Before the Legislature adopted new budget rules in 2004, property tax revenues were collected by the counties, which then distributed them to cities. As a result of the 2004 budget compromise, legislation was enacted to alleviate the state’s fiscal crunch, reducing the share of vehicle license fees allocated to each city. To compensate for the reductions, legislators said cities would instead receive additional property tax revenues to be paid in lieu of the vehicle license fees.
Starting in 2006, the counties were allowed to charge for the costs of administering the payments that they said should not exceed the actual cost of providing payment services. But the cities contend that they have been charged above what some say should usually be nominal fees.
According to the lawsuit, 88 cities around the state contend they were charged $13.5 million more than what they believe is fair. The Southern California cities said they were overcharged $4.3 million by the county, and Burbank says it was charged about $200,000 each year above the normal fee.
“The revenue shift was intended to be revenue-neutral but were actually a windfall for counties,” said Michael Colantuono, whose law firm is handling the case.
Colantuono estimated his litigation costs could be as much as $80,000, of which Burbank would be required to pay $4,000, which the council agreed to pay. Burbank’s share could decrease as other cities join the case, and at least one more, Highland Park, is expected to do so shortly, officials said.
Defense attorneys say the county is well within its right to assess the fees.
