Orange County School District officials and State officials are upset over the Orange County Board of Supervisors response to the stalled negotiations to return the $48 million in VLF fees that were swiped to fund the Governor’s budget balancing plan. Back in June, Governor Brown’s budget staff figured out that it could swipe VLF fees from several jurisdictions, including Orange County in order to fill the budget gap. The hit to Orange County was due to the failure of the Board of Supervisors to resolve a technicality that grew out of the 2005 refinancing of their bankruptcy debt.
The swipe caused the County to review Tax Code to determine what the County would get if it was treated the same as all the other counties in the state. Their premise is that if the state feels that the deal that swapped property tax revenues for VLF fees struck in 1995 is no longer valid, the they that deal is off and the calculation of property tax revenues goes back to the way it was.
That recalculation has resulted in the county discovering that rather than $48 million they would have received in VLF fees, the county is entitled to $73 million in property tax receipts.
This has School officials concerned. Voice of OC reports:
Orange County Superintendent of Schools Bill Habermehl wrote to supervisors Tuesday asking they withhold action until further legal analysis could be provided. County officials have made assurances that the state would backfill the funds – because of the dictates of Proposition 98 that guarantee certain levels of education funding. Nonetheless, Habermehl has been critical of the stealth nature of supervisors’ moves, telling the Orange County Register’s Kimberly Edds that the way county officials unveiled their action was “almost a slap in the face.”
The county believes that because of the provisions of Prop 98, the state will be required to fill the gap in tax revenues and the districts will still get their funding.
Voice of OC further reports:
The State Department of Finance on Tuesday issued a harsh rebuke of Orange County government officials for defying Sacramento’s budget allocations on property taxes.
“The county’s intended decision to withhold property taxes is not only misguided but very likely illegal,” said H.D. Palmer, Deputy Director of the State Department of Finance.
Palmer said a legal challenge is likely.
“We’re looking at a range of legal options,” Palmer said.
It will be interesting to see if the state actually files a legal challenge. They don’t really need to fight this mess out in court. I would hope that the county and state would now be motivated to reach agreement to return the $48 million in funds that were stolen due to a technicality.