Nullifying of Prop. 62 Stirs Cities’ Hopes

Westminster officials were cautiously optimistic Friday about the immediate impact of an appellate court ruling that declared Howard Jarvis’ 1986 Proposition 62 unconstitutional, allowing the city to continue collecting a 5% utility users tax.

“We’re glad because it seems we can still go on collecting the tax revenue, which this city really needs,” City Manager Murray Warden said.

Proposition 62 calls for local agencies to stop collecting new taxes imposed after July 31, 1985, unless they are approved by the voters by Nov. 5, 1988--or face the loss of an equivalent amount of property tax revenue.

An Appeal Possible

Warden said the caution inherent in city officials’ optimism Friday was a result of the California Tax Reduction Movement’s statement that it plans to appeal the ruling by the 4th District Court of Appeal in Santa Ana to the state Supreme Court.

“If there’s an appeal, it could be some time before we resolve this issue,” Warden said.

However, Westminster City Atty. Paul H. Morgan said he believes that the city can continue to collect the tax until “the Supreme Court reviews the matter and makes a decision.”

At stake is about $2.5 million that the utility users tax generates annually for the city.

The ruling also affects several other Southern California cities--including the City of Orange--that have put tax measures on their November ballots in an attempt to comply with Proposition 62.

Orange City Manager William Little said he believes that the city will put Measure L, a proposal that could increase hotel bed taxes from 8% to 10%, to the city’s voters.

In Los Angeles County, Lynwood Assistant City Manager Don Fraser said the city has put a telephone users tax on its ballot, as required under Proposition 62.

“Although this (recent ruling) gives us the right to pull the proposal off the ballot, to do so would be politically sensitive and frankly unfair to the voters,” he said.

‘Court Is Off Mark’

Joel Fox, president of the California Tax Reduction Movement, said his organization plans to appeal the ruling because “the people have a precious right to pass initiatives.”

“This court is off the mark,” Fox said.

On Friday, it was unclear what position the county auditor-controller will take as the legal battle rages on.

Proposition 62 calls for the auditor-controller to penalize Westminster by withholding an equivalent amount of property tax revenue if the city continues to collect the utility users tax after Nov. 5.

“We would have had to withhold from Westminster a dollar-for-dollar deduction,” Deputy County Counsel Victor T. Bellerue said. “But the new ruling changes things, and we don’t know what we’re going to do, especially if an attempt is made to appeal to the Supreme Court.”