City Faces New Suit Over Old Utility Tax

Since 1994, when Agoura Hills imposed a 4% utility tax on residents, the city has struggled with opposition to the tax.

The city repealed the tax after voters rejected it in a 1996 special election and last year it refunded part of the money collected. Now, Agoura Hills faces a Superior Court lawsuit seeking $2.2 million in additional tax refunds, filed on behalf of 163 plaintiffs.

Part of the dispute hinges on the interpretation of two court rulings after the tax was imposed.

In the view of City Atty. Amanda Susskind, Agoura Hills could not have done more to comply with a 1995 state Supreme Court decision that required voter approval of taxes. After that ruling, the city--voluntarily, she emphasized--put the utility tax on a 1996 ballot, repealed it when residents voted it down, and offered refunds for taxes collected after the court decision.

“There couldn’t be a city that did more to comply with this,” Susskind said. “It’s kind of ironic that they’re now going after taxes that were paid before” the law changed.

But Citizens Against New Local Taxes, a local group that brought the lawsuit on Sept. 24, argues that the tax was illegal from the start because voters had not approved it, said Barbara Murphy, the group’s chairwoman.

Murphy cites a 1997 appellate court decision that she said indicates the state Supreme Court ruling also applies to taxes imposed before 1995. Her group wants the city to offer to refund every dollar collected under the utility tax between June 1994 and July 1996.

“If the tax was illegally collected from Day One, refunds are due,” she said.

The lawsuit seeks to compel Los Angeles County to withhold $2.2 million in property taxes to compensate Agoura Hills residents for the portions of the utility tax not refunded. When the city offered about $1.1 million in refunds last year, Murphy said, only about $360,000 was actually claimed by residents.

Susskind said the city would carefully review the case, but pointed out that when Agoura Hills offered refunds previously, “very few people applied for them.

“When push came to shove,” she said, “the community really came out in force to support the city when we offered refunds.”