Mission Viejo City Council Rejects Tax Rebate Plan : Finances: City doesn’t have ‘potful of money,’ councilman says. Controversial item won’t go on June ballot.

For residents of this city dreaming of ways to spend a $500 tax rebate check ballyhooed by elected officials, there’s bad news: The check is not in the mail. The City Council has squashed plans for the controversial refunds.

Although the idea was embraced by the council in December, three of them soured on the rebates, which would have come from the city’s $21-million budget surplus. On Monday night, they rejected a proposal to put the issue on the June ballot.

“It would be irresponsible. It would be shortsighted,” Councilman Robert D. Breton said. Pointing to millions of dollars in unfunded projects that he said remain badly needed, Breton added: “We do not have a potful of money that we can legitimately call surplus revenue.”

Under a proposal by Councilman William S. Craycraft, the city would have dipped into its reserve funds and rebated about $10 million to property owners. But council members began having second thoughts about the refund plans, which raised eyebrows throughout a recession-plagued state, when city finance staff pointed out that only $5 million of the city’s reserves were not already earmarked for projects and programs.

Adding to the rebates’ demise was opposition from Mission Viejo residents themselves.

Council members say their mail and phone calls ran 2 to 1 against the rebates. At a well-attended town meeting on the issue Feb. 12, a small majority called for the council to turn down tax refunds, saying the 4-year-old city had too many needs to return city money to taxpayers.

Those who asked for the refunds said they would rather have the money in their pockets than in a city bank account.

Despite being aware of their colleagues’ opposition, Craycraft and Councilman Robert A. Curtis pushed during Monday’s meeting for putting the tax rebates to a vote in June.

Craycraft told the audience that roads and parks would be maintained regardless of whether budget reserves are rebated.

Capital improvements and park maintenance “are funded annually out of our revenue stream that comes every year,” Craycraft said. “Why people would want to continue to mislead others about this is beyond me.”

Curtis and Craycraft have both been criticized by the council and residents for pursuing a political agenda.

Craycraft first drew the ire of his fellow council members by calling a surprise Christmas Eve press conference to announce the rebate proposal. He further inflamed them by inviting an “outsider”--Assemblyman Mickey Conroy (R-Santa Ana)--to join him.

Curtis, who is considering a run against Conroy for the 71st District Assembly seat, claimed that Craycraft stole the idea from him.

The press conference went badly, as council members traded insults with Craycraft supporters and Curtis wound up nose-to-nose with Conroy in an expletive-filled exchange.

After initially supporting the concept of a rebate, the council soon cooled to the idea. Instead of $500 refunds, a rebate committee appointed by the council began talking about a maximum rebate of $75.

Council members began to publicly call the rebates a mistake. They also accused Curtis and Craycraft of having political motivations for their dogged support of the refund proposal.

Although both men denied politicizing the issue, Breton called the rebate proposal an “election-year gimmick.” Mayor Sharon Cody said she felt that many Mission Viejo residents were misled by the rebate talk.

“That’s the one thing that I regret the most about all this,” Cody said. “That there will be people out there who thought they were going to get rebates. I feel badly for them.”

As chairman of the rebate committee, Curtis was also criticized for featuring his name prominently in newspaper ads and mailers discussing the rebates.

“I think this idea has been used as a political tool,” resident Ted Olsen told the council Monday, waving a copy of the mailer in one hand.

In a separate action, the council agreed to put another politically charged issue on the June ballot, voting to let residents decide if they want the city to build an $18-million City Hall.

Although the city would stand to lose $600,000 already spent on plans if voters rejected the civic center, the council also decided to make the election binding.

The original proposal for the 80,000-square-foot building off Crown Valley Parkway near Interstate 5 called for an advisory election. But council members said that since they planned to go along with the will of voters, the election should be binding.