NEWPORT BEACH : City Joins Alhambra in Suit Against State

After hearing morose projections of revenue shortfalls, the City Council decided in closed session Monday to join the city of Alhambra in suing the state for shifting property tax revenue from cities to school systems during last year’s multibillion-dollar budget crisis.

“They’re just out of control in Sacramento is what it boils down to,” said Councilman Phil Sansone, who grumbled over the state’s “raid” of city coffers. “The legislators know that they’re ripping off the cities.”

Newport Beach joins more than 50 cities in 20 California counties to support Alhambra’s suit, which was filed in March and names half a dozen government officials, including Gov. Pete Wilson. The Los Angeles County Board of Supervisors is also a co-plaintiff in the lawsuit, and the state’s Independent Cities Assn. has supported the effort.

Four other Orange County cities--Buena Park, Garden Grove, Mission Viejo and Placentia--have already sent letters to the court supporting the suit.

The litigation contends that state legislators violated the Constitution by diverting property taxes from cities to fund public education, and demands that the state return to municipalities redevelopment revenue from cigarette taxes that were taken in past years. The League of California Cities estimates cities will lose 21.7% of their property tax revenue--more than $2 billion statewide--in the 1993-4 budget year.

“The property tax has always been considered a local property tax. . . . They were not intended to be filtered through the state of California to balance the state budget,” said City Manager Kevin J. Murphy, who was Alhambra’s city manager before coming to Newport Beach last year. “We are going to fight for home rule and local autonomy as we believe was set up in the state Constitution.”

Newport Beach lost $2 million in last year’s property tax shift, and expects to lose more than $4 million under Wilson’s budget plan.

Property taxes traditionally have been the city’s largest source of revenue. In 1992-3, the city’s operating budget of about $70 million included $22 million in property tax revenue. If the governor’s proposed cuts go into effect, Newport Beach will only get $16.5 million in property taxes in the coming year, according to local officials.

“We’re trying to drive home the point of home rule versus state rule,” Mayor Clarence J. Turner said of the council’s unanimous decision to join the lawsuit.