HomeMy WebLinkAboutCity Council - 2001-43 RESOLUTION NO. 2001-43
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF HUNTINGTON BEACH
FIXING THE FISCAL YEAR 2001/2002 TAX RATE
AND IMPOUNDING THE TAX REVENUES
WHEREAS, the City of Huntington Beach will be receiving a pro-rata portion of the one
dollar($1.00) Basic Property Tax Rate levied by the County Board of Supervisors as a means of
providing revenue for the operation and support of various City departments, offices and
activities; and
In 1966, and again in 1978, the electorate of the City of Huntington Beach approved a
City Charter revision authorizing the City to provide retirement benefits to its employees, and
further directing the City to levy a property tax in excess of 1% of the full cash value of property
"sufficient to meet all obligations of the City for the retirement system in which the City
participates"; and
In Carman v. Alvord(1982) 31 Cal.3d 318, the California Supreme Court held that a tax
such as that authorized by the City Charter to fund a city's employee retirement obligations is
exempt from Proposition 13 (Article XIIIA of the California Constitution) as voter-approved
prior indebtedness; and
Since 1983-84, Revenue and Taxation Code Section 96.31(b)has limited the City to
levying a maximum property tax override at Zero and 0.04930/100th Dollars ($0.04930)per$100
of assessed value to pay for pension programs; and
The City currently provides retirement benefits through a contract with the Public
Employees Retirement System (PERS). In addition, the City provides a Supplemental
Retirement Program offering survivor's benefits that replace certain PERS benefits and a Retiree
Medical Plan subsidizing the cost for retirees to participate in the City Health Plan; and
Although the City has participated in PERS since 1945, it has modified its retirement
programs since July 1, 1978. For example, after July 1, 1978, the City began reimbursing
employees for their contribution to PERS, as well as offering the Supplemental Retirement
Program and the Medical Insurance Retirement Fund; and
In December 1999, the Howard Jarvis Taxpayers Association ("HJTA") and a single
taxpayer filed suit challenging whether the City's property tax override violates Proposition 13,
in a case entitled Howard Jarvis Taxpayers Association, et al., v. County of Orange, and City of
Huntington Beach as Real Party in Interest, Orange County Superior Court Case No. 81-87-80
("Case No. 818780"). At issue was whether the override is limited to only those retirement
benefits the City paid for as of July 1, 1978, or for all City-paid retirement benefits, including
those benefits authorized after July 1, 1978; and
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SF-2001 Resolution:Fixing 2001/2002 Tax Rate
RLS 2001-0453
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Case No. 818780 was tried on February 26-27, 2001 in the Orange County Superior
Court. On June 4, 2001, the Court issued an Amended Judgment. The Court held that under
Proposition 13, the property tax override is unconstitutional "to the extent it exceeds the City's
employer contribution for PERS retirement benefits that were in existence prior to July 1, 1978
or amendments thereto mandated by the Legislature, and cannot be levied or collected." Further,
the Court held that"for the period up to and including(F.Y.) 1999/2000, the City need not
refund any portion of its property tax override in excess of the portion used to pay for the PERS
member contribution paid by the City, the Supplemental Retirement Plan and the Medical
Insurance Retirement Fund." At a minimum, this means that the property tax override can only
be used to pay the employer's contribution to PEAS, and cannot be used to fund the City's
payment of the employees' member contributions, the Supplemental Retirement Plan or the
Medical Insurance Retirement Plan; and
The City Council has authorized an appeal in Case No. 818780. It will take
approximately three years to complete an appeal and longer still if Supreme Court review is
sought; and
Absent any appeal, the City would be prohibited from levying a property tax levy for
Fiscal Year 2001/2002 because the City's cost to PERS for the employer's contribution is $0 for
Fiscal Year 2001/2002; and
Pursuant to Resolution No. 2001-19, the City Council declared its intent that should a
remittitur by an appellate court either affirm or modify the April 2, 2001 judgment in Case No.
818780, declaring that a portion of the property tax override violates Proposition 13,the City
shall refund within a reasonable time all property taxes paid from July 1, 1997 to the present
consistent with the remittitur upon presentation of a refund claim in compliance with the
California Revenue and Taxation Code. As a result, while the City may levy a property tax
override for Fiscal Year 2001/2002, the City is committed to reimbursing the tax consistent with
any final appellate decision. Consequently, the City has three options: (1) collect the tax, and
then use the money for employee benefits subject to refunding it pursuant to any remittitur; (2)
collect the tax, impound the proceeds, and then spend or reimburse the revenue consistent with
the remittitur; or(3) suspend the tax until its constitutionality can be resolved; and
The City Council has selected the second option: to collect the tax, impound the
proceeds, and then spend or reimburse the revenue consistent with the remittitur; and
The tax rate herein is levied pursuant to Section 96.31(a)(4) of the Revenue and Taxation
Code for the purpose of paying voter approved prior indebtedness of the City of Huntington
Beach;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington
Beach that the rate of taxation for said City for Fiscal Year 2001/2002 be fixed at zero and
.04930/100ths dollars ($.04930)per 100 of assessed property value in said City. The said rate
shall be applied to pension programs.
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SF-2001 Resolution:Fixing 2001/2002 Tax Rate
RLS 2001-0453
6/29/01
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BE IT FURTHER RESOLVED by the City Council of the City of Huntington Beach that
the City Treasurer is directed to impound the tax proceeds in an interest-bearing account bearing
interest at the greater of three percent (3%)per annual or the"county pool apportioned rate" (as
the latter term is defined at Section 5151 of the California Revenue & Taxation Code).
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 16th day of July , 2001.
T�?'r1 f j�►tt�.�Jlt.
Mayor
AT/TEST: APPROVED AS TO FORM:
4 0/
City Clerk 07-11—PICity Attorney r ��f
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REVIEWED AND P 4 ED: INITIATED APPROVE
City Administrato 4 r Director Administrative Services
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Res. No. 2001-43
STATE OF CALIFORNIA }
COUNTY OF ORANGE } ss:
CITY OF HUNTINGTON BEACH }
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of
the City of Huntington Beach, and ex-officio Clerk of the City Council of said
City, do hereby certify that the whole number of members of the City Council
of the City of Huntington Beach is seven; that the foregoing resolution was
passed and adopted by the affirmative vote of at least a majority of all the
members of said City Counci{ at a regular meeting thereof held on the 16th
day of July, 2001 by the following vote:
AYES: Green, Garofalo, Dettloff, Bauer
NOES: Boardman, Cook, Julien Houchen
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio C rk of the
City Council of the City of
Huntington Beach, California