Tulare County may owe cities millions
Officials with Tulare County are beginning to meet with cities over a bill now due based on a state Supreme Court ruling.
The Supreme Court has refused to rehear a Los Angeles County case regarding counties overcharging cities for the collection of property taxes. The Council of Cities in Tulare County filed suit against Tulare County, but that suit was pending the final settlement of the Los Angeles case.
Millions of dollars statewide are in question.
The city of Porterville feels it is owed approximately $700,000 that it claims has been wrongfully charged by the county since the 2005-06 fiscal year. The court ruling affects all counties and cities in the state.
The dispute stems from a November state Supreme Court decision that found counties overcharged cities for property tax administration.
“The court basically said you’ve been doing this wrong since you started it,” said Porterville City Manager John Lollis of the ruling.
Lollis explained that in 2005-06 when then Gov. Arnold Schwarzenegger and the Legislature came up with one of its clever budget solutions — called the triple flip — the state gave counties the authority to charge cities for collecting property taxes. The counties took that to mean they could charge cities to not only collect the taxes, but charge them again when the taxes were then distributed to the cities.
The action by the counties led to several lawsuits. In the LA suit, cities in Los Angeles County sued for money they felt they were being overcharged. A similar suit was filed in Stanislaus County and in Tulare County.
Lollis said the Los Angeles cities lost in Superior Court, but won in the appellate court and that was upheld unanimously by the state Supreme Court. Los Angeles County asked for a new hearing, but Tulare County Chief Administrative Officer Jean Rousseau said that request has been denied.
“That’s final,” said Rousseau of the ruling, adding, “We are researching the issue internally and working on how we’re going to handle it.”
The CAO said the county has already met with a couple of cities, including Visalia.
Lollis said Tulare County could owe as much as $5 million in all to the eight incorporated cities, but how far back the county owes money and if any interest is applied has to be negotiated. Rousseau said while the court ruled against the counties, it did not set a standard as to how the money has to be repaid.
“We have reduced the fee back to where it was before the triple flip (2005-06),” said Rousseau. “That will definitely help cities this year,” he added.
He said the county has placed some money in trust, but so far has not paid anything.
“We will try to come to a general conclusion for all cities,” he said.
In Stanislaus County, the tab is as much as $2.4 million just to the city of Modesto. In Los Angeles, officials said it could be tens of millions of dollars paid to 47 cities.