Renewed tax rankles some as ‘illegal’

Eron Ben-Yehuda

HUNTINGTON BEACH -- Taxes may be inevitable. But the kind the city

recently imposed shouldn’t be, officials say.

“The taxpayers will go nuts if they find out we’re charging taxes that

are illegal,” Councilman Tom Harman said.

On Aug. 16, the council voted 5-2 to continue to collect a property tax

at a fixed rate of about 5 cents per $100 of assessed value. Along with

Harman, Councilman Dave Sullivan objected.

The money helps pay for retirement benefits of city employees. The tax

will raise about $7 million this year and, because property values are

rising, about $7.5 million next year, said John Reekstin, the city’s

director of administrative services.

Reekstin says the city’s charter -- the equivalent of a constitution for

municipalities -- gives the council the authority to continue to impose

the levy for pensions.

“I feel very comfortable with the way we’re using the money,” he said.

But the councilmen, as well as a member of the city’s volunteer finance

board, resident Chuck Scheid, argue that state law requires the tax be

approved by two-thirds of the city’s voters.

The source of the dispute dates back to 1978 when voters passed

Proposition 13 and, at the same time, amended the charter, according to a

memo dated July 27 by City Atty. Gail Hutton. The memo remained

confidential until the council unanimously approved its release to the

public Monday.

While the proposition made levying taxes more difficult, the charter

amendment seemed more permissive, allowing the levying of property taxes

“sufficient to meet all obligations of the City for the retirement system

in which the City participates ...” the memo shows.

Scheid calls the apparent contradiction in the people’s will a “slight

dichotomy.” At most, he argues, the city could only use the money from

the property tax to pay for retirement benefits earned by employees prior

to 1978. But the city uses the money to pay for pensions earned since

that time as well, he said.

Hutton considers the council’s risk of getting into trouble for imposing

the tax to be “low” because only those taxpayers that legally challenge

the city and win in court will have to be paid refunds, according to the

memo.

But Scheid hopes to create a groundswell of public outrage that will make

the council reconsider.

“It is going to take a while but I am going to make the residents of

Huntington Beach very well aware of how staff and the city council are

trying to screw them this time,” he said.