initiative was on the ballot.  The Court soundly rejected that argument.  The initiative was distinctly different from the referendum  The initiative would have imposed a different rate schedule than the City’s master rate schedule whereas the referendum would simply repeal the City’s master rate schedule.  The Court reasoned that voters might dislike both Ms. Wilde’s and the City’s rate schedules, thereby voting against Ms. Wilde’s initiative but for Ms. Wilde’s referendum.  Therefore, the appeal was not moot because the court could grant relief by requiring the referendum to be put on the ballot.

Substantively, the Court granted the writ of mandate, requiring that the referendum go to the voters.  As always, the Court “jealously guard[ed] th[e] right of the people” to direct democracy.  See Associated Home Builders etc. v. City of Livermore (1976) 18 Cal.3d 582.  More specifically, it concluded that Proposition 218 had been intended to expand voting rights, rather than contract them, so Proposition 218 could not reasonably be read to “negatively impact voters’ referendum power.” 

The Court further determined that the fee schedule was a legislative action, rather than an administrative action.  The legislative/administrative distinction was determinative because referenda are only available for legislative acts, but not for administrative acts.  A legislative action prescribes a new policy or plan whereas an administrative action carries out a previously determined legislative action.  The new rate schedule was “the product of a newly formulated set of policies that implemented a new set of choices,” making it a legislative decision.  Had the City simply implemented the prior 1994 water policies, it might have been an administrative action.  But that did not occur.    

Finally, the Court rejected the City’s allegation that its rate schedule was not subject to referendum under the “essential government service exception” to the voter’s referendum power.  In general, referendum that would preclude the functioning of essential government services is not permissible.  Hunt v. Mayor and Council of City of Riverside (1948) 31 Cal.2d 619, 628-29.  But the City’s water rate schedule did not affect the functioning of essential government services.  In the case of a successful referendum, the water would still be provided, but the City would revert to its old rate schedule. 

This case confirms once again the breadth and power of direct democracy in California.  It serves as a reminder to public agencies to respect their citizens’ initiative and referendum powers. 


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