The state Supreme Court ruled Monday that Los Angeles County improperly withheld millions of tax dollars from at least 47 cities, including several in the South Bay.
The unanimous opinion was a victory for Michael Colantuono, the attorney who represented the plaintiff cities in a case challenging property tax administrative fees charged by counties on education money that is exempt from such fees under state law.
Colantuono said the county owes cities $10 million to $30 million that was improperly withheld in past years, in addition to $10 million a year owed in the future.
Those numbers cover all 88 incorporated cities in Los Angeles County, even those that weren't involved in the case. The 47 plaintiffs will get about half of the money at stake, or $5million a year.
Statewide, the ruling means a difference of about $40 million a year for cities.
"It's significant for the simple reason it affects every city in the state," said Benjamin Fay, an attorney who wrote a friend-of-the-court brief for the League of California Cities.
Fay said cities around California had been waiting for the ruling and will be seeking refunds from their counties. Most counties used the same interpretation of law the Supreme Court struck down Monday.
At least in L.A. County, cities won't be getting that money for a while.
The two sides first will go back before a judge to argue about whether the refunds go back several years or, as the county will argue, only one year.
Deputy County Counsel Doug Lovejoy said he was still reading the ruling Monday and had no immediate comment.
The exact numbers haven't been worked out, but Colantuono said estimates show the ruling will make a yearly difference locally of about $155,664 for Carson, $106,583 for Culver City, $88,600 for Gardena, $129,939 for Hawthorne, $44,867 for Lawndale, $27,014 for Lomita and $98,890 for Redondo Beach.
The city of Los Angeles was not involved in the case, though it had as much at stake as the 47 plaintiffs combined, Colantuono said. All 88 cities in the county were invited to participate, he said.
Cities not involved in the lawsuit may still be able to seek refunds, but that process is not clear.
Counties collect property tax revenue and then distribute shares to cities and schools after taking out administrative fees for doing so.
The L.A. County court case, filed in 2008, centered on the Educational Revenue Augmentation Fund, a state-created pot of money in each county that sets aside property tax revenue to meet constitutional school funding requirements. By statute, that money can't be factored into the administrative fees the county charges.
But in 2004, the state passed two laws that used some of that education funding to close budget gaps elsewhere. L.A. County took that to mean the money was no longer exempt from fees, and it started to hold back an extra $10 million a year.
The county had said it would keep doing so unless a court ordered otherwise, Chief Justice Tani Gorre Cantil-Sakauye wrote in Monday's Supreme Court ruling.
In 2009, a specially appointed judge ruled the county's move was legal. But an appellate court reversed that ruling and sided with the cities. L.A. County appealed to the Supreme Court, which said the "plain language" of state law doesn't support the county's interpretation.
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