Los Angeles County must repay cities millions, court rules

Cities across Los Angeles County should have an extra $10 million a year after a state Supreme Court ruling Monday.

In a unanimous opinion, the state's top court said the county improperly withheld millions of tax dollars from at least 47 cities and now must pay up.

L.A. County, like others in California, charged property tax administrative fees on education money that is exempt from such fees under state law.

Michael Colantuono, the attorney who represented the 47 plaintiff cities, including Long Beach, said L.A. County owes municipalities $10 million to $30 million that was improperly withheld in past years. That's in addition to $10 million a year 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 $5 million a year.


"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, including those in San Mateo County that he represents, 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.


That ruling isn't expected for months.


The exact numbers haven't been worked out, but Colantuono said estimates show the ruling will make a yearly difference of $155,664 for Carson, $151,699 for Cerritos, $147,494 for Norwalk, $126,175 for Lakewood, $98,068 for Bellflower, $86,869 for Paramount, $83,760 for La Mirada and $51,142 for Signal Hill.

Among his 47 clients, the largest checks, $653,499 a year, will go to Long Beach.

The smallest will go to Bradbury, a San Gabriel Valley city of 1,000 people. Its annual windfall: $845. But Colantuono said its corresponding share of the legal fees is just $7.

Tom Modica, Long Beach director of government affairs and strategic initiatives, said the city is still determining the effects of the ruling but that there will likely be several hundred thousand dollars in annual general fund relief.

"I don't think it's anything we can expect to receive immediately, but we would have fewer fees to pay for property tax administration," Modica said.

The city of Los Angeles wasn't 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.

A spokesman for the L.A. city attorney couldn't be reached for comment on why the city didn't participate. Cities not involved in the lawsuit may still be able to seek refunds, but that process isn't clear.


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.


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.

Staff Writer Eric Bradley contributed to this report.

eric.hartley@dailynews.com, 818-514-5610, twitter.com/ehartley

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