Laguna Niguel Renews Its Offensive Against County : Taxes: Assemblyman reintroducing bill to capture about $450,000 a year in revenue. County can ill afford to lose.

As Orange County officials today ask the state Assembly for legislative help with its bankruptcy recovery efforts, the city of Laguna Niguel will be pushing a bill that could strip the county of about $450,000 in annual tax revenue.

Laguna Niguel officials contend that the money is rightfully theirs but has been going to the county because of a quirk in the way the city government was incorporated in 1989.

“That money, plain and simple, belongs to the city of Laguna Niguel,” said Mayor Mark Goodman. “The city’s residents are being cheated out of it.”

For the past 18 months, the county and city have fought bitterly over the apportionment of the so-called Proposition 172 funds, which are sales tax revenue earmarked specifically for public safety purposes.

The funds are intended to reimburse local governments a portion of the money that they lost beginning in 1993 when the state permanently shifted property tax revenue from cities and counties to the state.

City officials contend that Laguna Niguel is not receiving those funds because of its unique government structure, which maintains a separate community services district to provide the type of service that traditional city government provides. They contend that the district and the city are essentially the same entity and the loss in property tax revenue sustained by the district should count as the city’s loss.

But the guidelines for allocating the Proposition 172 funds do not recognize the district. Consequently, the city, which contracts with the county for police services, receives no Proposition 172 money.

County officials say the city is not entitled to the money. They argue that allowing Laguna Niguel to grab a portion of the funds would create a dangerous precedent that could lead to similar attempts by other cities.

Dennis Carpenter, the county’s lobbyist, sent out a letter to legislators Wednesday asking them to reject the city’s request.

He wrote that since the community services district “does not provide public safety services, why should their property tax loss qualify for Proposition 172 sales tax revenue?”

Carpenter further asked: “With the county working to mitigate the financial disaster that resulted in bankruptcy and all county services already being drastically reduced, is it really in the public’s best interest to reduce funding to the county sheriff and district attorney in order to make up funding lost by a special district that provides street sweeping and landscape maintenance?”

Assemblyman Bill Morrow (R-Oceanside), whose district includes Laguna Niguel, said the county’s arguments were a bald attempt to use the bankruptcy to sink an issue that was being pressed “long before (former Treasurer-Tax Collector Robert L.) Citron drove Orange County into bankruptcy.”

Morrow pushed a similar bill last year, but it was beaten by the county’s quick counterattack.

Morrow’s latest bill is expected to be heard on the Assembly floor, perhaps as early as next week. Although some insiders say it faces an uphill fight, Morrow said he thinks it has a good chance.

“I think the message is being better received this year,” he said.