Deirdre Newman
NEWPORT-MESA -- A letter released Tuesday by the county auditor shows
the school district could endure a staggering loss of about $11.5 million
this year if an initial ruling on property tax assessments turns into a
class-action lawsuit.
Assistant Supt. Mike Fine of the Newport-Mesa Unified School District
was quick to downplay the loss because he expects the effect to be
considerably less -- about $4 million -- and a successful appeal could do
away with it altogether.
"The first thing is, we don't know it means anything because we don't
know the ruling is valid," Fine said. "This is a huge issue for the
state, not just for schools, and it needs to rise to a higher, more
competent level."
The estimates, released by county Auditor-Controller David Sundstrom,
show the district would also lose about $5.9 million in subsequent years.
Cities would also suffer, with Newport Beach anticipating to lose $3.4
million the first year and $1.7 million in subsequent years. Costa Mesa
would be hammered with an estimated $1.5-million loss the first year and
$780,000 in subsequent years.
The losses are based on a Superior Court judge's recent decision that
the county assessor violated Proposition 13 by a process known as
recapturing. It increases property assessments above the legal 2% a year
mandated by Proposition 13 to compensate for a property decreasing in
value and then rebounding. It has been a common practice among many
counties around the state in recent years.
Officials close to the case expect Judge John Watson to decide whether
to expand the ruling to class-action status next week. On Jan. 7, the
Orange County Board of Supervisors directed the county counsel not to
appeal the case.
Sundstrom, however, claims in his letter that "there is a reasonable
expectation that the judge's order would be reversed on appeal."
The recapturing process began when Bob Pool and Renee Bezaire, a Seal
Beach couple, filed suit when their home's assessed value reached 4% in
1998.
In December, Watson declared the practice unconstitutional, saying
property values cannot be increased by more than 2% a year, even if the
market exceeds that amount.
The couple's taxes have since been adjusted, and they have received
their refund. But if the ruling turns class-action, the county will be
forced to refund about $285 million in excess property taxes paid between
1998 and April 2002.
Schools would be hardest hit because they rely so heavily on property
