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| FYI Press Release 2010 Contact: Jacob Roper 916-445-2636 SACRAMENTO – Today State Controller John Chiang notified Los Angeles County that for years the City of Bell has charged higher property tax rates than allowed by State law. The overcharges were discovered during the initial phase of the Controller's audit into the City of Bell's finances. Property owners in the city paid an estimated $3 million in extra taxes during the past three years. “While my investigation into the City of Bell continues, these unlawful taxes must stop immediately,” said Chiang. “Homeowners and property owners should not pay the price for this poor fiscal management.” The Controller's letter explains that Bell's City Council began raising property tax rates in 2007 to pay for pension obligations, even though State law caps those taxes at the rate used in fiscal year 1983-84. Property taxpayers saw their assessments for pension obligations rise from . 187554% in 2007 to .277554% in 2010. The letter instructs the County to reduce the property tax rates as quickly as possible. The lower rates would deliver, for example, an estimated $250 in annual savings on a property worth $275,000. 300 Capitol Mall, Suite 1850, Sacramento, CA 95814 ♦ P.O. Box 942850, Sacramento, CA 94250 ♦ (916) 445-2636 ♦ Fax: (916) 322-4404 777 S. Figueroa Street, Suite 4800, Los Angeles, CA 90017 ♦ (213) 833-6010 ♦ Fax: (213) 833-6011 www.sco.ca.gov JOHN CHIANG California State Controller August 13, 2010 Wendy L. Watanabe Auditor – Controller County of Los Angeles 500 West Temple Street, Room 525 Kenneth Hahn Hall of Administration Los Angeles, CA 90012 Dear Ms. Watanabe: During the course of my audit of the financial affairs of the City of Bell, my auditors have discovered an issue that requires immediate attention. It appears that on July 23, 2007, the City Council of Bell passed Resolution No. 2007-42 (copy attached) to increase the level of tax being assessed to pay the City of Bell’s pension obligations from . 187554% to the following: For 2007-08 - .237554% For 2008-09 - .257554% For 2009-10 - .277554% These increased rates were assessed by your office during the years cited. However, we have determined that the tax levies approved by the City Council of Bell through Resolution No. 2007-42 are unallowable under Revenue and Taxation Code section 93.31(b). Under this section, the City of Bell has no authority to levy a property tax rate greater than the rate imposed in the Fiscal Year 1982-83 or Fiscal Year 1983-84. The estimate of the unallowable taxes assessed during the fiscal years of 2007-08, 2008-09 or 2009- 10 is $2.9 million (see attached). Additionally, under Revenue and Tax Code section 96.31(d), the County Auditor of Los Angeles is required to reduce the City of Bell’s tax levy for pension obligations to the amount allowable - . 187554%. The law also requires that the overpayment of unallowable taxes collected must be allocated to elementary, high school, and unified school districts within the City of Bell in proportion to the average daily attendance of each district. Therefore, I request that you review this matter and take immediate actions to ensure that the taxpayers of the City of Bell are not further burdened with what appears to be an improper property assessment. Wendy L. Watanabe August 13, 2010 Page 2 In order to remedy this situation, the property tax levy for the City of Bell pension obligation during Fiscal Year 2010-11 should be reduced to .187554%. Also, any amounts collected above the allowable rate of.187554 during the three years identified should be calculated and reallocated to the elementary, high school and unified school districts within the City of Bell in accordance with the requirements of Revenue and Tax Code section 96.31(d). If you have any questions, please contact Jeffrey V. Brownfield, Chief, Division of Audits at (916) 324-1696 if you have any questions. Sincerely, Original signed by: JOHN CHIANG California State Controller |