Tax Decision on Appeal

AUSD to take Measure H ruling all the way to California's highest court

'This decision has the potential to be a significant blow to our budget with many negative consequences.' — AUSD Superintendent Kirsten Vital

The Alameda Unified School District (AUSD) is planning to appeal a First District Court of Appeals decision that invalidated components of Measure H that forced property owners to pay a larger parcel tax than residential owners.

The appelate court ruling, issued Thursday, Dec. 6, declared "Measure H's property classifications and differential tax burdens exceed the District's taxing authority."

Owners of commercial properties of fewer than 2,000 feet were taxed at $120 annually under the measure — the same as residential property owners. But owners of parcels more than 2,000 square feet were taxed at 15 cents a square foot, capped at $9,500 annually.

On Wednesday, Dec. 12, the school district trustees voted 4-1 during a special session to challenge the ruling at the California Supreme Court of Appeals. Trustee Trish Spencer cast the only no vote during Wednesday's meeting. The decision by the district came as no surprise to the plaintiffs.

"I expected this to go to the California Supreme Court," said attorney for the plaintiffs David Brillant. "I've spoken with my clients and they are prepared for this case to last another year or so." With the district's decision to appeal, the case now has an uncertain future of when this will be resolved.

"Right now it depends on the California Supreme Court," said Brillant. "If they decide to reject the appeal, the case will be resolved relatively quickly. If they decide to accept the case, we are probably looking at another year."

Before the district voted to appeal the Dec. 6 ruling, the district was on the hook to pay back the extra tax accumulated from owners of property exceeding 2,000 square feet over the three years the measure has been in affect. Reports say the amount AUSD must pay back was $7.5 million, but Brillant says the figure has not been determined yet. "The amount that would be paid is going to be up to the trial court," said Brillant. "The trial court will also decide how each of the plaintiffs will be compensated."

Brillant believes the amount could be substantial. "I have yet to calculate the exact exposure for the district, but it is significant," he said. "Some taxpayers alone with multiple parcels could stand to receive tens of thousands of dollars in refunds for each of the three years the district collected a parcel tax."

However, the district said the decision that will force them to pay refunds would put them in a precarious position.

"If the trial court orders refunds of tax revenues already collected and spent, this decision has the potential to be a significant blow to our budget with many negative consequences for our students, teachers and staff," said Superintendent Kirsten Vital. She went on to say the ruling has "significant public policy and budget implications" for not just Alameda, but school districts throughout the state.

But Brillant said upholding California law trumps the potential impact the ruling may have on AUSD.

"I believe what this case is about is the government operating within the laws we have in California," said Brillant. "Districts, including AUSD, which have enacted or proposed taxes that classify taxpayers into categories with different rates are now on notice that those structures are illegal under California law."

The district board is expected to review the case again during a closed session meeting on Jan. 15. Contact Ekene Ikeme at eikeme@ alamedasun.com.

 

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