Petaluma to Receive 500K Refund From County

Petaluma will receive nearly $600,000 refund from Sonoma County, following a California Supreme Court ruling last year over property tax administration fees.

Counties collect property tax revenue and then distribute shares to cities and schools after taking out administrative fees.

But in 2008, the city of Alhambra challenged Los Angeles County over the practice and filed a lawsuit, which centered on the Educational Revenue Augmentation Fund, a state-created pot of money in each county that sets aside property tax revenue to meet constitutional school funding requirements.

By statute, that money can't be factored into the administrative fees the county charges.

But in 2004, the state passed two laws that used some of that education funding to close budget gaps elsewhere. California counties took that to mean the money was no longer exempt from fees, and started to hold back additional funds each year.

In 2009, a judge ruled the county's move was legal. But an appellate court reversed that ruling and sided with the cities. L.A. County appealed to the Supreme Court, which said the "plain language" of state law doesn't support the county's interpretation. 

Last year, the California Supreme Court said Los Angeles County improperly withheld millions of tax dollars from its cities and now must pay, a decision that applies to all cities around the state.

Petaluma stands to receive $584,000 back from the county, including interest.