Straightforward Tax Full of Legal Twists and Turns : Legal battle: The half-cent sales tax approved two years ago, will probably land in state high court.

If only Proposition A were that simple.

Arguing before a state appeal court Wednesday in the second round of a legal battle expected to reach the California Supreme Court, supporters and opponents of Proposition A--a half-cent sales tax approved by San Diego voters in 1988 to raise $1.6 billion for new jails and courts--each portrayed the case as being simple and straightforward.

Although the 4th District Court of Appeal reached no decision, the three-justice panel did conclude one thing: Proposition A is no simple matter.

“Contrary to all your claims, this is no easy argument,” said presiding Justice Thomas E. Hollenhorst, eliciting laughter from both sides and the many lawyers observing in the courtroom.

Because the case has potential statewide implications, Hollenhorst made the unusual announcement that copies of the transcript of arguments would be made available for interested parties.

Other counties are watching the San Diego case for guidance on imposing taxes to meet criminal justice and other local funding needs. Attorneys for both sides agree that legal ratification of Proposition A would make it easier for local governments to boost their treasuries with new taxes.

The court is expected to issue its decision within 90 days. Whatever the outcome, the case is expected to be appealed to the state Supreme Court, worsening the county’s chronic problems of jail overcrowding and backed-up court system.

In March 1989, a Superior Court judge in Riverside County struck down Proposition A, ruling that the measure violated Proposition 13, the landmark property-tax-cutting initiative approved statewide by voters in 1978.

The judge ruled that San Diego County officials “purposely circumvented” Proposition 13’s requirement of a two-thirds vote for approval of new taxes. Proposition A, which would raise an estimated $10.6 billion during its 10-year existence, received approval from 50.6 % of local voters.

Members of the Libertarian Party and United Taxpayers of San Diego filed suit, claiming the measure was a deliberate attempt to exploit loopholes in Proposition 13. The county has continued to collect the sales tax while the matter is appealed.

An estimated $135 million had been collected since the tax began in January 1989, including $8 million in interest, said Chuck Pennell of the county Chief Administrative Office. None of the money has been spent, he said.

Wednesday’s arguments again centered on whether the San Diego Regional Justice Facility Financing Agency--the seven-member board that administers the funds generated by Proposition A--is exempt from Proposition 13 under state Supreme Court rulings exempting local agencies not authorized to levy property taxes from the two-thirds vote requirement.

The Justice Facility Financing Agency would spend the Proposition A funds under plans developed and approved by the county Board of Supervisors.

Lynn McDougal, the agency’s attorney, said the sales tax was a “general tax” and that the state legislation that established the agency authorized a majority vote.

“This money is for the full scope of the general governmental functions of our agency,” McDougal said. “All the tax money goes into a general fund and is utilized for the governmental functions that agency has.”

Lou Wenzell, the attorney representing the taxpayers group, however, said the sales tax was a deliberate attempt to circumvent the two-thirds vote requirement.

“We’re saying a special tax is defined by where the money is spent, not what label goes on the bank account,” Wenzell said, referring to the Justice Facility Financing Agency. “If it looks like a duck and walks like a duck and quacks like a duck, then it’s a duck. This is a duck.”