Court Refuses to Hear Agencies’ Suit to Recoup Diverted Tax Revenues

A state appeals court has refused to hear a lawsuit filed by nine public agencies in Ventura County that want to recoup millions of dollars of property taxes they claim were illegally diverted to balance the state budget.

Don Kendall, general manager of the Calleguas Municipal Water District, said he was “shocked” by the court’s one-sentence ruling issued last week. Calleguas is one of the nine special districts involved in the case with the Ventura County Taxpayers Assn.

“It certainly sends the wrong message to the taxpayers. If there was ever a time for a case to be heard in a timely matter, now is the time,” Kendall said.

Lawyers noted that the ruling from the 2nd District Court of Appeal did not address any of the issues raised in the lawsuit.

Specifically, the suit challenges the Legislature’s decision in 1992 to transfer $375 million in property taxes from special districts such as Calleguas to schools and community colleges. The redistribution helped the state balance its budget.

The nine Ventura County districts estimate they are losing more than $5.3 million a year from the tax shift, and many have had to cut staff and services. For example, the Conejo Recreation and Park District, another district involved in the lawsuit, eliminated nearly one-fourth of its staff, raised fees and reduced hours at community centers.

Calleguas, Ventura County’s largest water wholesaler, may have to raise its rates to replace the property tax funds.

Assistant Atty. Gen. Allen Sumner, who is defending the state tax transfer, said the issue affects about 5,000 special districts in California, 1,000 school districts and 70 community college districts.

He said the state contends that Gov. Pete Wilson and the Legislature had full authority to reallocate property taxes.

Thomas Anderle, a lawyer for the districts and the Ventura County Taxpayers Assn., another plaintiff, said they will file a petition with the state Supreme Court by Tuesday seeking a quick hearing.

He said the districts are taking the unusual legal strategy of filing directly with the Supreme Court because following the usual procedure of filing with the Superior Court would take years to get a final appellate ruling.

The districts want a quick legal decision because the governor’s proposed budget for the 1993-94 fiscal year continues the “tax swap” that will cost the district millions of dollars, he said.

“Those people are all standing on one leg trying to decide what they are going to do with their budgets. They need a decision right away,” Anderle said.

The districts originally filed the suit with the Supreme Court last December. The high court referred it to the appeals court.