LOS ANGELES -- Los Angeles County has lost a nearly year-long fight over the state's $2.6 billion shift of property taxes from local governments to schools.
The California Supreme Court said last Thursday it would not hear Los Angeles County's petition for review of an adverse ruling in March by an appellate court. The county also lost in trial court last July.
The state high court decision could be a bad omen for eight other local governments that must decide by mid-August whether to pursue their own lawsuits against the state's property tax transfer.
Attorneys representing the eight local governments "realize their suits have very little chance of success" following the high court's Los Angeles County decision, said Allen Sumner, a state senior assistant attorney general.
In early June, the eight cases were rejected by Los Angeles County Superior Court Judge Robert H. O'Brien, setting the stage for an appeal to the appellate court level.
In the aftermath of the Los Angeles County decision, the localities plan to meet next week to plot legal strategy, said Tim Cremin of Burke, Williams & Sorerisen, the law firm that represented Alhambra, Calif.
Cremin said, "Now the issue is whether any of the parties are going to appeal."
At issue in the various lawsuits is whether the state's political leadership had the right to transfer the $2.6 billion of property taxes from localities to schools in the current fiscal year that ends Thursday.
The transfer was crafted to free state budget planners from having to seek an equal amount of revenues for schools from other funding sources.
The state-mandated property tax shift hit the state's 58 counties the hardest. They were required to shift $2 billion to schools. The balance came from cities and special districts.
Los Angeles County supervisors, upset that the county's transferred share was $680 million, filed a lawsuit against the state last July. After losing two separate legal rounds in lower courts, the final blow to the county came last Thursday when the state Supreme Court told Los Angeles County it would not hear a petition for review.
Because the case does not involve "federal questions" to be resolved, Los Angeles County assistant counsel Frederick R. Bennett said, "for all practical purposes" it appears the county has reached the end of its legal road. Regarding other legal remedies, Bennett said, "There is nothing pending at this point in time."
The county's fiscal 1995 spending plan factored in the possibility of losing the litigation, said Sharon Yonashiro, the county's assistant administrative officer. The court ruling "has budgetary impact, but it isn't as if we had not planned on it," she said.
But squabbling over the property tax transfer continues. The state department of finance said Los Angeles County is one of 12 counties that failed to transfer the required amount of property taxes to schools. The state general fund is short by $159 million of the expected amount, of which Los Angeles County owes $93 million, department officials said.
Dan Wall, a lobbyist with the California State Association of Counties, said a two-house conference committee writing the fiscal 1995 spending plan has agreed to allow Los Angeles County to repay the shortfall over a two-year period. The association is also trying to establish a two-year repayment plan for the 11 other counties.
The department of finance's estimated revenues to be collected in the tax transfer "missed the mark" by incorrectly assuming the amount of money that counties provide to redevelopment agencies, Wall said.
