November 14th, 2011, 4:07 pm
Posted by Kimberly Edds, Staff Writer

In a bold move to make up for $49.5 million in tax revenues lost to the state earlier this year the County of Orange will grab $73.5 million in property taxes once destined for local school districts, County Supervisors Chairman Bill Campbell said Monday.

Campbell said that state coffers, not the school districts, will suffer, because a state law mandates that it backfill the reduction in local revenue.

County employees who were scheduled to be laid off December 1 as a result of the county’s $49.5 million shortfall received an unexpected reprieve.

A legislative money grab earlier this year targeted special funds Orange County receives from California vehicle license fees and uses to pay off its bankruptcy debt. That took the county from a balanced $5.6 billion budget that increased spending 2.7 percent to a budget that was $49.5 million in the hole.

The state and Orange County have been bickering over its share of property taxes and vehicle license fees funds for years. According to the governor’s budget staff, Orange County gave up some of its property tax revenue in exchange for a larger cut of VLF when it refinanced its bankruptcy debt in 2005. But county officials argue that Orange County has long been at a disadvantage when it comes to property taxes, a disadvantage made worse when the state changed the ratio between property taxes and the vehicle fees in 2004.

Meanwhile property tax collections have continued to inch upward while vehicle license fees have been on a steady decline.

County lawmakers and union officials failed to persuade state legislators to give back the $49.5 million before the Legislature’s session ended Sept. 9.

A month later supervisors authorized laying off public defenders and county prosecutors, agreed to pull $8 million from county reserves, cut millions in funding that pays for medical care for the poor and planned the closure of hundreds of jail beds to bridge the gap. The move drew howls of protest from the county’s sheriff, district attorney and department heads, who argued that years of weathering the bad economy had pushed them and their budgets to the brink.

But before people were laid off and many of the cuts were put into effect, attorneys with County Counsel came up with an option that gives the county even more money in property taxes than the VLF funds that are being taken away. County attorneys say they have that authority under section 97.70 of the state Revenue & Taxation Code.

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