Cities explore ways to recover lost taxes

Four cities that lost hundreds of thousands in property tax revenue due to an error by San Mateo County in 1988 have hired outside legal counsel to help determine if they’re still owed more money.

This revelation comes in the wake of a highly critical civil grand jury report released Tuesday identifying a series of mistakes made by the county 1988 that resulted in Colma, Half Moon Bay, Woodside and Portola Valley not being paid a total of $8.1 million.

In 2005, the county, acknowledging its error, paid the cities a total of $2.6 million for the previous two years of the mistake. Woodside received the most, garnering $1.12 million, while Portola Valley received $917,000, and Colma and Half Moon Bay received $457,000 and $103,000, respectively. However, Portola Valley Town Administrator Angela Howard said the cities retained attorney Ben Fay four months ago to help them determine whether the county should pay them more.

Sacramento legislation passed in 1988, known as Tax Equity Allocation, directed counties to move property tax revenues from the county to “no/low-property-tax cities,” according to the grand jury report. Such cities previously received little or no revenue from their property taxes, County Controller Tom Huening said.

Locally, however, the revenue transfer did not go smoothly.

“Of the 17 counties with qualifying cities, San Mateo County is the only county in the state that failed to comply promptly with the TEA provisions,” the grand jury reported noted.

The controller relied on the County Manager's Office and County Counsel to notify him of changes in the law, according to the report, and the state Controller’s Office overlooked the misallocation in its four-year audits. The county assessor didn't notify the Controller of the change in the law, and none of the cities or towns mentioned the error until last year, the report added.

“It was a classic case of everybody depending on somebody else,” said Ted Glasgow, the grand jury foreman.

“As [President Richard] Nixon would say, a mistake was made,” Huening said.

While the report refers to a mistake made 18 years ago, Huening said such a mistake is unlikely to be made today due to various crosschecks the office performs.

County Assessor Warren Slocum took issue with his office being included in the grand jury’s report on the 1988 mistake, because the office generally only hears about legislation of interest to assessors.

“The bigger message to me is the tax cycle needs to work in better harmony,” Slocum said.

This is not the first such error to come to light in recent years. Last year, the Assessor’s Office announced that a computer glitch and human error resulted in hundreds of thousands of dollars in misguided property taxes over a number of years.

dsmith@examiner.com

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