PJI Has Property Tax Declared Unconstitutional As Applied to Church
San Rafael, CA–In a case that could benefit churches statewide, the Pacific Justice Institute convinced the Marin County Superior Court to declare a voter-approved local property tax unconstitutional as applied to a local church.
On October 9, PJI attorney Ray Hacke represented Valley Baptist Church of San Rafael in a civil trial against the City of San Rafael. The trial concerned the City’s Paramedic Services Special Tax, which was enacted by a two-thirds vote of the City’s voters in 2010 and empowers the City to annually tax non-residential structures at a rate of up to 14 cents per square foot. At issue were two questions of law: one, whether the Paramedic Tax is a property tax, as opposed to an excise tax; and two, if the Tax is in fact a property tax, whether its status as a voter-approved “special tax” allows the City to skirt the California Constitution’s provision exempting buildings that are used exclusively for religious worship from taxation.
The answer to the first question was “yes,” as liability for the Paramedic Tax is triggered by mere ownership of real property, as opposed to a particular use of the property, and is due annually. The answer to the second question was “no,” as the court held that the California Constitution exempts buildings used for religious worship from property taxation in all its forms, not just ad valorem taxes, which are levied on property in proportion to its value as determined by assessment or appraisal.
Based on its answers to those questions, the court held that the Paramedic Tax was unconstitutional as applied to Valley Baptist. The court also ordered the City to refund the $13,644 in taxes that the Church had to pay to the City as a condition of filing the lawsuit, along with interest at a rate of 3 percent per annum.
“Jesus said to render to Caesar that which is Caesar’s,” said Hacke, citing Matthew 22:21. “He said nothing about letting Caesar reach into churches’ pockets to take that which does not belong to him. That’s what the City of San Rafael tried to do here by ignoring California’s tax exemption for church buildings, and PJI made sure the City didn’t get away with it.”
Valley Baptist’s victory could have implications for both cities and churches statewide—especially if an appellate court affirms the trial court’s ruling. As one of the cases Hacke cited in his trial briefs noted, cities have an obvious incentive to re-label their taxes to get around the California Constitution’s provision exempting church buildings from taxation.
“The Legislature has declared that church buildings are exempt from property taxation, and cities have a duty to honor that,” PJI President Brad Dacus said. “The City of San Rafael chose not to, and hopefully this case will send a message to other cities that they cannot willfully ignore churches’ rights under the California Constitution in order to generate revenue.”