LOS ANGELES -- Three separate lawsuits by local California governments that challenge a massive property tax revenue shift by the state will be coordinated and heard by one judge, a California court ruled this week.

In an order issued Wednesday after a brief hearing, Los Angeles County Superior Court Judge Gary Klausner granted a petition for coordination of the three suits filed by California Attorney General Dan Lungren.

The localities are challenging a controversial section of the 1994 state budget act that requires local governments to shift $2.6 billion of property tax revenues to schools to help balance the state's own budget. The suits question the constitutionality of the shift.

A state judicial council appointed Los Angeles County Superior Court Judge Robert H. O'Brien to oversee the coordinated cases. O'Brien will hear the cases concurrently, but they will remain independent of each other. Attorneys expect O'Brien to call a conference shortly for interested parties to set briefing and hearing schedules.

Klausner said the coordination order applies to suits filed by San Diego County, the city of Alhambra and its redevelopment agency, and a Marin County fire protection special district.

However, assistant attorney general Allen Sumner said the state would petition to expand the coordinated hearing to include four other local governments that also have challenged the tax transfer. They are: Butte County, Contra Costa County, Kern County, and several special districts in Ventura County.

Sumner said the attorney general seeks coordination of the seven cases for expedited lower court proceedings because the issues ultimately are expected to be decided by the California Court of Appeal.

"The purpose of one lower court proceeding will be to provide the appellate court with an omnibus action to rule on, as opposed to numerous trial court decisions trickling up to the court of appeal from various local governments at different locations and points in time," Sumner said.

In a related development, the California Second District Appellate Court recently agreed to hear Los Angeles County's challenge of the tax shift in November.

The attorney general's original petition sought to include Los Angeles County in the coordinated lower court proceedings. Klausner said, however, that the request is moot because the county's case has moved beyond the trial court level.

Los Angeles County launched its appeal in August after Los Angeles County superior court Judge Diane Wayne dismissed a county challenge on July 28. Wayne ruled that the state transfer of local property taxes was constitutional. The date for oral arguments has not been set. The state's brief is scheduled to be filed Monday and the county's response next Friday, said Frederick R. Bennett, assistant counsel to the county. Bennett said a decision could be handed down by February because the appeal court has granted Los Angeles County's request for calendar preference.

Of the $2.6 billion of property taxes shifted from counties, cities, special districts, and redevelopment agencies, the counties were hit hardest, losing nearly $2 billion of funding. But the state budget package contains several revenue adjustments to mitigate the impact.

In addition to giving counties certain vehicle license fee allocations, a budget trailer bill extends for six months a one-half cent sales tax to provide $744 million of revenues for counties and cities. Voters will be asked in a special statewide election Nov. 2 whether the sales tax should be permanently extended. That move would provide an extra $712 million to counties and cities this fiscal year. but the money would be earmarked for public safety activities.

Underscoring their displeasure with the budget package approved by the Legislature and signed by Gov. Pete Wilson, supervisors for 22 of the state's 58 counties have passed ordinances directing their auditors to defy the state and refuse to hand over any additional property tax money.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.