District threatened by more money woes

-- Deirdre Newman

As the Newport-Mesa Unified School District contemplates a potential

$1.3-million deficit from midyear budget cuts, a larger financial threat

is looming on the horizon.

The district could lose millions because of a questionable practice by

county assessors that was found to violate Proposition 13.

The practice, called recapturing, involves increasing property

assessments above the legal 2% a year mandated by Proposition 13 to

compensate for a decrease in property values.

Last month, Judge John Watson declared the practice unconstitutional.

On Monday, the Orange County Board of Supervisors directed the county

counsel not to appeal the ruling, meaning districts throughout the county

could lose $94 million in the first year the decision is implemented..

Newport-Mesa would be hit hard because it receives a majority of its

funding from property taxes, Assistant Supt. Mike Fine said.

But it’s still too early to even approximate the size of the fiscal

effect, Fine added.

The county would have to give back an extra $285 million in property

taxes paid between 1998 and 2001 if the 2% limit is applied retroactively

to all property owners, according to an analysis by Orange County

Auditor-Controller David Sundstrom.

Watson still must decide whether he will enlarge his original ruling

to class-action status.