Round One in a dispute over property taxes in San Rafael, California, has gone to the Valley Baptist Church.
A judge has rejected the city’s claim that its “special tax” is not a “property tax,” because it is applied only on property with non-residential structures in the city.
That means the case brought by Valley Baptist Church now can be heard on its merits, says the Pacific Justice Institute, which is defending the church.
“This is a huge victory for churches all over California,” said Brad Dacus, president of PJI. “If all a city has to do to tax churches in the state is call a proposed tax on real property a ‘special tax,’ place it on a local ballot and get two-thirds of the city’s voters to approve it, then the city has effectively found a way to get around California’s constitutional and statutory provisions protecting church property from taxation.
“That would defeat the whole point of having such protections to begin with,” he said.
WND reported in 2017 when the case developed Valley Baptist took the fight to Superior Court for Marin County after San Rafael applied its new tax to the church property.
In California, churches and religious institutions are exempt from ad valorem taxes, which are assessed in proportion to the estimated value of the property.
“The special tax is a de facto property tax because it triggers a duty on the part of owners of non-residential structures to pay the tax,” Dacus explained at the filing. “The California Constitution exempts churches from paying such taxes, pure and simple. Valley Baptist did not owe a penny to the city of San Rafael, and it’s unfortunate that the church now has to go to court to win back money that it never should have had to pay to begin with.”
PJI explained that federal, state and local governments “have long granted tax exemptions to churches and other religious non-profit organizations because of the significant and beneficial social services they provide to their communities.”
Dacus said the concept “is being lost in our generation because, sadly, church membership has declined.”
“People in government thus unfortunately assume that churches aren’t paying their ‘fair share’ without understanding why they’re tax-exempt to begin with,” he said.
Valley Baptist challenged the city because officials suddenly slapped the church with a bill for more than $13,000, claiming it was for unpaid taxes that had been due in previous years.
But PJI found that under California law “all taxes on real property must be ad valorem taxes – in other words, they must be levied in proportion to the property’s value as determined by assessment or appraisal.”
“Because the California Constitution exempts real property used for religious purposes from ad valorem taxation, Valley Baptist contends that it does not owe any money to the city under the special tax.”
The church seeks a refund plus “a declaration that the city has violated plaintiff’s rights under the California Constitution and that churches and other religious organizations are exempt from paying special taxes that are de facto ad valorem taxes in form and function.”