Tax Rebate Idea Fuels Feud in Mission Viejo

City taxpayers could get money next spring under an unprecedented tax rebate embraced Tuesday by all five City Council members during a press conference where sparks flew over who should get credit for the idea.

How much money is available for rebates was disputed by city officials, several of whom doubted that the city was able to give as much as $500 per property owner, as proposed Monday by City Councilman William S. Craycraft.

Council members, who said they have spent months quietly discussing how to spend the city’s large surplus, showed up at the press conference and lashed out at Craycraft for going public with his idea of a $10-million rebate.

At one point, the event even disintegrated into angry name-calling and a blistering exchange between some of the politicians present. But while the councilman has gained his colleagues’ enmity, the idea of a rebate appears to enjoy wide support.

“There are a number of ways to get this money to the taxpayers,” said Mayor Robert A. Curtis, who has said he originated the tax-rebate idea. “We don’t want to precipitously preempt the best way to issue this rebate.”

City financial officers say that Mission Viejo has a $21-million surplus, of which about $5 million is not reserved for any city project or program. That surplus is largely the result of Mission Viejo’s low overhead and of state funding formulas that deliver extra money to new cities.

Craycraft supports issuing checks to commercial and residential property owners on April 15. Other council members have proposed issuing vouchers good only at Mission Viejo businesses, which would be turned in for payment at City Hall.

Although City Manager Fred Sorsabal agreed that a large budget surplus exists, he cautioned against issuing tax rebates without careful study.

“Until staff really analyzes this, I’m not comfortable giving out any figures,” he said.

The lack of concrete information has done little to slow the council’s enthusiasm for the rebate idea, however.

In a sometimes bizarre 90-minute press conference Tuesday morning, several citizens, an Orange County state legislator and council members traded insults and derisive laughter as they accused each other of trying to use the tax rebate proposal for political gain.

Curtis and three of his council allies expressed outrage at the appearance of 67th District Assemblyman Mickey Conroy (R-Santa Ana) beside Craycraft in support of the rebates.

Curtis has said he is “strongly” considering a run at a proposed 71st District that would include Orange, Mission Viejo and Lake Forest, among other communities. Tuesday, he accused Craycraft of stealing the tax rebate idea and colluding with Conroy.

“I think it’s deplorable that a Santa Ana politician (Conroy) would come down here and try to take credit for this,” Curtis said. Speaking directly to Conroy, Curtis added: “You don’t know anything about the city budget.”

Conroy denied Curtis’ charges, saying he is a tax reformer who attended the press conference at Craycraft’s request.

As the press conference continued, the two men moved off to one side and stood nose-to-nose in an angry exchange.

“Where do you get off pulling this?” Curtis asked. “You’re an irresponsible and stupid idiot.”

Conroy broke off the confrontation and walked away, waving his hand in disgust.

Later, Councilwoman Sharon Cody accused the assemblyman of threatening her with political retaliation. Sorsabal said he overheard that threat, and told Conroy that he was “going over the edge.”

Conroy denied making any threats.

In fact, Conroy said it was Cody who “threatened me that she was going to campaign against me. I didn’t threaten her at all. That’s not my bag. It’s not the way I function.”

Councilman Robert D. Breton called Craycraft’s press conference “a clear act of subterfuge and sabotage. (Craycraft) is not a team player. . . . He’s willing to forfeit the future of the city for his own political gain.”

Craycraft denied that he stole the tax rebate idea from Curtis, saying he had been working on refunds to taxpayers for several weeks.

“I’m sorry that this turned into a series of personal attacks,” he said. “Why people would lower themselves to that is beyond me.”

As council members feuded, officials outside the city marveled at the notion of a rebate. Officials at the League of California Cities called it unprecedented, and noted that it comes at a time when most cities are struggling to make ends meet.

“I’ve never heard of this happening before,” said Dan Harrison, financial officer for the league. “It’s a big contrast to a lot of cities that are using up their reserves. Hey, I’m envious of (Mission Viejo’s) position.”

Harrison cited a recent league study showing that 138 California cities have eliminated more than 3,200 jobs in the current fiscal year. The survey paints a grim financial picture for state municipalities, detailing more than $200 million in program cutbacks and pointing out that almost 70% of the cities raised taxes last year to create new revenue.

“It’s very severe for many cities out there in the state,” he said. “This (tax rebate) would be an amazing thing.”

Sorsabal said that newly incorporated cities are generally in better financial shape than older cities.

Mission Viejo, which incorporated in 1987, gets a tax revenue break from the state that amounts to about $2 million annually. The city maintains a low overhead by contracting for many services such as recreation and law enforcement. About 65 employees in Mission Viejo serve a population of about 73,000.

Earlier this year, the city declined to spend about $1 million to support the Mission Viejo Nadadores, a world-class swim team whose sponsor, the Mission Viejo Co., will not be backing the squad financially after the Barcelona Olympics in 1992. Council members said the money was too much to spend for the relatively few members of the swim team, many of whom are not Mission Viejo citizens.

Despite Mission Viejo’s flush finances, Elizabeth Fox, city treasurer of Fountain Valley, said Tuesday that the city would be wise to hold onto its cash reserves.

“Obviously, a city starts out with a lot of cash,” Fox said. “The long haul is what you have to look at. What’s the city going to be like 20 years from now?”

Craycraft, however, defended the rebate and pledged to pursue it.

“There is absolutely no reason for the city to continue receiving more revenues than are needed to conduct the city’s business,” he said. “We believe it is the most massive rebate in the state of California if not the nation. It’ll be a tremendous Christmas gift for Mission Viejo taxpayers.”

Most of the council members said the anger displayed at the press conference would not affect debate on the tax rebate.

But Breton disagreed, saying the “bad taste of this confrontation will linger in my mouth.”

“Whether it’s going to be a roadblock, I don’t know,” Breton added. “In my mind, it’s certainly going to be a stumbling block.”

In the Money

Most California cities are in dire financial shape. But Mission Viejo, like some other new cities, has benefited by the state funding formula that doles out tax revenue.

MOST CITIES

138 California cities cut out a total of 3,200 jobs this year.

70% of California cities raised taxes.

To balance their budgets, California cities cut about $200 million.

MISSION VIEJO

Mission Viejo avoided layoffs.

Mission Viejo is considering a tax rebate.

Mission Viejo showed a surplus of $21 million.

Source: California League of Cities and Mission Viejo finance officers