HomeMy WebLinkAbout2010-04-13; City Council; 20192; Amending Carlsbad Municipal Coder Section 3.12.120 - Refunds Establishing Pay First Litigate Later RuleCITY OF CARLSBAD - AGENDA BILL 8
AB#
MTG.
DEPT.
20,192
4/13/10
CA
AMENDING CARLSBAD MUNICIPAL
CODE SECTION 3.12.120 - REFUNDS
ESTABLISHING A PAY FIRST LITIGATE
LATER RULE
DEPT. DIRECTOR
CITY ATTORNEY
CITY MANAGER
RECOMMENDED ACTION:
Introduce Ordinance No. CS-081 adding 3.12.120(e) to Carlsbad Municipal Code
establishing a pay first litigate later rule in order to protect tax and fee revenue.
ITEM EXPLANATION:
California cities and counties have generally not needed to adopt ordinances requiring a tax
payer to first pay contested taxes and then file a suit for refund because it was believed that
California Constitution Article XIII, §32 already required that. However, a superior court in Los
Angeles has sent Shockwaves around the State when it concluded that this constitutional
provision did not apply and overturned an administrative law judge's finding in favor of the City
of Anaheim for about $23 million and allowed the case to proceed without first paying the
contested taxes. The reason for the constitutional provision is that cities and counties need to
have some certainty in their budget planning processes and can rely on the collection of taxes
to provide essential public services. The ruling by the superior court in Los Angeles County
turns this constitutional provision on its head and allows a taxpayer to refuse to pay taxes and
then file an action in court to prevent their collection.
It is therefore recommended that the City enact a provision in its refunds of taxes procedures
that would expressly require a taxpayer to pay the contested taxes first as a condition to filing a
lawsuit challenging them.
FISCAL IMPACT:
This provision will ensure the collection of taxes even when they are judicially challenged.
Requiring the payment of taxes prior to judicially challenging them will impact the City's cash
flow but not disturb the right of a taxpayer to judicially challenge them. The City Council will
then have the discretion to determine whether and how judicially challenged proceeds of taxes
shall be expended.
ENVIRONMENTAL IMPACT:
This ordinance amendment is not a "project" within the definition of the California Environmental
Quality Act in that it does not have a direct or indirect impact on the physical environment under
CEQA Regulation 153789(b).
EXHIBITS:
1. Ordinance No.CS-081
DEPARTMENT CONTACT: Ron Ball 760-434-2891 ron.ball@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
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CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER -SEE MINUTES
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4 WHEREAS, the City Council finds that it is in the best interest of the
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City that a provision in its refunds of taxes procedures be enacted that would require
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a taxpayer to pay contested taxes first as a condition to filing a lawsuit challenging
8 them.
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11 Section 1: That Section 3.12.120(e) is hereby added to the Carlsbad
12 Municipal Code to read as follows:
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3.12.120(e)-Refunds14
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ORDINANCE NO. CS-081
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, AMENDING CARLSBAD
MUNICIPAL CODE SECTION 3.12.120 - REFUNDS
NOW, THEREFORE, the City Council of the City of Carlsbad ordains
as follows:
It shall be a condition that, prior to the filing of any
lawsuit, of any kind whatsoever, including a claim for
refund of taxes, injunction or writ of mandate or other
equitable process, the payment of all taxes, interest and
penalties as determined by the City shall be required to
be paid as a condition to seeking such judicial review of
any tax liability. In addition, no such legal action shall
be proper unless all of the administrative remedies
provided by this chapter shall have first been
exhausted.
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EFFECTIVE DATE: This ordinance shall be effective thirty days after
its adoption; and the city clerk shall certify the adoption of this ordinance and cause it
to be published at least once in a newspaper of general circulation in the City of
Carlsbad within fifteen days after its adoption.
INTRODUCED AND FIRST READ at a regular meeting of the
Carlsbad City Council on the 13tb day of April , 2010, and thereafter
PASSED AND ADOPTED at a regular meeting of the City Council of
the City of Carlsbad on the day of , 2010, by the following
vote, to wit:
AYES:
NOES:
ABSENT:
APPROVED AS TO FORM AND LEGALITY:
RONALD R. BALL, City Attorney
CLAUDE A. LEWIS, Mayor
ATTEST:
LORRAINE M. WOOD, City Clerk