Council approves another property tax override

Jenny Marder

The City Council approved a property tax override to help fund

retirement benefits for public safety employees Monday night less

than an hour after arguing over how to pay for $27 million in refunds

for a similar tax the city collected illegally.

The tax will fund retirement benefits approved by voters in 1966

and 1978, Mayor Connie Boardman said.

Chuck Scheid, the driving force behind the lawsuit filed by the

Howard Jarvis Taxpayers Assn. in 1999, warned the council that this

tax might also be unconstitutional.

“If Scheid is right, we passed an illegal tax [on Monday] night,”

Councilman Dave Sullivan said.

But Boardman, backed by City Atty. Jennifer McGrath and Deputy

City Atty. Scott Field, insisted the property tax override was legal

and that it was already deemed legal by the Superior Court.

In 2001, the Superior Court ruled that under Proposition 13, an

initiative passed by voters in 1978 that capped the property tax

cities could levy at 1% of its assessed value, a property tax

override can not be used to pay for amendments to the city’s

retirement plan approved after 1978. But it also ruled that the city

can legally levy a property tax override for retirement benefits put

in place prior to 1978. The court of appeal upheld the Superior Court

decision July 30.

“The court’s decision was a two-sided coin, and it upheld the use

of pre-1978 benefits,” Boardman said.

Scheid contends that some of the benefits in question were put in

place after 1978 and violate Proposition 13.

The City Council voted for the benefits before Proposition 13, but

Scheid says that some didn’t go into effect into effect until later.

“My view is it was put in place only when [the Public Employee

Retirement Service] signed up for it,” Scheid said. “It wasn’t an

obligation for the city to PERS until September.”

McGrath rejected his warning. The tax was legal, she said, because

the city became obligated to pay the benefits in 1976, well before

the initiative was in place.

The council voted 6 to 1 to approve the tax, with Sullivan

opposed.

“I would remind the council that Mr. Scheid came to that podium in

1999,” Sullivan said. “Two members of the council listened to him,

and five members didn’t, and it cost them $27 million. I suggest that

it’s really important that we listen to Mr. Scheid.”

The new tax will go into effect on the next property tax bill in

November.

* JENNY MARDER covers City Hall. She can be reached at (714)

965-7173 or by e-mail at [email protected].