L.A. Sales Tax Surcharge for Transportation Is Upheld : Ruling: Backers of O.C.’s Measure M, which still on appeal, are jubilant. Transit programs are spared postponement, cuts or cancellation.

Sparing about a dozen transportation programs from postponement, curtailment or cancellation, the 2nd District Court of Appeal on Thursday unanimously upheld the legality of Los Angeles County’s second half-cent sales tax surcharge.

The state court ruling is significant because it is the first after a state Supreme Court decision last month overturning a San Diego County sales tax surcharge used to build new courts and jails.

And the ruling buoyed the hopes of Orange County transportation officials, who are awaiting the outcome of a similar court challenge to Measure M, the half-cent sales tax for transportation projects approved by county voters in November, 1990.

In both appeals, the plaintiffs were represented by attorney Mark S. Rosen, who used nearly identical arguments.

“It’s very good news,” said Stanley T. Oftelie, chief executive officer of the Orange County Transportation Authority.

Kennard R. Smart Jr., OCTA’s attorney, said: “It’s unlikely that the two appellate courts will come to conflicting conclusions.”

The 4th District Court of Appeal in Santa Ana is expected to rule in the Orange County case any day.

Measure M is expected to raise $3.1 billion over 20 years for highway and transit improvements, including widening the Santa Ana Freeway and commute rail service.

The Supreme Court ruled that the San Diego tax was illegal because it was levied by a special district created after 1978’s landmark Proposition 13 to provide a service normally paid for with property taxes.

However, the lower court said that the Los Angeles tax is legal because it generates money for an agency, the Los Angeles County Transportation Commission, formed before Proposition 13 to provide a service not historically paid for with property taxes.

The Supreme Court used similar logic in a 1982 decision upholding the legality of the first Los Angeles County transportation sales tax surcharge. That levy, authorized by Proposition A in 1980, is in effect. Both taxes will be levied until transit bonds are repaid early in the next century.

The Libertarians challenging the tax have 120 days in which to ask the state Supreme Court to review the lower court ruling. Attorney Rosen from Santa Ana said he will ask for such a review.

“I think the justices were wrong, and we’re going to appeal,” Rosen said. “I think the San Diego case went beyond special districts formed after 1978.”

Until the time for appeal passes, or the Supreme Court issues its ruling, the LACTC will continue to deposit money collected under the sales tax surcharge in an escrow account, LACTC Executive Director Neil Peterson said.

The commission has been spending the interest from the escrow account for several projects, such as the Freeway Service Patrol. Under that program, tow trucks cruise the county’s busiest freeways at rush hour, offering assistance, free gas and minor repairs.

Revenue from Proposition C is designed to fund a variety of projects, including an extension of the Metro Blue Line from Los Angeles to Pasadena and construction of the Orange Line subway from the Westside to the Eastside.

Proposition C also is slated to pay for expansion of bus service in the county, the addition of car-pool lanes on half the county’s freeways, establishment of a regional bikeway network, construction of new park-and-ride lots, and development of computer-controlled traffic signals to ease congestion on major thoroughfares. Without the Proposition C money, all those programs would have to be delayed, scaled back or canceled.

Times staff writer Jeffrey A. Perlman contributed to this story.