COUNTY OF LOS ANGELES v. STATE (1985)

These consolidated appeals, arising from two separate trial court proceedings, present an issue of first impression.

Appeal No. B001713 (Los Angeles case) concerns the enactment of chapter 1042, Statutes of 1980 (hereinafter 1042/80).   Appeal No. B003561 (Sonoma case) concerns the enactment of chapter 922, Statutes of 1982 (hereinafter 922/82).

Both statutes provide for increases in certain workers' compensation benefits.   All appellants are self-insured employers.   They contend that since the State of California (state) has mandated certain increases in workers' compensation benefits, they are entitled to state reimbursement.   Respondent state counters that the increase in payments not in excess of the applicable cost of living adjustments must be borne by appellants.

After reviewing these statutes together with California Constitution article XIII B, section 6 and Revenue and Taxation Code sections 2207, subdivision (a), and 2231, subdivision (a), we conclude that appellants are not entitled to state reimbursement for statutorily imposed increases in workers' compensation benefits so long as these benefits do not exceed the increase in applicable cost-of-living adjustments.   We do, however, reverse the Los Angeles case and remand for more adequate findings.

PARTIES TO APPEAL

In case No. C 424301 below, petitioners were County of Los Angeles, County of San Bernardino and City of San Diego.   In case No. C 428363 below, petitioners were County of Butte, City of Sonoma, Novato Fire Protection District and The Galt Unified High School District.   Pursuant to stipulation, these cases were consolidated for all purposes in the superior court and carried under case No. C 424301.

On February 18, 1983, the trial court entered a judgment denying a petition for a writ of mandate.   The County of Los Angeles, County of San Bernardino and City of San Diego have appealed.   The other petitioners below in consolidated case No. C 428363 have not.   This case concerns the enactment of 1042/80 and is hereinafter referred to as the “Los Angeles” case.

In superior court case No. 464829, petitioners were the City of Sonoma, County of Los Angeles and City of San Diego.   On December 2, 1983, the superior court entered its judgment granting a peremptory writ of mandate.   All of the trial court petitioners have appealed.   This case concerns the enactment of 922/82 and is hereinafter referred to as the “Sonoma” case.

ADMINISTRATIVE AND TRIAL COURT PROCEEDINGS IN LOS ANGELES CASE (B001713)

Pursuant to Revenue and Taxation Code section 2201 et seq., test claims were filed with the State Board of Control (Board) requesting that the Board determine that a “state mandate” existed, and that the Board implement procedures to determine the proper amount of the subventions required.¹  The Board denied the request.

Los Angeles filed a civil petition pursuant to Code of Civil Procedure section 1094.5 seeking a writ of administrative mandamus alleging that the decree of the Board was contrary to law, not supported by adequate findings, and that the findings were not supported by the evidence.   The petition was denied.

The trial court determined that the constitutional provision (art. XIII B, § 6) is subject to an implied exception of the rate of inflation.

ADMINISTRATIVE AND TRIAL COURT PROCEEDINGS IN SONOMA CASE (B003561)

922/82 amended various Labor Code sections increasing temporary disability indemnity and permanent disability indemnity payable to injured employees of public agencies, and also increased death benefits to dependents of those who die in the course and scope of public employment.   Appropriate test claims were filed with the Board raising several issues including the mandated cost issue.   The Board ruled that 922/82 did not impose state mandated costs.

Sonoma thereafter filed a motion for a peremptory writ of mandate.   On December 2, 1983, the superior court entered its judgment granting a peremptory writ of mandate substantially as follows:

1. The court held that the changes made by chapter 922, Statutes of 1982, may be excluded from state mandated costs if that change effects a cost of living increase which does not impose a higher or increased level of service on an existing program.²

2. The court commanded the State Board of Control to set aside its decision.   It remanded the matter due to insubstantial evidence and legally inadequate findings on whether or not the evidence established the presence of state mandated costs on the issues presented by the changes made by chapter 922, Statutes of 1982.

 These appeals have been consolidated for purposes of analysis, argument and decision because the critical issue in each case is identical.³

ISSUE

Stripped to its essence, the primary issue is whether the legislatively mandated increases in workers' compensation benefits are a “higher level of service” (Cal. Const., art XIII B, § 6) or an “increased level of service” to an existing program.⁴  (Rev. & Tax.Code, § 2207, subd. (a).)

Cast in terms of contentions, appellants argue that any increase in dollar costs resulting from cost of living adjustments requires state reimbursement.   Respondent counters that only increased dollar costs which result in an increased level of service to an existing program, i.e., above and beyond applicable cost of living adjustments, qualify for reimbursement.⁵

DISCUSSION

Determination of this issue turns on the interpretation to be afforded article XIII B, section 6 of the California Constitution, effective July 1, 1980,⁶ and Revenue and Taxation Code sections 2207, subdivision (a),⁷ and 2231, subdivision (a),⁸ amended to their present form in 1977.

I

Appellants argue that the subvention, or reimbursement, requirement of article XIII B, section 6 is absolute and that it is not subject to an implied exception of increased costs so long as they do not exceed the applicable rate of inflation.   This is so because under the doctrine of expressio unius est exclusio alterius, the existence of three specifically enumerated exceptions precludes the judicial creation of a fourth and implied exception.  (See footnote 6 for the three exceptions.)

We do not characterize the issue here as one of an implied exception.   The question at bench is whether a local agency does in fact provide an increased level of service to an existing program by making additional payments to beneficiaries when the payments do not exceed the applicable cost of living increases.   This determination turns on the meaning of “increased level of service.”

“[I]t is a well settled rule of interpretation that constitutions, like laws, must be so construed that full force and effect shall be given to every portion thereof.   The legal intendment is that each and every sentence and clause has been inserted for some useful purpose, and when rightly understood has some practical operation.”  (People v. Zolotoff (1941) 48 Cal.App.2d 360, 364, 119 P.2d 745.)

“[I]n arriving at the meaning of a Constitution, consideration must be given to the words employed, giving to every word, clause and sentence their ordinary meaning.”  (State Board of Education v. Levit (1959) 52 Cal.2d 441, 462, 343 P.2d 8.)

Article XIII B, section 6 and Revenue and Taxation Code section 2207, read in pari materia, do not specifically define “increased level of service” nor is there any language or expression of intent within the constitutional or statutory framework that reasonably lends itself to the interpretation that if the cost of rendering a service is higher, it is, ipso facto, an increase in the level of service.

At one time “increased level of service” was statutorily defined, but that definition was repealed in 1975.  (See ch. 486, Stats. of 1975, §§ 6, 7, pp. 999–1000.)   It was found in former Revenue and Taxation Code section 2231, subdivision (e), and read as follows:

“ ‘Increased level of service ’ means any requirement mandated by state law or executive regulation after January 1, 1973 which makes necessary expanded or additional costs to a local agency or a school district.”  (Emphasis added.)

The phrase “increased level of service” is still in use but the preexisting definition, “expanded or additional costs,” was eradicated, and has never been redefined.   Section 18.6 of chapter 486, Statutes of 1975, part of the same legislative overhaul that deleted section 2231, subdivision (e), provided that newly enacted section 2207 (fn. 7) was declaratory of existing law.   From this premise appellant Sonoma further argues that since repealed Revenue and Taxation Code section 2231, subdivision (e) defined “increased level of service” as any requirement which makes necessary “expanded or additional costs,” that definition is still valid and existing.   In short, there was no change in the meaning.   We disagree.

 One cannot reasonably conclude that the statutory definition of a phrase of art continues after it has been specifically repealed.   A change must have been intended;  otherwise deletion of the preexisting definition makes no sense.  “[I]t is ordinarily to be presumed that the Legislature by deleting an express provision of a statute intended a substantial change in the law.”  (Lake Forest Community Assn. v. County of Orange (1978) 86 Cal.App.3d 394, 402, 150 Cal.Rptr. 286;  Eu v. Chacon (1976) 16 Cal.3d 465, 470, 128 Cal.Rptr. 1, 546 P.2d 289.)   Here a whole section was eliminated.

Legislative intent to change the preexisting law is particularly manifest where, as here, the philosophical approach to the entire subject of subvention was reformulated in the 1975 legislative package, and a new concept of “costs mandated by the state” was enacted.   This phrase had never before been utilized or defined.  (See ch. 486, Stats. of 1975, art. 3.5, p. 1002 et seq.)   The definition of “costs mandated by the state” is found in Revenue and Taxation Code section 2207, and as applicable in our matter is defined as:  (1) “[I]ncreased costs”;  (2) “as a result of”;  (3) “an increased level of service of an existing program.”   When these events coincide, subvention is required.   Otherwise, it is optional.

An extension of appellants' argument results in a process of circular reasoning:  Since extra dollar payments (costs) are mandated, they are increased costs as a result of an increased level of service of an existing program—a non sequitur.⁹  The change is significant.   Under repealed section 2231, subdivision (e), increased costs were deemed tantamount to an increased level of service, but no longer.

II

 The interpretation that something new was intended is reflected in the statement of Assemblyman McAlister, which with the unanimous consent of the Assembly was entered in the Assembly Journal ¹⁰ following the passage of AB 2750 (1042/80).   Courts will not consider evidence of the motives or understandings of an individual legislator who casts a vote in favor of a statute, nor will an exception to the principle be made simply because the legislator whose motives are proffered actually authored the bill in controversy.   This is so because there is no guarantee that those who supported the proposal shared the scope and dimension of the legislator's intent.   However, where the declaration is not an expression of a legislator's own intent but a reiteration of a discussion of events which transpired during the legislative process, the court will consider these recitals as an aid in determining legislative intent.  (In re Marriage of Bouquet (1976) 16 Cal.3d 583, 589–590, 128 Cal.Rptr. 427, 546 P.2d 1371.)   The relevancy of a statement of legislative intent is enhanced where it is printed pursuant to a motion to publish it as a letter of intent:  “The materiality of the letter is not lost merely because it was written and published after the effective date of the amendment.  [A court] may properly consider a subsequent expression of legislative intent regarding the construction of a prior statute.”  (Id., at p. 590, 128 Cal.Rptr. 427, 546 P.2d 1371.)

Assemblyman McAlister, who wrote the intent letter, did not allude to his intent, although he did advert to the fact that he was the author of the legislation.   He wrote about a special hearing of the Assembly Ways and Means Committee where it was recommended that the bill, AB 2750, be approved without any appropriation on the grounds that the increases contained therein are a result of changes in the cost of living and not reimbursable under either section 2231 of the Revenue and Taxation Code or section 6 of article XIII B of the state Constitution.   He also alluded to the fact that the Senate Finance Committee rejected a motion to include an appropriation in the bill and approved a motion to concur in the Conference Committee amendments which deleted any appropriation.   He further requested the letter of intent be printed in the Assembly Journal.¹¹

 While a motion to print a letter of legislative intent commands less respect than a formal resolution of legislative intent, which was not present here, there is no conflicting evidence of intent to balance against the probative value of Mr. McAlister's letter or its entry in the Assembly Journal.  (See In re Marriage of Bouquet, supra, 16 Cal.3d at p. 591, 128 Cal.Rptr. 427, 546 P.2d 1371.)

This missive bears directly on the intent of the Legislature to not subvent for the increase in costs of workers' compensation benefits in 1042/80, and the bill did not so provide.   It also bears on the interpretation given by the Legislature to chapter 486, Statutes of 1975, and article XIII B, section 6, effective July 1, 1980, which in its view did not require subvention under 1042/80.

“Although a legislative expression of the intent of an earlier act is not binding upon the courts in their construction of the prior act, that expression may properly be considered together with other factors in arriving at the true legislative intent existing when the prior act was passed.”  (Eu v. Chacon, supra, 16 Cal.3d 465, 470, 128 Cal.Rptr. 1, 546 P.2d 289.)

Since the Legislature had already expressed its awareness of the subvention problem incident to its passage of AB 2750, there was no need for further expression on the point at the time of enacting 922/82, a similar piece of legislation.   Against the backdrop of the McAlister letter, the fact that no appropriation was enacted in 922/82 manifests a clear legislative intent not to do so.

III

Sonoma argues that “the intention of the Legislature to reimburse for cost-of-living increases associated with workers' compensation benefits was again reaffirmed in this year's budget appropriation bill.”   Reference is made to chapter 258, Statutes of 1984 wherein funding was provided for reimbursement for workers' compensation cost-of-living increases occasioned by chapters 1021 and 1023, Statutes of 1973.

The McAlister letter drew the subvention issue into clear focus.   Having concluded therein that no appropriation was required with respect to cost-of-living increases mandated by 1042/80, 1984 funding of similar 1973 legislation underscores the legislative intent to pick and choose when to subvent and when to shift the extra dollar costs to the local agencies.   If, in the future, the Legislature intends to subvent the dollar cost increases engendered by 1042/80 or 922/82, it can do so at any time.

IV

Sonoma contends that assuming some ambiguity in the language of the constitutional provision requiring reimbursement, resort may be had to the ballot pamphlet to determine the probable meaning of uncertain language.

“The ballot summary, arguments and analysis presented to the electorate in connection with a particular initiative may be looked to in trying to ascertain the probable meaning of uncertain language [citation], but ‘ “[s]uch aids to the interpretation of a written document while available to the courts are not at all to be considered as controlling, since whatever may have been the intent of the proponents of a particular change in a law must at the last analysis be derived from the language of the proposed enactment purporting to effect such change.” ’ ”  (City of Sacramento v. State of California (1984) 156 Cal.App.3d 182, 191, 203 Cal.Rptr. 258, quoting from Cal. Inst. of Technology v. Johnson (1942) 55 Cal.App.2d 856, 859, 132 P.2d 61, citing Fay v. District Court of Appeal (1927) 200 Cal. 522, 537, 254 P. 896.)

The ballot pamphlet provides, inter alia:  “Finally, the initiative would establish a requirement that the state provide funds to reimburse local agencies for the cost of complying with state mandates.   The initiative specifies that the Legislature need not provide such reimbursements for mandates enacted or adopted prior to January 1, 1975, but does not require explicitly that reimbursement be provided for mandates enacted or adopted after that date.   Legislative Counsel advises us that under this measure the state would only be required to provide reimbursement for costs incurred as a result of mandates enacted or adopted after July 1, 1980.”

This ballot argument does not address the issue in question.  Article XIII B, section 6 decrees that “[T]he state shall provide a subvention of funds to reimburse such local government for the costs of such [new] program or increased level of service ․”  (Emphasis added.)   The ballot pamphlet does not discuss the issue of increased level of service, but refers only to the cost of complying with new state mandated programs, a separate item requiring subvention.¹²

V

Having concluded that neither article XIII B, section 6 nor Revenue and Taxation Code sections 2207 and 2231 require subvention unless there are increased costs resulting from an increased level of service, and that the Legislature did not intend to subvent under 1042/80 or 922/82, the question remains whether the state may lawfully enact legislation that places an extra financial burden on local agencies.

At argument, all counsel conceded that the state is empowered to enact this type of legislation under present constitutional and statutory pronouncements.   We have been unable to find any authority to the contrary.

VI

Finally, we observe that the State Board of Control held that neither 1042/80 nor 922/82 required subvention.

“․ [W]hen an administrative agency is charged with enforcing a particular statute, its interpretation of the statute will be accorded great respect by the courts ‘and will be followed if not clearly erroneous.  [Citations.]’ ”  (Judson Steel Corp. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 658, 668, 150 Cal.Rptr. 250, 586 P.2d 564, quoting from Bodinson Mfg. Co. v. California E. Com. (1941) 17 Cal.2d 321, 325–326, 109 P.2d 935.)

FINDINGS OF THE BOARD IN LOS ANGELES CASE

Los Angeles also argues that the findings of the Board are inadequate to identify the analytic route between the raw evidence and the ultimate decisional order.   They continue that the Board must find:  (1) The period of time under consideration.  (2) The increase in the consumer price index for the period.  (3) The amount of the legislatively mandated increase in cost for the local government agency.   We agree that the findings are inadequate.

“[I]mplicit in section 1094.5 is a requirement that the agency which renders the challenged decision must set forth findings to bridge the analytic gap between the raw evidence and ultimate decision or order.”  (Topanga Assn. for a Scenic Community v. County of Los Angeles (1974) 11 Cal.3d 506, 515, 113 Cal.Rptr. 836, 522 P.2d 12.)

With respect to 1042/82, the Board stated as follows:

“Prior to the enactment of Chapter 1042/80, local agencies and school districts were required to pay temporary and permanent disability and death benefits to employees who were victims of job related injuries.   Chapter 1042/80 did not change the terms and conditions under which such benefits are to be awarded.   Rather, the maximum benefit levels were increased.   Simply increasing the dollar level of benefits may increase costs but does not, by itself, create an increased level of service.

“Therefore, no reimbursable mandate exists because no new program or increased level of service resulted from Chapter 1042/80.”

The discussion of the Board is clear but it does not go far enough.   The record fails to indicate the cost-of-living formula being used, its rate of increase(s), or the period of time over which it is considered applicable.   Moreover, we find no indication of the determinations made in all categories of benefit increases so that parties entitled to review administrative determinations will be able to objectively and clearly trace the reasoning process from data gathering to decision making to ascertain that as to each category of recipient the increase has not exceeded the applicable cost of living.

DISPOSITION

 We hold that neither article XIII B, section 6 nor Revenue and Taxation Code sections 2207 and 2231 requires state subvention for increased workers' compensation benefits provided by chapter 1042, Statutes of 1980 and chapter 922, Statutes of 1982, so long as the increases do not exceed applicable cost of living adjustments because these payments do not ipso facto result in an increased level of service.

 We reverse the judgment and remand the Los Angeles case (B001713) to the State Board of Control for further and adequate findings directed to the shortcomings enumerated in the second paragraph supra.   The judgment in the Sonoma case (B003561) is affirmed.

FOOTNOTES

1.   In 1975 the Legislature created an expanded State Board of Control and charged it with the administrative duty of determining the validity of claims for subvention (or reimbursement).  (See ch. 486, Stats of 1975, art. 3.5, p. 1002 et seq.;   Rev. & Tax.Code § 2250.)

2.   This ruling alone is addressed in this appeal.

3.   Sonoma posits that “the proper standard of review” in the trial court and here is whether the decision is supported by substantial evidence.   We do not subscribe to this notion because the issue is one of law.  (City of Sacramento v. State of California (1984) 156 Cal.App.3d 182, 190, 203 Cal.Rptr. 258.)

4.   We will proceed to use the phrase “increased level of service” in this opinion.   None of the parties has suggested there is a semantic or legal distinction between “higher level of service” referred to in the Constitution and “increased level of service” identified in the Revenue and Taxation Code sections.   The constitutional provision uses both terms.   (See footnotes 6, 7 and 8 for full text of applicable constitutional and code sections.)Nor does any party argue that the phrase “increased level of service” used in article XIII B, section 6 be given any different meaning than that afforded the same language in Revenue and Taxation Code section 2207.

5.   Appellant Sonoma claims “the Legislature has mandated an increased level of service, or increased costs upon Appellants for which reimbursement is required.”   That assertion does not properly frame the issue because it assumes that an increase in dollar costs ipso facto results in an increased level of service.   These concepts are different as we discuss infra.

6.   Section 6, article XIII B of the California Constitution, enacted by initiative measure, provides as follows:“Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the state shall provide a subvention of funds to reimburse such local government for the costs of such program or increased level of service, except that the Legislature may, but need not, provide such subvention of funds for the following mandates:  [¶] (a) Legislative mandates requested by the local agency affected;  [¶] (b) Legislation defining a new crime or changing an existing definition of a crime;  or [¶] (c) Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975.”

7.   Revenue and Taxation Code section 2207, subdivision (a) provides as follows:  “ ‘Costs mandated by the state’ means any increased costs which a local agency is required to incur as a result of the following:  [¶] (a) Any law enacted after January 1, 1973, which mandates a new program or an increased level of service of an existing program.”

8.   Revenue and Taxation Code section 2231, subdivision (a) provides as follows:  “The state shall reimburse each local agency for all ‘costs mandated by the state’, as defined in Section 2207.   The state shall reimburse each school district only for those ‘costs mandated by the state’ as defined in Section 2207.5.”

9.   Appellants do not contend that they are providing an increased level of service other than being required to provide additional compensation benefits.   In this context, the additional dollar payments translate into an increase in the purchasing power of goods and services.

10.   “Dear Mr. Speaker:  The purpose of this letter is to clarify the intent of the Legislature in enacting Assembly Bill No. 2750, of which I am the author.“At a special hearing of the Assembly Ways and Means Committee, it was recommended that the bill be approved without any appropriation on the grounds that the increases contained therein are a result of changes in the cost of living and, therefore, are not reimbursable under either Section 2231 of the Revenue and Taxation Code or Section 6 of Article XIIIB of the State Constitution.   The Senate Finance Committee rejected a motion to include an appropriation in the bill and approved a motion to concur in the Conference Committee amendments which deleted any appropriation.“I respectfully request that this letter of intent be printed in the Assembly Journal for August 31, 1980.”

11.   The same deference cannot be afforded a letter from Assemblymen Vasconcellos and Young respecting 922/82, which was printed in the Assembly Journal.   Under the Bouquet principle their combined statement was totally subjective in referring to their intentions, and that of the Legislature as a whole.   That letter reads:“It is not our intention, nor that of the Legislature, to mandate either a new or higher level of service.   Instead, recognizing the fact and experience of inflation, we deem it necessary to enact this cost-of-living increase in order to continue to provide the same level of service heretofore provided and enjoyed.”

12.   With respect to 922/82, Sonoma contends:  (1) That public employer liability is enlarged and state costs increased by reason of a change in the burden of proof against the local agency;  and also by creating the right to file an independent action outside of the “workers' compensation scheme” by classifying a local agency as a manufacturer of certain mechanical devices.   We do not address these contentions because these issues have been previously remanded to the Board for further consideration.(2) That the trial court's ruling that “no reimbursement is required for cost of living increases would be violative of public policy.”   The specifics of this proposition are but a reiteration of arguments advanced supra and are without merit.

EAGLESON, Associate Justice.

ASHBY, Acting P.J., and HASTINGS, J., concur.