Surf City property tax is given the heave-ho

Tariq Malik

HUNTINGTON BEACH -- An Orange County Superior Court judge has sided

with a Surf City resident and a taxpayers’ rights group who claimed a tax

paid by home and property owners was illegal.

In a tentative ruling Monday, Santa Ana Judge Robert H. Gallivan

decided in favor of resident Chuck Scheid and the Howard Jarvis

Taxpayers’ Assn., stating that a property tax funding some city employee

retirement benefits was a violation of the 1978 Proposition 13.

That proposition reduced local property taxes by setting a cap of 1%

of assessed value.

Tim Bittle, attorney for Scheid and the taxpayers’ association, said

he is preparing a final statement of judgment for Gallivan’s approval.

City officials argued that the city’s charter, which was amended at

the same time as the Proposition 13 vote to allow taxes to meet city

retirement system obligations, gave them the power to apply the money

toward employee pensions.

City Atty. Gail Hutton said she will bring the decision to the

attention of the City Council in one of the next two upcoming meetings

before deciding on a course of action.

“We want to have a chance to digest [the decision] and meet with our

special counsel to see how to proceed,” she said. “But we’re

disappointed.”

The Jarvis organization, named after the late Howard Jarvis, filed

claims against the city in November 1999 on behalf of Scheid and the late

Charles Davis. The two demanded refunds in the belief that the property

tax was illegal, and the lawsuit was filed a month later. Davis has since

been dropped from the proceedings.

The tax charges about 5 cents on every $100 of assessed property

value, meaning a home worth $300,000 would generate $150 in property tax.

An exception in Proposition 13 allowed the city to continue levying taxes

in excess of the 1% cap for benefit obligations in place before the 1978

election.

Gallivan’s ruling, however, pointed out that the city’s supplemental

retirement benefit costs approved after the proposition were not approved

by voters and constituted an illegal override in property taxes.

Under Gallivan’s decision, in addition to Jarvis’ litigation costs,

the city is ordered to repay Scheid $22.55, the amount of tax he paid

during the 1999-00 fiscal year.

While the sum may seem insignificant, to Scheid there is a greater

principle involved, he said.

“Obviously $22 is not a bunch of money, but the total revenue

collected under the tax was in the millions,” Scheid said, adding that he

understands the city needs the money. “Just because you need money

doesn’t justify robbing the bank, and that’s what it amounts to here. The

people are being robbed.”