Ruling May Lead to Property Tax Increase : Agencies: State Supreme Court refuses to hear a suit challenging the diversion of revenue from special districts.

In a decision that could lead to a property tax increase in much of Ventura County, the state Supreme Court has refused to hear a lawsuit challenging the diversion of tax revenue from special districts.

The Calleguas Municipal Water District, which serves 500,000 county residents from Oxnard to Simi Valley, and eight other Ventura County agencies had asked the court to grant an immediate hearing to their suit.

The suit challenges the decision of the governor and Legislature last year to take $5.3 million in property tax revenues collected by the districts and divert the money to schools and community colleges.

Calleguas has said it might have to impose a $10 parcel tax on every property in the district if it fails to recoup the tax revenue, and other districts have already cut services.

On Thursday, Calleguas General Manager Donald Kendall said the agency’s board will call a special meeting this month to consider further legal action. The board also will eventually have to decide whether to impose the parcel tax, but that decision does not have to be made immediately, Kendall said.

The Calleguas district, which buys water from the Metropolitan Water District and resells it to 28 public and private water companies, lost about $3.5 million in the state’s property tax shift. District officials say the money is needed to build a second pipeline to connect with the MWD and to make other improvements aimed at “drought-proofing” the Calleguas district.

The Conejo Recreation and Park District lost about $900,000 in the shift, General Manager Tex Ward said, forcing the district to lay off 26 workers, cut services and raise fees. The Conejo district joined in Calleguas’ suit, as did three other water districts, two sanitation districts, the Ventura Port District and the Rancho Simi Recreation and Park District.

Normally, such lawsuits are filed at the county level in Superior Court, but Calleguas in December asked the state Supreme Court to take the case, arguing that it affected thousands of districts statewide.

The high court referred the case to the 2nd District Court of Appeal, which in February refused to hear it. This week, the state Supreme Court also declined to take the case. Neither court ruled on the merits of the suit.

Now Calleguas and the other districts must decide whether to file the case in Ventura County Superior Court--a process that their attorney, Russell G. Behrens, said could take up to five years.

“In the meantime, the money is being shifted and spent,” Behrens said.

Special districts across the state have expressed interest in filing some joint challenge, the attorney said. “As the reality of having to make up revenues or reduce services hits home, you’re going to get more people disturbed about it,” Behrens said.

Kendall said the state is illegally diverting tax money that voters intended to be spent on local projects. The Conejo district, for instance, was established by voters in 1963 to provide recreation services in the Conejo Valley.

But Allen H. Sumner, the assistant attorney general who defended the state against the suit, said voters changed their minds by approving Proposition 13, the 1978 tax-cutting measure. That measure cut property taxes by 40% to 45% and gave the Legislature the right to reallocate revenue as it saw fit.

“If they have a complaint, it’s not with the Legislature or the governor, it’s with Howard Jarvis,” Sumner said, referring to the author of Proposition 13. “Why they think revenue can be cut 40% without a diminution in services makes no sense.”

Ward of the Conejo district said the state’s argument “is contrary to the system of government we have, where local government does what it does under the eye of local taxpayers versus having Sacramento people decide what the priorities are.”