County Owes Anaheim $1 Million, Judge Rules

An Orange County Superior Court judge has ruled that the county must pay Anaheim nearly $1 million in interest and penalty money collected from overdue property taxes since 1980.

The preliminary decision could force the county to pay more than $17 million in penalty and interest money it has collected to other cities and government agencies in the county, county officials said.

In the ruling, Judge C. Robert Jameson found that state law requires the county to return penalty and interest money collected on taxes, as well as property tax revenues, to cities, school districts and other local government agencies.

Jameson cited two recent lawsuits against Long Beach and against Los Angeles County in which courts ruled that governmental agencies are entitled to penalty and interest money collected from property taxes.

“The city is pleased at the court’s intended decision and (at) the fact that the judge is in accord with our position,” Anaheim Deputy City Atty. Max Slaughter said.

The decision stems from a dispute over interpretation of state tax laws and Proposition 13, a ballot measure passed in 1978 that limits property taxes to 1% of fair market value and generally prohibits tax increases without voter approval.

Before Proposition 13 and since then, the county has kept penalty and interest money from delinquent property taxes, citing provisions of the state’s Revenue and Taxation Code.

But in 1983, Anaheim and its Redevelopment Agency sued the county, contending that Proposition 13 and revisions in state tax laws required the county to pay the city a portion of the penalty and interest money it collects.

“It amounts to a very technical question of interpretations,” County Auditor Steve Lewis said. “There is still a set of laws on the books that says the monies belong to the county. The question becomes what is the intent of Proposition 13 and other legislation.”

Appeal Is Uncertain

Bill McCourt, chief assistant to the county counsel, said officials were uncertain whether the ruling will be appealed. Nor are officials certain whether other cities would have to sue the county to retrieve the funds, if the decision is upheld, he added.

But officials said the ruling would have no immediate effect on taxpayers or the county’s budget. Lewis said the county has set aside a reserve fund of more than $17 million, collected from the penalty and interest money in question.

“It was never taken into the general fund or budgeted for projects,” he said.

Slaughter said Anaheim officials have calculated that the county owes the city about $315,000 and its Redevelopment Agency about $530,000, plus interest that has accrued.

Lewis said county officials have not determined how much other cities and local governmental agencies are owed.