California Supreme Court Clears Way for Class Challenges to Local Taxes and Fees: McWilliams v. City of Long Beach
Today, the California Supreme Court issued an opinion that could expose municipalities and agencies to unanticipated liabilities. In McWilliams v. City of Long Beach (Apr. 25, 2013, No. S202037) – Cal.4th -- (McWilliams), the justices held that the claims provisions of the Government Claims Act (Gov. Code section 900 et seq.) control local tax and fee refund actions absent another state statute on point and local claims ordinances are without effect. Because the GCA permits class claims, the ruling gives a green light to class claims for local tax and fee refunds. And because the GCA includes limitations periods longer than those in many local ordinances, the ruling extends the period that a refund claim may cover. The ruling comes at a time when the procedural and substantive rules for local taxes and fees, including the constitutional rules established by Propositions 218 and 26, are less than settled. The result will likely be greater revenue uncertainty for local entities across California. Agencies, however, can take steps to manage their exposure.