Calif. court rejects lawsuit against tax hikes

— Anti-tax groups said Thursday they will consider new legal action after a California appeals court tossed out a lawsuit that sought to block tax hikes passed by Democrats in the state Legislature.

Citing separation of powers, the state's 3rd District Court of Appeal in Sacramento ruled Wednesday it could not intervene because Gov. Arnold Schwarzenegger had not signed the bills into law.

"Absent the Legislature's passage and the governor's signing of such legislation, adjudication of its constitutionality and other matters raised by the petition are not yet ripe for judicial review," the court wrote.

Schwarzenegger eventually vetoed the $18 billion proposal, which included a mix of tax hikes and spending cuts as a way to start closing California's $42 billion budget deficit. The governor said he vetoed the package because Democrats did not make enough labor and environmental concessions.

The lawsuit was filed by the Howard Jarvis Taxpayers Association, with support from most Republican state lawmakers.

They argued that the Democratic majority acted illegally when it passed the tax increases because it did so with a simple majority vote. The state Constitution requires a two-thirds majority for tax hikes.

John Coupal, president of the taxpayers association, said the group is considering an appeal to the state Supreme Court and a new lawsuit in federal court because the vote violated the constitutional rights of the Republican minority members.

"We are still looking at this case for potential appeals because we believe this issue needs to be resolved," he said.