City of Scotts Valley v. County of Santa Cruz

*7 Opinion

I. Introduction

“There is no equitable way to share property tax revenues, only different degrees of inequity.” (Sen. Com. on Local Government, Rep. on Sen. Bill No. 407 (1987-1988 Reg. Sess.) Apr. 20, 1987, p. 2.) This observation is as true today as when it was made during the legislative process more than 20 years ago.

In this case, the City of Scotts Valley (City) claims it has not received all the property tax revenues to which it is entitled. Specifically, the City claims the Auditor-Controller of the County of Santa Cruz (Auditor-Controller) has not properly applied Revenue and Taxation Code section 98, which entitles “no- and low-property tax cities” to a certain percentage of the property taxes paid by their residents. The trial court agreed with the City and granted its petition for a writ of mandate against the County of Santa Cruz and the Auditor-Controller (collectively the County). The court ordered the County to change its allocation methodology and reallocate approximately $2 million in property tax revenues to the City for past fiscal years. The County has appealed, but the trial court’s order did not finally dispose of all claims in the case.…