Westminster Sues County Over Prop. 62

Westminster has sued Orange County in a bid to keep $2.5 million in property tax revenue it might lose under Prop. 62, the so-called “Jaws 2” initiative sponsored by the late Howard Jarvis and approved by California voters in November.

The measure requires local agencies to stop collecting new taxes imposed after July 31, 1985, unless most of the voters approve the tax by Nov. 5, 1988--or face the loss of an equivalent amount of property tax revenue, which is distributed by the county.

The Westminster City Council enacted a 5% utility tax in September, before Prop. 62 was approved by voters. The utility tax had been expected to generate $2.5 million annually.

Suit Filed Monday

In a lawsuit filed Monday in Superior Court against the county and Auditor-Controller Steve E. Lewis, the city argued that retroactive provisions of the ballot measure are unconstitutional.

State officials said the lawsuit represents the first challenge by a California city to the constitutionality of the ballot measure.

On June 30, Sonoma County, which had raised its hotel bed tax, became the first county government to file such a challenge. That county claimed that the ballot measure--as a statute, not a constitutional amendment--improperly expanded the people’s right to referendums.

The cities of La Habra, which recently increased business license fees, and San Juan Capistrano, which recently raised its hotel bed tax, are also among 45 municipal governments in California, including Los Angeles, that face potential loss of property tax revenues under Prop. 62, according to state and county officials.

‘Friendly’ Action

Meanwhile, Lewis and acting Westminster City Administrator Bob Huntley both described the lawsuit against Orange County as “friendly.” Both said the measure was headed for court tests anyway, and officials need a quick resolution for revenue-forecasting purposes.

Neither Lewis nor County Counsel Adrian Kuyper have taken a position on the constitutionality of Prop. 62. Lewis was named a defendant in Westminster’s lawsuit because, under Prop. 62, he would be responsible for reducing Westminster’s property tax allocation late next year.

The county has 30 days to file a response to Westminster’s lawsuit.

The new taxes and fees have been imposed by local agencies reeling from the economic effects of Proposition 13, the property tax reform initiative approved by California voters in 1978, and from cancellation last year of the federal revenue sharing program.

Several cities, including Baldwin Park, are phasing out new taxes by Prop. 62’s deadline of November, 1988, rather than challenge the measure in court.