City of Alhambra v. County of Los Angeles

By statute, counties are responsible for the administration of local property taxes by assessing and collecting them and then disbursing the revenue to the various cities, special districts, schools, and other entities within the county. Some of the revenue, however, must be allocated to each county’s “Educational Revenue Augmentation Fund” (sometimes referred to as ERAF)—a state-created fund that reallocates portions of local property tax revenue to fulfill the state’s constitutional obligation to fund education at specified levels. In order to cover county costs in administering the property tax system, a county is statutorily authorized to impose a property tax administration fee on each city or other entity within its borders. The property tax administration fee is based on an apportionment of the amount of property tax revenue allocated to the city or other entity. But any revenues allocated from these cities and entities to the county’s ERAF are exempt from this fee. At issue here is a dispute between Los Angeles County (County) and 47 cities (Cities) within the county regarding how County calculates and imposes property tax administration fees on Cities for their…