Monday’s state Supreme Court ruling that Los Angeles County overcharged municipalities for administrative services could mean a modest but important boost for strapped city budgets.
"It’s all very important and this money’s going to go right back to city general funds that pay for police and fire and other important local services," said Chris McKenzie of the League of California Cities.
Counties manage property tax collection for cities and charge them a fee for the service. After California’s state legislature enacted a couple of complex tax swaps to plug a budget hole, counties began managing more property tax dollars for cities.
McKenzie said the counties were supposed to provide the service at cost.
"Apparently L.A. County and other counties that followed the guidelines were charging in excess of their actual cost."
Forty-seven cities calculated that Los Angeles County overcharged them a collective $5 million a year for the past six years.
The City of Alhambra sued over the higher fees four years ago. Other cities joined in, including Burbank, Glendale, Long Beach and Pomona. The City of Los Angeles did not sue.
McKenzie says now that the state Supreme Court has sided with the cities, the only question will be how far back they can recoup their losses — and how soon. That will be up to a Los Angeles Superior Court judge to decide.
A spokesman for Los Angeles County declined to comment on the ruling, saying their attorneys are still assessing the impact.
The ruling is expected to apply to the majority of counties in California who charged cities using the same formula as L.A. County. Statewide, counties could be on the hook to repay cities tens of millions of dollars.