HomeMy WebLinkAboutMINUTES - 12112012 - C.30RECOMMENDATION(S):
APPROVE appropriation adjustment no. 5035 transferring $5,304,000 from the Tax Losses Reserve Fund to
reimburse all cities within the County for certain monies previously classified as property tax administration fees;
and REQUEST the Auditor-Controller to transfer to the cities in this County a portion of the fees collected for each
fiscal year since 2006-2007, as recently identified by the California Supreme Court in City of Alhambra v. County of
Los Angeles.
FISCAL IMPACT:
County expense of $5.3 million to reimburse cities for certain monies previously classified as property tax
administration fees for the last 6 fiscal years, since fiscal year 2006-2007. Monies have been identified and will be
appropriated from the Tax Losses Reserve Fund. The on-going impact of the change in the calculation of property tax
administration fees will reduce the amount of fees collected by approximately one million dollars annually.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 12/11/2012 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II
Supervisor
Mary N. Piepho, District III
Supervisor
Karen Mitchoff, District IV
Supervisor
Federal D. Glover, District V
Supervisor
Contact: Lisa Driscoll, (925)
335-1023
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board
of Supervisors on the date shown.
ATTESTED: December 11, 2012
David Twa, County Administrator and Clerk of the Board of Supervisors
By: Carrie Del Bonta, Deputy
cc: Robert Campbell, Auditor-Controller
C. 30
To:Board of Supervisors
From:David Twa, County Administrator
Date:December 11, 2012
Contra
Costa
County
Subject:Refund Property Tax Administration Fee monies
BACKGROUND:
By statute, counties are responsible for the administration of local property taxes. Counties levy taxes, collect
them, and distribute these revenues to the various cities, special districts, schools and other entities in the county.
In order to partially recover county costs in administering the property tax system, a county is statutorily
authorized to impose a property tax administration fee on certain taxing agencies within its borders. This fee is
calculated as a percentage of the amount of property tax revenue allocated to that taxing agency. Some of the
property tax revenue collected by the county must be paid into each county’s Educational Revenue Augmentation
Fund (ERAF). Any revenues allocated from the taxing agencies to the county’s ERAF are exempt from the
property tax administration fee.
In 2004, the Legislature adopted two budgetary measures designed to transfer local property tax revenue that
would have been deposited into each county’s ERAF to fund various State budget gaps. In return the State made
whole each county’s ERAF contributions through the allocation of other state funds. This policy was known as
the “Vehicle License Fee (VLF) Swap” and the “Triple Flip.” After this legislation was passed, the State
Association of County Auditors determined that it was appropriate for counties to recover the costs of
administering the revenues resulting from the VLF Swap and Triple Flip, from cities in the same way that they
recovered the costs from administering other property tax revenues (i.e., as a percentage of the money distributed),
beginning in fiscal year 2006-07, and prepared guidelines to this effect. Accordingly, since fiscal year 2006-07,
the Auditor-Controller has included property tax revenues derived from the VLF Swap and Triple Flip in the
annual calculation of the property tax administration fees recoverable from cities and has withheld these
administration costs from the County’s cities. The VLF Swap and the Triple Flip had no impact on the property
tax administration fees paid by other taxing agencies in the County.
Cities in numerous counties, including those in Contra Costa County, objected to counties’ inclusion of property
tax revenues resulting from the VLF Swap and Triple Flip in the calculation of a county’s recoverable property
tax administration fees. These cities took the position that the VLF Swap and Triple Flip monies should be exempt
from the administration fee, just as ERAF funds are exempt. Forty-seven cities in Los Angeles County brought
suit against the county and its auditor to recover the property tax administration fees that they felt had been
improperly deducted from their share of property tax revenues. On November 19, 2012, the California Supreme
Court ruled in favor of the cities of Los Angeles County in City of Alhambra v. County of Los Angeles
[(November 19, 2012) S185457]. The Court held that, in enacting the VLF Swap and Triple Flip, the legislature
did not intend to eliminate the ERAF exemption for the property tax revenues designated for ERAF but diverted
by the Triple Flip and VLF Swap, so that county was not allowed to collect the proportionate property tax
administrative fees from these revenues. The only fees that could be collected were those that related to a few,
minor services performed by the county pertaining to these funds. On November 30, 2012, Los Angeles County
filed a Petition for Rehearing.
Payment to the cities in this County of the portion of the property tax administrative fees identified by the
California Supreme Court in Los Angeles v. City of Alhambra is consistent with the Supreme Court’s ruling.
CONSEQUENCE OF NEGATIVE ACTION:
Failure to take the recommended action would be inconsistent with the California Supreme Court’s ruling.
CHILDREN'S IMPACT STATEMENT:
None.
ATTACHMENTS
PTAF TC 24