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California Supreme Court Upholds Existing Standards for Public Expenditures on Local Ballot Measures

Vargas v. City of Salinas, — Cal.Rptr.3d —, 2009 WL 1035257 (Cal. April 20, 2009) The Supreme Court’s recent decision in Vargas v. City of Salinas reaffirms the Court’s holding in Stanson v. Mott (1976) 17 Cal.3d 206, and maintains existing limitations on the expenditure of public funds for materials and activities related to ballot measures.

While the Court rejected the adoption of a proposed bright-line test that would have permitted public expenditures for all communications that were not express advocacy, it provided some useful new general guidance beyond that in Stanson. It also provided helpful specific examples both of acceptable publicly funded communications–by approving the specific expenditures by the City of Salinas at issue in the lawsuit–and of unacceptable communications (by expressly disapproving communications from other cases and from a recent California election). We discuss below these important issues, which all public agencies must consider as they communicate with their respective communities regarding local ballot measures.

In Stanson, the California Supreme Court created a standard for determining when a public entity is permitted to expend public funds in connection with a ballot measure. The Court held that communications can generally be categorized as either “campaign materials,” which may not be paid for with public funds, and “informational materials,” for which public expenditures are permitted, but that some types of communications do not clearly fall into either category. In those instances, courts must look at the “style, tenor, and timing” of the communications to determine whether a public expenditure is permitted.

The Vargas case dealt with materials that the City of Salinas made available to the public regarding Measure O (“Measure”), a local initiative that was designed to immediately cut in half, and eventually repeal, the City’s utility users tax (“UUT”). The materials included a report on the potential effects the Measure would have on the City; an alternative budget with program and service reductions that would be implemented if the Measure were to pass; slide presentations made to the Council; a one-page pamphlet that described the history of the UUT and detailed the services that would be eliminated or reduced if the Measure was successful; the minutes of City Council meetings considering the Measure, its impacts, and the City’s response; and articles in the City’s regular quarterly newsletter regarding the Measure, which was mailed to the City’s normal mailing list. Many of the materials were published on the City’s website. The City did not make any of its communicative media available to the Measure’s proponents.

Salinas argued in favor of the adoption of a new legal standard that would have allowed all publicly funded communications, as long as they did not “expressly advocate” in favor of or against a proposed ballot measure. The California Supreme Court instead upheld Stanson as providing the appropriate standards. It nevertheless held that the communications at issue in Vargas were permissible.

The Court also provided some additional guidance which should be helpful for public agencies. First, the Court held that a public agency that communicates its viewpoint on a ballot measure as part of a permissible education effort is not required to represent the views of those who oppose the agency, or to give those individuals or groups access to the agency’s means of communication . Second, public agencies are not prohibited from analytically evaluating and expressing an opinion regarding the merits of a ballot measure, as long as the agency does not use public funds to “mount a campaign” on the measure. An agency may form an opinion; express that opinion in a balanced, non-inflammatory way to citizens who inquire; and make documents reflecting that opinion available to those who seek them out. It is when the agency takes affirmative steps to put its views in the hands or before the eyes of potential voters who have not sought out those views that it enters the gray area. (And if it uses certain media—e.g., billboards, TV and radio spots, or canvassing—it enters the forbidden zone.)

Additionally, Vargas identified three factors that courts will look at when determining whether a communicative activity is truly informational: 1) whether the information conveys past and present facts—for example, that an agency’s legislative body will take specific actions if a measure succeeds or fails; 2) whether the communications are argumentative, include “inflammatory rhetoric,” or urge voters to vote in a particular way or take action to support or oppose a measure; and 3) whether the activity is consistent with a public agency’s normal communicative practices.

Agencies should continue to consult with legal counsel regarding information they wish to disseminate to ensure they are in compliance with the Stanson and Vargas standards. Meyers Nave’s Elections Law Group provides advice on local elections issues and represents public agencies and private individuals in elections litigation. For more information about the Group, or the legal issues discussed in this alert, please contact Sky Woodruff.