A unanimous state Supreme Court ruling yesterday against Los Angeles County means that money-starved City Hall, at some foggy future date, will recoup an estimated $250,000 that the County illegally assessed Culver City among other communities in property taxes the last six years.
To a city that is $8 million down in its budget, Mayor Andy Weissman called the quarter of a million dollars “a modest amount. If it were $250 million, we would jump up and down.
“This is not a windfall, and it will not allow the city to repair streets. But it is a sum of money that is going to be part of our General Fund budget.
“To the extent we are operating in reserve, this is $250,000 less in reserve we will have to dip into.
“Significant but not monumental,” the mayor said.
Details of the Ruling
The Court issued a unanimous decision in City of Alhambra v. County of Los Angeles, handing California cities an important victory. The court agreed with 47 plaintiff cities in the County, rejecting a calculation method used by many county auditors that has resulted in millions of dollars in excessive Property Tax Administration Fees charged annually to cities.
The League of California Cities reported:
“In 2004, the Legislature instituted both the Sales Tax Triple Flip and the Vehicle License Fee Swap under the tax laws. The Triple Flip reimburses cities with property tax proceeds to compensate for reduced city sales tax revenue, instead sending the quarter of a cent sales tax to pay off Prop. 57 state fiscal recovery bonds. The Vehicle License Fee Swap provides cities with additional property tax share to compensate for the related cut in the Vehicle License Fee tax rate and revenue.
“The Legislature stipulated that counties could not charge additional fees to cities for the first two years of the Triple Flip and Vehicle License Fee Swap implementation, and that thereafter, charges to cities could not exceed the actual cost of providing the services. “However, commencing in fiscal year 2006-07 and following guidelines developed by the County Auditors Assn., some counties altered Property Tax charges by counting the Triple Flip and Vehicle License Fee Swap amounts as increased base property tax revenue to cities.
“This resulted in Property Tax increases far in excess of the actual additional cost of administering the Triple Flip and Vehicle License Fee Swap. Los Angeles County alone withheld an additional $4.8 million in fiscal year 2006-07 and $5.3 million in fiscal year 2007-08 in Property Tax Administration Fees from the plaintiff cities. The county’s actual annual cost in administering the Triple Flip and Vehicle License Fee Swap was $35,000.”
