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On Tuesday, the Third District Court of Appeal rejected a challenge to a property tax benefit for domestic partners. The decision by the Sacramento-based court upholds the state Legislature’s power to craft exclusions to Proposition 13, a state constitutional amendment passed in 1978 that limits local governments’ ability to assess property at the latest market rates. In Tuesday’s unanimous opinion, Justice Arthur Scotland pointed out that the Legislature has, for public policy reasons, created various exemptions for property transfers that would otherwise be considered a change of ownership and trigger a tax hike. That is consistent with the “plain language” of Prop 13, Scotland wrote: “Proposition 13 does not expressly, or by necessary implication, preclude the Legislature from creating exemptions from the phrase ‘change of ownership’; it simply provides that taxes ‘shall not exceed’ a set amount unless there has been a change in ownership.” Justices Rodney Davis and Harry Hull concurred in Strong v. State Board of Equalization, 07 C.D.O.S. 11871. In 2003, the state’s Board of Equalization, a tax administration agency, created a rule that gave tax protection to domestic partners who inherit property from a partner’s death. Some county assessors, including Sutter County’s, unsuccessfully challenged the Board of Equalization’s rule in Sacramento County Superior Court, then appealed to the Third District. According to Tuesday’s ruling, the county assessors argued that any exemption for domestic partners was an impermissible end run around Proposition 58, which voters passed in 1986 and enshrined only an exemption for property transfers between spouses in the state constitution. The plaintiffs asserted that a constitutional amendment was necessary to extend that exemption to domestic partners, the ruling says. Two years ago, the Legislature followed up the board’s rule by creating a statutory exemption to Prop 13 that sheltered “any [property] transfer between registered domestic partners” from a tax hike. According to Scotland’s ruling, similar tax benefits already applied to other groups, including owners of mobile home parks who want to sell to their tenants. Ronald Erickson, Sutter County counsel, didn’t return a call to his office late Tuesday. Neither did Dennis Cota, a Roseville attorney who represented the county assessors. Shannon Minter, an attorney representing Equality California, a nonprofit that intervened in the case in favor of the domestic partner exemption, said the case illustrates a need to legalize same-sex marriage. “As long as same-sex couples only have domestic partnership, it is always going to be vulnerable to attack,” said Minter, legal director of the National Center for Lesbian Rights, which is challenging California’s ban on same-sex marriage in another case.

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