City of Highland v. County of San Bernardino

The City of Highland (City) sought a peremptory writ of mandate against the County of San Bernardino (County) to correct alleged errors in County’s allocation of property taxes to City. The trial court issued a judgment granting the petition in part and denying it in part. Both City and County appeal the judgment, the totality of their appeals challenging all of the determinations made by the trial court.

A brief review of the system by which property taxes are allocated within a county is appropriate as a precursor to our specific analysis of the issues of this case. The property tax is the largest single source of tax revenue for local governments. (11 Cal. Practice, State and Local Taxation (1987) § 4, p. 4.) Property taxes levied and collected by counties are allocated among the various agencies within the county, including cities. (Rev. & Tax. Code, §§ 93, 95, 96, 97.5.) When a city is created in a previously unincorporated area of the county, and undertakes performance of governmental services previously performed by the county, a reallocation of some portion of the property tax from the county to the city is necessary. Government Code section 56842 is designed to…