Local tax foes are rejoicing at a recent California Supreme Court ruling that could threaten the city's 6% utility levy, but city officials warn they could be forced into bankruptcy without the tax money.
The Supreme Court recently upheld the constitutionality of Proposition 62, a 1986 ballot measure that required voter approval of general and special taxes. The judgment reversed a 1986 lower court decision that indicated the measure was unconstitutional.
Under Proposition 62, taxes levied for general purposes, such as La Habra's utility tax, must be approved by a majority of voters.
City Atty. Richard D. Jones said he is unsure how the ruling will affect the city tax, passed in 1992 by a unanimous vote of the City Council. The League of California Cities said Monday that the ruling does not specifically address how city taxes are affected and that it could be months before the issue is resolved.
Residents have been trying to get the tax repealed for the past 10 months. Merceline La Porte, who organized La Habra ACT (Against City Tax), said her group is celebrating the court ruling and has begun the process to get the levy on the ballot "just in case the city is allowed to keep its unfair tax."
La Porte said the city should save money by drastically cutting police, fire, child care and other emergency and social services.
City officials say such a plan would be a catastrophe for the city. They warned that the city might face bankruptcy or deep cuts in crucial services should officials be forced to invalidate the tax, which generates $3.7 million annually.