Appeals Court Lets County's Transportation Sales Tax Stand : Measure M: Jubilant local officials hope to get moving on variety of projects that have been stalled. Disappointed plaintiffs vow to go to state high court.


Orange County's half-cent sales tax for transportation projects was upheld 3-0 by the state's 4th District Court of Appeal on Tuesday, raising hopes among local officials that they can move ahead more rapidly on dozens of highway and transit projects.

Bill Ward of Drivers for Highway Safety, one of the lead plaintiffs, said they will appeal to the California Supreme Court. "I knew we would be at the Supreme Court," said a disappointed Ward, "but we figured it would be the other side that would have to take it there."

"Hallelujah!" said an overjoyed Supervisor Thomas F. Riley, also a member of the Orange County Transportation Authority. "Thank the supreme being. Now we can get on with building roads."

The legal challenge to Measure M, which was approved by 55% of county voters in November, 1990, has constricted the flow of money for transportation projects.

After Measure M was passed, transportation officials had planned to immediately sell millions of dollars in bonds that would be repaid by future tax revenue. But they were sued within two months of the vote, and Wall Street is loathe to buy and sell bonds backed by tax revenue that may never materialize. No bonds backed by Measure M funds have been sold.

With Tuesday's ruling the officials will be talking to their consultants about whether investors will be willing to buy bonds now or will insist on waiting for the Supreme Court's ruling, said Transportation Authority member Dana W. Reed.

Also, the authority has not spent Measure M revenue because the money might have to be repaid to taxpayers if the measure is declared unconstitutional. Stanley T. Oftelie, chief executive officer of the Transportation Authority, on Tuesday said the agency may now decide to start spending the $100 million in Measure M revenue that has accrued since the tax took effect last year.

Measure M is expected to raise $3.1 billion over a 20-year period, with much of the money earmarked for the widening of the Santa Ana, Riverside and San Diego freeways, regional commuter rail and local urban rail systems.

Tuesday's ruling follows a March 6 decision by the 2nd District Court of Appeal in Los Angeles that upheld Los Angeles County's second half-cent sales tax hike for transportation projects.

Both tax measures were attacked as unconstitutional by the same plaintiffs, who argued that the levies violated the two-thirds vote requirement for new taxes in Proposition 13, the property tax reform initiative adopted by California voters in 1978.

The two rulings are significant because they follow a state Supreme Court decision last month overturning a San Diego sales tax hike used to build courts and jails.

The Supreme Court ruled that the San Diego tax was illegal because it was levied by a special district board created after Proposition 13 to provide a service normally paid for with property taxes.

The key difference in Orange County, appellate justices ruled, was that Transportation Authority--formerly the County Transportation Commission--was formed two years before Proposition 13, never collected property taxes and thus was not designed to get around Prop. 13.

The appellate justices used unusually harsh language in rejecting the challenge to Measure M, stating in a 13-page opinion that the plaintiffs' appeal was "meritless."

Among other arguments, the plaintiffs, including the Libertarian Central Committee of Orange County and Citizens Against Unfair Taxation, said that Measure M violated Proposition 62, which requires a two-thirds majority for adoption of "special" taxes.

But the appellate court rejected all their arguments, and even referred to some of the claims as having been put forward "bizarrely" and with "gall." The justices also awarded court costs to the Transportation Authority, estimated to be about $2,000.

The opinion was written by Justice Thomas F. Crosby Jr. and signed by Justices David G. Sills and Henry T. Moore Jr.

Attorney Mark Rosen, who represented the plaintiffs in both the Orange and Los Angeles cases, said he will file an appeal because he believes the appellate opinions are "completely contrary" to the Supreme Court's decision last month in the San Diego case.

Transportation Authority member Reed said he hopes the agency will attempt to recover from the plaintiffs the full $250,000 it has cost the agency to defend Measure M successfully through a total of four court decisions in two separate courts.

Rosen declined to say how much the plaintiffs have spent.

County officials reacted with glee to Tuesday's ruling, saying they hoped Measure M spending would boost the local economy.

"If there was ever anything that would stimulate jobs, this is it," said Supervisor Don R. Roth, also an authority member.

Board of Supervisors Chairman Roger R. Stanton, who also chairs the authority, said of the plaintiffs: "I really would appeal to them to see that it's now a waste of time and money to pursue the case any further. Let's join hands in this and get some traffic moving."

Tom Rogers, a San Juan Capistrano rancher who heads Citizens Against Unfair Taxation, said "there's room for conciliation" but said he was speaking for himself and not the other plaintiffs.

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