Cities Weigh Sales Tax Revolt Against County

Several Ventura County cities say they may join a tax revolt against the county if the city of Ventura is successful in keeping $572,000 in sales tax revenue.

Officials in Simi Valley, Thousand Oaks, Oxnard, Moorpark and Fillmore are closely watching Ventura’s threat to withhold the money, but say the battle won’t easily be won.

County attorneys say they are prepared to go to court to keep the estimated $2.3 million received from nine of the county’s 10 cities each year. And the cities acknowledge that a change in the tax-sharing agreement with the county might require new state legislation.

County administrators say the sales tax revenue helps pay for county services, such as the tax assessor, county registrar, planning departments, environmental agencies and public safety.

But the cities argue that the tax-sharing agreements are outdated because many services that the county provided in the 1950s, such as animal control, are now contracted out to other agencies and companies.

“It’s a hostage kind of situation,” said Bob Heitzman, Simi Valley’s deputy city manager.

Fillmore Mayor Pro Tem Don Gunderson said his rural town needs to reclaim the $100,000 it turns over to the county each year.

“In cities like Fillmore, our people do so much shopping outside the city that we lose” tax revenue, he said. “We’ve just really got to scratch for every penny we get.”

Ventura’s proposal comes at a time when the county is strapped for revenue. To balance the county’s $1-billion budget next fiscal year, Chief Administrator Harry Hufford has recommended $12 million to $15 million in budget cuts spread across nearly all county departments.

Hufford said Ventura’s proposal to withhold taxes, if adopted by several other cities, would become “a big problem” for the county’s finances.

“If the cities should do this and if it passes all legal tests, then it adds to our deficit,” he said.

Cities don’t appreciate that their sales tax revenues pay for “the basic infrastructure for local government for the benefit of the cities,” Hufford said. “This is jails, human services, probation services. This is the Ventura County Medical Center. We conduct elections. We do property tax.”

On Monday, Ventura’s City Council is set to consider the first reading of an amendment to the sales tax ordinance that, if approved, would free the city from sharing any portion of its state sales taxes with the county.

The amendment would increase to $17.57 million the amount the city receives in annual sales taxes, based on retail sales made within Ventura. This additional $572,000 would be used for residential road improvements, according to Bill Little, the city’s interim director of administrative services.

California has 17 counties that have arrangements with their cities to share sales tax revenue, Little said. But not all cities within those counties have agreed to split the money, he said.

“There’s nothing in state law that says you have to give anything to the county,” Little said.

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In 1955, California counties were authorized by new sales tax legislation to receive a portion of such revenues. Counties and cities passed ordinances the following year that allow them to share the money.

Now, nine Ventura County cities give up one-third of 1% of their sales taxes, or $3.30 per $1,000, to the county general fund for a total of about $2.3 million each year, city officials said.

State law dictates that the money must go into a county trust fund and cannot be spent until an agreement is reached between the city and county, said Steve Szalay, executive director of the California State Assn. of Counties.

But Bob Boehm, Ventura’s city attorney, said the city’s agreement with the county does not prohibit it from discontinuing its tax-sharing ordinance.

The State Board of Equalization, which collects and distributes sales taxes, released Ojai from sharing its portion of sales taxes with Ventura County back in 1972.

Ojai City Manager Andrew Belknap said city officials have forgotten what prompted the decision, but added that his city hasn’t been approached by county officials to reinstate an agreement.

But Frank Sieh, chief assistant county counsel, said it’s likely that the state “made a mistake” in releasing the city from its obligation to share its taxes. And if Ventura attempts to renege on its agreement with a new ordinance, the county may sue to force continued payments, he said.

Sieh said the county is preparing an official response to Ventura’s pending action, which could include reporting the city to the Board of Equalization.

“I suppose we need to sit down with the city of Ventura to talk about what the ramifications would be,” he said, “because presumably the other cities would follow suit. And if they do, the ramifications would be of substantial proportions.”

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Along with the money from the cities, the county said it expects to receive nearly $5 million in sales tax revenues from unincorporated areas, such as Somis and Oak Park.

Many city officials interviewed Wednesday had forgotten that their cities contribute sales taxes to county coffers.

Thousand Oaks, which expects to receive $19.7 million in sales taxes during fiscal year 2000-01, would relinquish $650,000 to Ventura County, Thousand Oaks City Manager MaryJane V. Lazz said.

For years, Thousand Oaks officials thought that they were paying for animal control services from the county, but now the city contracts with Los Angeles County for those services.

“What is the reason a portion of what we get in sales tax should be shared with the county?” Lazz asked.

Simi Valley expects to relinquish about $330,000 in state sales taxes to the county in the next fiscal year, Heitzman said.

About $200,000 of Camarillo’s sales taxes go to the county, said Anita Lawrence, the city’s finance director. Another $7.2 million stays with the city.

“I think philosophically it was to go toward animal control and those types of things, but we pay for it,” Lawrence said. “But now, I don’t know what it goes toward.”