Local News

Friday, Jan 10 2014 05:16 PM

City, county both tout wins in tax money dispute

BY JAMES BURGER Californian staff writer jburger@bakersfield.com

This week's first-round court brawl between the city of Bakersfield and county of Kern over about $1 million in property tax money ended in a win for one side, both sides said.

Which side that was, however, is a matter of some dispute.

"The judge essentially gutted their lawsuit and made a finding that they were not likely to prevail on the merits," said Kern County Counsel Theresa Goldner.

"The judge said, when he reads the contract, it is 'inherently ambiguous,'" said Bakersfield City Attorney Ginny Gennaro. "We see that as a clear win for the city of Bakersfield. It lends credence to our argument that history is going to play a big role" in the suit.

But while neither side could agree on what Wednesday's rulings in Fresno County Superior Court mean, both said a behind-the-scenes effort to settle the lawsuit is under way.

"Both sides are talking with each other. The lines of communication are open," Gennaro said. "I'm cautiously optimistic that both sides can resolve this issue."

"I think it is good that we do keep lines of communication open," Goldner said. "We do hope the city can continue to work with us on a path toward settlement."

DISPUTE

Essentially what the city and county are arguing over is the language of a contract that controls how property taxes are split up when the city annexes a section of county land.

In 2012, the county of Kern reviewed the contract language and then-Kern County Auditor-Controller Ann Barnett determined that the county had been calculating the tax split incorrectly.

She changed the way it handed out the money.

Barnett's change meant the city of Bakersfield would get less money each year while schools and the county get more.

The city sued the county -- and launched a separate suit against the county over how property taxes for fire fighting services are split.

The $1 million is property tax money the county has been holding onto and will be divvied up depending on the court case.

The future financial impact of the case could be larger, depending on annexation activity going forward.

On Wednesday, Fresno County Superior Court Judge Dale Ikeda denied a request by the city of Bakersfield to force Kern County to go back to the old way of calculating taxes.

Ikeda ruled that, since the county had placed the money that was in dispute into a trust fund, the city would not face any harm if the county kept counting taxes the way it thought was right.

But the judge also found, as a part of that consideration, that the city was "unlikely to prevail on the merits."

Colin Pearce, the city's contract attorney, said the judge made the ruling in passing and the debate on the injunction really focused on the issue of whether the city would be harmed.

Ikeda meant only that, Pearce said, "we haven't -- yet -- demonstrated that we're going to win."

But Goldner said the ruling was a significant indication that the city's case is in trouble.

GOING FORWARD

In the end, both sides said, the core question of who is right was not decided Wednesday.

Brett Price, the county's outside contract attorney, said that Ikeda will not ultimately hear the rest of the case. He has pushed the rest of the fight into another judge's courtroom.

The core issue in the case as Judge Ikeda saw it, Price said, is the interpretation of the contract language between the city and the county.

He said the core city complaint that the county violated that agreement has been left intact and will be debated before the new judge.

Gennaro and Pearce said that the judge believed the language of the contract was ambiguous.

And that means that the historical way of interpreting it, they believe, should be left in place.

The county, however, thinks the language is clear and the county is required by law to change the way taxes are split.

If the two sides can't make a deal, then the issue of who wins will take a lot more court rulings to finalize.

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