California ~ Property Tax: County Administrative Fee Not Applicable to Revenues Diverted From ERAFs

California 2004 budgetary legislation and subsequent legislation, which in part had the effect of diverting county property tax revenues from being allocated to local educational revenue augmentation funds (ERAFs), did not authorize counties to collect a property tax administration fee on those diverted revenues, which otherwise would have been exempt from the fee if they were allocated to the ERAFs.

Prior to the legislation, counties would allocate property tax revenues among municipalities or other entities (entities), allocate a portion of each entity’s revenues to an ERAF, and impose a property tax administration fee on the balance of each entity’s revenues. After enactment of the 2004 legislation, one county began imposing the fee on the diverted funds, arguing that those revenues no longer were deposited in the county’s ERAF.

However, pertinent statutes show that the Legislature included provisions to ensure that the 2004 budgetary measures did not alter the basic allocation of property tax revenues to local entities. It was not shown that the Legislature intended to change the effect of the ERAF exemption from the property tax administration fee or to authorize the county to add the diverted property tax revenues to the entities’ allocation for purposes of distributing administrative costs.

City of Alhambra v. County of Los Angeles, California Supreme Court, S185457, November 19, 2012, ¶405-738

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