County of Los Angeles v. State of California
233 Cal. Rptr. 38, 43 Cal. 3d 46, 729 P.2d 202 (1987)
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Rule of Law:
State laws of general application that apply to both public and private entities, and which only incidentally increase costs for local governments in their capacity as employers, do not constitute a 'new program or higher level of service' requiring state reimbursement under Article XIII B, section 6 of the California Constitution.
Facts:
- In 1979, California voters approved Article XIII B, a constitutional amendment requiring the state to reimburse local governments for costs incurred from state-mandated 'new programs or higher levels of service.'
- In 1980, the California Legislature passed a law increasing the maximum weekly wage for calculating disability indemnity and raising certain death benefits under the workers' compensation system.
- In 1982, the Legislature again passed a law further increasing workers' compensation benefits, including raising minimum and maximum weekly earnings for disability calculations and increasing maximum death benefits.
- These legislative changes to workers' compensation benefits applied to all employers in the state, both public entities like the County of Los Angeles and the City of Sonoma, and private businesses.
- The state did not appropriate or provide funds (subvention) to local governments to cover the increased costs associated with paying the higher benefit levels to their employees.
Procedural Posture:
- The County of Los Angeles and City of Sonoma filed test claims with the State Board of Control seeking reimbursement for increased workers' compensation costs.
- The State Board of Control denied the claims, reasoning that the increases did not create a 'higher level of service.'
- The local governments filed two separate lawsuits in superior court seeking writs of mandate to compel the board to approve their claims.
- In the first action, the superior court (trial court) denied relief, finding the benefit increases did not exceed cost-of-living changes.
- In the second action, the superior court granted partial relief, ordering the board to set aside its ruling and make more adequate findings.
- The local governments appealed from a portion of the second judgment to the Court of Appeal (intermediate appellate court).
- The Court of Appeal consolidated the appeals and held that state-mandated cost increases not exceeding the rise in the cost of living are not reimbursable.
- The County of Los Angeles and the City of Sonoma sought review of the Court of Appeal's decision by the Supreme Court of California.
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Issue:
Does Article XIII B, section 6 of the California Constitution require the state to reimburse local governments for increased workers' compensation benefit costs mandated by state legislation that applies to all employers, public and private?
Opinions:
Majority - Grodin, J.
No. Article XIII B, section 6 does not require state reimbursement because the increased workers' compensation benefits are not a 'new program or higher level of service' uniquely imposed upon local governments. The court reasoned that the drafters of Article XIII B intended reimbursement for costs of programs administered by local governments to provide services to the public, not for incidental costs from laws of general application. Workers' compensation is a statewide system administered by the state, not a local program; local governments are subject to its requirements as employers, just like private entities. To interpret section 6 otherwise would impede the Legislature's plenary power over workers' compensation (Cal. Const., art. XIV, § 4) and would effectively require a two-thirds supermajority vote for any general law that incidentally increased local government costs, an outcome the court found was not intended by the voters.
Concurring - Mosk, J.
No. While concurring in the result, this opinion would have adopted the Court of Appeal's narrower rationale. It argues that state reimbursement is not required only if the benefit increases do not exceed cost-of-living adjustments, because such adjustments do not constitute an 'increased level of service.' The concurrence expresses concern that the majority's broader holding creates a loophole that could allow the state to impose unlimited financial burdens on local governments in the future without providing the necessary funds, contrary to the spirit of the reimbursement requirement.
Analysis:
This decision significantly clarifies and narrows the scope of the state's reimbursement obligation under Article XIII B. It establishes a critical distinction between state-mandated governmental 'programs' administered by local entities (which require reimbursement) and laws of 'general application' that affect local governments merely in their capacity as employers (which do not). This precedent limits the ability of local governments to seek state funding for costs arising from statewide laws like minimum wage increases or other employee benefit changes. The ruling also reinforces the Legislature's ability to pass such generally applicable laws by a simple majority without needing a two-thirds supermajority for an accompanying appropriation, thereby preserving its plenary power in designated areas like workers' compensation.
