California state recently filed suit against Orange County for $73.5 million in property taxes that should have been passed on to the state. Orange County withheld property taxes that normally pay for K-12 schools and community colleges because they believe that money is rightfully theirs. Additionally, they are relying on the state to make the schools “whole”, so that they do not have to forfeit the money that they basically stole from the state.
While a law does exist to make K-12 schools whole when property tax revenue falls, it does not include community colleges. Furthermore, the state contends that the county is illegally relying on a provision that is intended to address natural property tax declines, “not from a county’s illegal manipulation of its fiscal affairs.” The county has yet to responded on the claims.