ALHAMBRA, CITY OF v. COUNTY OF LOS ANGELES

Respondents’ Petition for Review

Cal.August 16, 2010

8185457 S Filing Fee Exempt Govt’ Code § 6103 IN THE SUPREME COURTOF THE STATE OF CALIFORNIA CITY OF ALHAMBRA,etal., SUPREME COURT FILED Plaintiffs and Appellants V. AUG 16 20i0 COUNTY OF LOS ANGELES,et al., Frederick K. Ohirich Clerk Deputy Defendants and Respondents PETITION FOR REVIEW , Of a Published Decision of the Second District Court of Appeal Reversing a Judgment Entered by the Superior Court of the State of - California for the County ofLos Angeles, Case No. BC116375 ‘Honorable James. Chalfant, Presiding [By C.C.P. § 638 Reference to the Hon. Dzintra Janavs (Ret.)] GREENBERG TRAURIG, LLP OFFICE OF LOS ANGELES Scott D. Bertzyk (116449) COUNTY COUNSEL Karin L. Bohmholdt (234929) Andrea Sheridan Ordin (38235) 2450 ColoradoAvenue County Counsel Suite 400E Thomas M.Tyrrell (72985) Santa Monica, CA 90404 Principal Deputy County Counsel Telephone: (310) 586-7700 500 West Temple Street Facsimile: (310) 586-7800 Los Angeles, CA 90012 Telephone: (213) 974-1833 Facsimile: (213) 617-7182 a Attorneysfor Defendants and Respondents Below - . COUNTY OF LOS ANGELES,ET AL. LA 129,052,081v1 8-13-10 S Filing Fee Exempt Govt’ Code § 6103 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA CITY OF ALHAMBRA,et al., Plaintiffs and Appellants V. COUNTY OF LOS ANGELES,etal., Defendants and Respondents PETITION FOR REVIEW Of a Published Decision of the Second District Court of Appeal Reversing a Judgment Entered by the Superior Court of the State of California for the County of Los Angeles, Case No. BC116375 Honorable James Chalfant, Presiding [By C.C.P. § 638 Reference to the Hon. Dzintra Janavs (Ret.)] GREENBERG TRAURIG, LLP OFFICE OF LOS ANGELES Scott D. Bertzyk (116449) COUNTY COUNSEL Karin L. Bohmholdt (234929) Andrea Sheridan Ordin (38235) 2450 Colorado Avenue County Counsel Suite 400E Thomas M.Tyrrell (72985) Santa Monica, CA 90404 Principal Deputy County Counsel Telephone: (310) 586-7700 500 West Temple Street Facsimile: (310) 586-7800 Los Angeles, CA 90012 Telephone: (213) 974-1833 Facsimile: (213) 617-7182 Attorneysfor Defendants and Respondents Below COUNTY OF LOS ANGELES,ET AL. LA 129,052,081v1 8-13-10 TABLE OF CONTENTS Page INTRODUCTORY STATEMENT....00. oo cccccccccessssesssceseeseesscssessecseecsesecseesnesesees 1 ISSUE PRESENTED FOR REVIEW ...0......cccccccccsssssscsscsseseseeeseessecsessecsesessesssass 2 WHY REVIEW SHOULD BE GRANTED 0.0... cccccccseeseesesseeeseeesseeeeeeers 2 BACKGROUND AND STATEMENTOF THECASE.............ccccccssceseeseeeee 3 A. Property Tax Collection, The Impact Of Proposition 13, And Emergence Of The Longstanding Rule Of Pro-Rata ReCOUPMENE ooo...eeeeeeeeeeeeceseeceneeeseeecececesecesstecsesessensessecsaeessaeeess 3 B. The Exemption Of PTAF Recoupment For Taxes Devoted To School Funding. 0.0.0.0... cesccsecsssecceseceeeceeneeeeceeesseessecessesenaeens 5 C. More Recent Statutes Reiterate The Legislature’s Pro- Recoupment Intent...cecccececesseeeeeseceessseesseeceesetscesseeteseaneees 6 D. Triple Flip, VLF Swap, and Additional Recoupment................... 7 E. Counties’ Interpretation and Implementation of Section QTTS oe cecccecseescceseneeseceecececeseeeaeeceaeeeaaeceneseaseeseaeseseeeesasesaesesseessaseneesenees 9 F. The Trial Court Rules Against The Cities, And The Court Of Appeal Reverses 2.0...eee scceecccsteceessncecenaceeseeteeeseneeessneesnneees 11 ARGUMENT. 00. cecceeccceccceseeeeseceseneeeeonesseensaueseaeceseessneeeseeeeseseceeenaeesseteesseeesaeensees 12 A. Every Consistent Interpretation Of Section 97.75 Supports The County’s Practices. .............ccccessceceseeeesteeeessneeees 12 B. Review Should Be Granted To Interpret Section 97.75 In Light Of The Entire Relevant Statutory Scheme........0..000000..... 14 1. The Court Did Not Interpret Section 97.75 In CONteXt. oieececteecerecereeceeeessaeessseessaeeeeeeseceetseeseneeeaeeses 14 2. Review Should Be Granted To Determine Whether The Court of Appeal Has Rewritten Section 97.75.......... 15 C. Ultimately, The Court Of Appeal’s Decision Will Harm EVGIYOME. 0...cececeseeesseteneceessersceeeeeserseessessesaeenserseseeteaeesaaeesseees 18 CONCLUSION(0...eeececeeenceeeneeeeneneeeeeeses daceeseaceucecsneseeseeseeeeeeeceeeeseessesuensenses 19 i LA 129,052,081v1 8-13-10 TABLE OF AUTHORITIES Page(s) Cases Arcadia Redevelopment Agency v. Ikemoto (1993) 16 Cal.App.4th 444 ooceecsccssesecseessssessseseesssssessesessesaesaseessscsessacsusarens 5 Briggs v. Eden Councilfor Hope & Opportunity (1999) 19 Cab.4th 1106...ccccccccccsessesssssesssecsecssescsesecseseeceesecsesaesecsesseseusescans 17 Hammond v. McDonald . (1939) 32 Cal.App.2d 187 oc. ccccssccssessessscssssseesseessesessessessecsecsecsessecenscensenseseras 17 Inre MS. (1995) 10 Cal.4th 698oeccecccesecsessscesecssesssesssseesesccecsecsecsecaecsesseceescsucateceeses 17 In re Rudy L. (1994) 29 Cal.App.4th 1007oceecccscsssecsessessessscsecesessseeecsesseeseesscseecaserecatenes 16 Jurcoane v. Superior Court (2001) 93 CalApp.4th 886.00... ccccecssecsnsecssessnecssessecseesessssssesssesaeesseesseeseeeees 15 People v. Hull (1991) 1 Cal4th 2660.cccccsssesecssessessecsstssecsscssessessessessecsecseceessssesscsecseesseees 14 Statutes Rev. & Tax. Code § 95(f) ..cecccecccssccsssscsseseseccsseessseeesnecsseetensesesesetecsssessaeeeseesstessens 6 Rev. & Tax. Code § 95.3 oo. ecceccecsssessscneceseseseseneseseeaes 1, 4, 6, 7, 10, 12, 16, 17, 18 Rev. & Tax. Code § 95.3(a) ceccccssssssssssssssssssescscsessssesecscssssnsesssstsacsvencsesasaverearsesanenees 4 Rev. & Tax. Code § 95.3(D) ....cccccescesssesssccsseesessessseeseeceneecseessaeesssesseeessasessseass 4,15 Rev. & Tax. Code § 95.3(D)(2)......ccccsscccssseccessceessneeessssecsseseeseaeessateesssecesseasesauers 5,6 Rev. & Tax. Code § 95.3(d) on... ceccscssecsseseeessecseeessessecenecsnesseecsesssesseeeeeseesneees 4,19 Rev. & Tax. Code § 95.3() .o.ceccesssesesseseessssesseesenesaeeesesseseassessssecseesseseseesseeesseeeees 4 Rev. & Tax. Code § 95.31 ooo. cccceccsseseesneseeeeseesaeeseeeeseceneeseessesessseeseeessesessssaeesseeeaees 7 Rev. & Tax. Code § 95.31(€) ...ccececcssccssscsssssssessesssessseessecssecssesseseesssessusesseesseseaeseese 7 Rev. & Tax. Code § 95.35 oo. ccscsssesstccsscsseecsssessseeesaseeseecseesscsesesecsesessateesssessensues 7 Rev. & Tax. Code § 95.35(8) occ cescccsssccesssccsessseesssesessseecessesesseecssseesseeeees 3, 5, 7, 18 Rev. & Tax. Code § 95.35(f) ec cecesesscssccececssesseeesenesceessesseesaesesesseesseseaeeseesaeestennees 7 Rev. & Tax. Code § 97.68 oo. cccccccccccssscsssssessssseeeesseeeseesesensseesaeens 1, 8,9, 12, 15, 16 Rev. & Tax. Code § 97.70 .....cceccccsssesueeseeenecessecenessaessesseeseneeseseaees 1, 8, 9, 12, 16, 18 Rev. & Tax. Code § 97.75 w...ccceseseesesreees 1, 2,9, 10, 11, 12, 13, 14, 15, 16, 17, 18 ii LA 129,052,081v1 8-13-10 INTRODUCTORY STATEMENT California counties are obligated to assess, collect and allocate property tax revenues for the benefit of all local agencies and jurisdictions entitled to receive them. Because this obligation has imposed an “unfair and disproportionate . . financial burden,” the Legislature has mandated, since 1990, that counties are entitled to deduct from allocated revenues a jurisdiction’s or agency’s pro rata share of such costs (commonly called property tax administrative fees or “PTAF”). (Rev. & Tax. Code, § 95.3.)! There is only one exception to this rule, and it evolved in the years immediately following enactment of the original recoupment statute. The exception is for school funding, which includes the so-called Educational Revenue Augmentation Fund (“ERAF”), into which the State shifted part of certain local jurisdictions’ and agencies’ tax shares to offset the State’s funding obligation for education. (/d.) In 2004, the Legislature gave cities larger property tax shares at the expense of schools, through the implementation of two property tax transactions commonly knownas the “Triple Flip” (section 97.68) and the “VLF Swap”(section 97.70). Collectively, the statutes (i) took sales tax and vehicle license fees cities previously had received, and (ii) gave cities additional property tax shares from revenues that otherwise would have gone into ERAFs. The Legislature also adopted section 97.75 to authorize counties, beginning with the 2006-07 fiscal year, to recoup from cities the cost of “services under” the Triple Flip and VLF Swap statutes. Section 97.75 did not define what the Legislature viewed those “services” to be. Nor did it mention section 95.3, which the trial court and Court of Appeal both recognized permitted the County to recoup more PTAF from cities in proportion to the larger property tax shares now being allocated to them. " All statutory references are to the Revenue & Taxation Code. 1 LA 129,052,081v1 8-13-10 ISSUE PRESENTED FOR REVIEW Does section 97.75 implicitly repeal section 95.3’s requirement that each city is responsible for the pro rata share of PTAF associated with all property tax revenues it receives and, in effect, impliedly give the cities’ new tax shares the same PTAF exemption granted to schools expressly? A highly experiencedtrial judge answered “No.” A highly experienced appellate panel answered “Yes.” For reasons explained briefly below, the Court of Appeal has erred and, in effect, rewritten section 97.75. Regardless of the ultimate outcome,this important issue should be reviewed andsettled by this Court now. WHY REVIEW SHOULD BE GRANTED This is the lead case presenting a common claim affecting virtually every city and county in California. Similar claims (and, in at least one instance, a lawsuit) have been asserted across the State and are trailing in the wake ofthis case. The stakes involved are far too high for other counties to acquiesce in a mistaken appellate ruling. Inevitably, the same legal theories and defenses will be brought and pursued through superior and appellate courts across the State. Each impending new suit carries the possibility for a different interpretation and a different outcome. Each conflicting decision will, in turn, bring wasteful expense and uncertainty. Granting this Petition would prevent such waste, promote uniformity of decision, and settle an important question of law that affects cities and counties throughoutthe State. The stark financial consequences of an erroneous decision underscore the importance of this case.’ In this time of fiscal crisis — with inevitable State * Precisely because of the importance ofthe issue, the parties stipulated below to have the case heard by reference to the Hon. Dzintra Janavas (Ret.), a respected and highly experienced Los Angeles Superior Court writs and receivers judge. 3 For example, Los Angeles County faces more than $60 million in potential repayment exposure for prior years and lost funding on a go forward basis. Such 2 LA 129,052,081v1 8-13-10 pressure on local revenues — counties have noability to replace lost recoupment dollars, much less cover the spate of refund claimsthat will follow if this Decision is allowed to stand. Further, depriving counties of the resources needed to adequately fund an efficient property tax administration system ultimately will harm every recipient local agency and jurisdiction, because proper funding is the key to robust revenue collection. Our Legislature recognized this long ago, when it passed one of many statutes designed to enhance property tax funding and expressly noted a “significant and compelling state financial interest in the maintenance of an adequately funded system of property tax administration.” (Section 95.35(a).)* In sum, not only is the Court of Appeal’s Decision erroneous (for reasons weshall explain below), but it sanctions dubious policy that, unless corrected now, will harm all concerned, including, in the long run,the plaintiff cities themselves. Review should be granted to resolve this question of widespread public importance, and to establish a uniform rule applicable to all cities and counties in this State. BACKGROUND AND STATEMENT OF THE CASE A. Property Tax Collection, The Impact Of Proposition 13, And Emergence Of The Longstanding Rule Of Pro-Rata Recoupment Historically, counties had limited means to recoup PTAF from the various entities benefiting from counties’ assessment, collection, and allocation efforts. Prior to the adoption of Proposition 13 in 1978,° this limitation imposed no burden because counties were free to set countywide property tax rates at a level sufficient a blow would both aggravate the County’s current fiscal crisis and severely handicap tax administration. . ‘4 The State has a constitutional obligation to fund education, and schools are the largest recipient of property tax revenues. Thus, every property tax dollar allocated to schools frees a dollar otherwise due schools from the State’s General Fund. > Cal, Const., art. XTITA. LA 129,052,081v1 8-13-10 to enable them to recoup administration costs from the taxpayers countywide. With Proposition 13’s constitutional cap on the amount of property tax that could be collected, however, the counties’ ability to recoup PTAF vanished, even though property tax administration was becoming increasingly burdensome and complex.® Recognizing the unfairness of this situation, the Legislature, in 1990, passed a general recoupmentrule that, with an exception for school entities, still is in place today. (Section 95.3.) In creating recoupment authority, the Legislature expressed its intent “to recognize that since the adoption of Article XTIIA of the California Constitution by the voters, county governments have borne an unfair and disproportionate part of the financial burden of assessing, collecting, and allocating property tax revenues for other jurisdictions and for redevelopment agencies.” (Section 95.3(e).) In operation, section 95.3 does three things. First, section 95.3(a) provides that the PTAF responsibility for each individual agency or jurisdiction is its percentage share of total countywide property tax revenues.’ Next, Section 95.3(b) mandates that, with the exception of funds earmarked for schools, each recipient’s cost share is deducted from the property tax revenues otherwise allocable to it. Finally, section 95.3(d) mandates that every dollar recouped must fund property tax administration. But, because property taxes allocated to schools do not contribute recoupment, counties always pay far more than their proportionate share of PTAF, as the Legislature has recognized and lamented. ° 1 JA 46 [Stip. No. 6]; 3 JA 547. (Citations to “JA __” are to the volume and applicable page numbers of the Joint Appendix below;citations to “RB”are to the Respondent’s Brief; a copy of the Court of Appeal’s decision (“Dec.”) is attached a the end ofthis Petition.) ’ As explained in the Respondent’s Brief below, and as the Court of Appeal agrees, PTAF recoupmentis driven by the post-Proposition 13 tax share scheme pursuant to section 96.1, which serves as the master statute. (RB at 9-19; Dec. at p. 4.) LA 129,052,081v71 8-13-10 (Section 95.3(b)(2); see also section 95.35(a) [quantifying disproportionate burden].) B. The Exemption Of PTAF Recoupment For Taxes Devoted To School Funding As mentioned above, the Legislature ultimately chose to exempt from PTAF recoupment those revenues devoted to funding education. The reason for that exemption is apparent: Every dollar of PTAF recoupment from schools is a dollar the State must replace out of its General Fund. The evolution of the recoupmentrule (and its exemption) confirmsthe State’s fiscal motivation. " Asoriginally enacted in 1990, the recoupment rule was absolute: Every local agency or jurisdiction receiving property tax revenues, including schools, was obligated for its pro rata share of PTAF. (Stats. 1990, ch. 466, Section 4 (SB 2557) [amending Rev. & Tax. Code section 97].)*® " In 1991, in an emerging recessionary budget crisis, the Legislature exempted schools from PTAF recoupment. (Stats. 1991, ch. 75, Section 1 (SB 188); ch. 333, Section 3 (SB 282).) # In 1992, with budget problems worsening, the Legislature began requiring local governments and agencies to shift part of their allocated property tax shares to the Educational Revenue Augmentation Fund (ERAF) to be used to offset the State’s funding obligation for education. Attempting to minimize the harm to property tax administration, however, the Legislature: (i) provided that counties still could recoup from schools the PTAF associated with revenues allocated to the ERAF; and (ii) ’found” that such recoupment would not impact the State’s financial obligation for school funding (i.e., that the State would not have to make up the PTAF dollars recouped on ERAF funds). (Stats. 1992, ch. 697, Section 14 (SB 1559).) ® See also Arcadia Redevelopment Agency v. Ikemoto (1993) 16 Cal.App.4th 444, 454 [quoting legislative findings clarifying original recoupment rule and legislative history]. LA 129,052,081v1 8-13-10 = In 1993, with the crisis worsening, the Legislature did away with recoupment for funds allocated to ERAFs. (Stats. 1993, ch. 66, Section 35.5 (SB 399).) « In 1994, the Legislature moved the recoupmentrule to section 95.3. (Stats. 1994, ch. 1167, Section 6 (AB 3347).) « Finally, in 1996, the Legislature amended section 95.3 to confirm that property tax revenues allocated to ERAFs were exempt from PTAF recoupment — although the statutory definition of “school entities”? already compelled that conclusion. (Stats. 1996, ch. 1073, Section 1 (AB 1055).) The Legislature acknowledged that the underfunded property tax administration system resulting from its exemption for schools would be “to the great detriment of both the counties and taxpayers.” (/d.) And, recognizing the unfairness to counties, the Legislature promised to rectify at least a part of that unfairness in the future. (Section 95.3(b)(2).) Through these various enactments, the Legislature’s intent is clear, unmistakable and express. It was (andis) vitally interested in adequately-funded property tax administration systems. It exempted schools (and later ERAF school funding) from PTAF recoupment grudgingly and in baby steps. It did so not because it was hostile to recoupment, but because the burden of funding amid never-ending budget shortfalls made it expedient to create the exemption. Even then, the Legislature was aware of the adverse consequences for property tax administration, and stated an express intent to enhance funding through future legislation. C. More Recent Statutes Reiterate The Legislature’s Pro-Recoupment Intent With the exception of its exemption for school entities, every act taken by the Legislature since 1990 has enhanced funding for property tax administration. ? Section 95(f). LA 129,052,081v1 8-13-10 In 1995, the Legislature passed section 95.31 to authorize loans to fund property tax administration. (See also section 95.31(e) [loans shall not reduce amounts county is entitled to recoup under section 95.3].) In 2001, the Legislature passed section 95.35 to provide relief for counties in the form of grants. The Legislature found and declared that: [T]here is a significant and compelling state financial interest in the maintenance of an adequately funded system ofproperty tax administration. . . . The Legislature also finds and declares that the State-County Property Tax Loan Program contained in Section 95.31 wasin recognition ofthe state’s financial interest, and the success of that program has demonstrated the appropriateness of an ongoing commitment of state funds to reduce the burden ofproperty tax administration on countyfinances. Therefore, it is the intent of the Legislature, in enacting this act, to establish a grant program. . .[to] maintain the commitmentto efficient property tax administration. (Section 95.35(a) [emphasis added]; see also section 95.35(f) [grants shall not reduce amounts countyis entitled to recoup under section 95.3].) In other words, the Legislature recognized that there is a direct correlation between the amount of funding for property tax administration and the amount of property tax revenues collected, with better funding yielding higher revenues. And, in point of fact, empirical studies immediately predating this statute have concluded that, on average, every additional $1 of funding for property tax administration yields in the range of $11 to $14 in additional revenues collected."° D. Triple Flip, VLF Swap, and Additional Recoupment The PTAF for which local jurisdictions have been responsible has ebbed and flowed in direct proportion to the amount of property tax revenuesallocated to © 2 JA 386. Although the accuracy of these findings was undisputed, the trial court below ruled such studies were irrelevant. LA 129,052,081v1 8-13-10 them. In 1990, when the Legislature first provided for recoupment of PTAF,there was no such thing as an ERAF,and allocated revenues and PTAF both were proportionally higher. When ERAFs were established, a portion of the property tax revenues allocated to some local jurisdictions was diverted to school funding, and allocated revenues and PTAF recoupmentboth decreased proportionally. In reallocating property tax revenues away from ERAFs pursuant to the Triple Flip and VLF Swap, the Legislature essentially has come full circle, restoring to cities and counties property taxes that (i) originally had been allocated to local agencies and subject to recoupment, but (ii) later had been diverted to ERAFs for school funding (and, hence, exempt from recoupment). It is these legislative changesthat give rise to the instant dispute. The “Triple Flip.” During the 2003-2004 fiscal year, the State took a portion of sales tax revenues that had been levied by cities and counties and allocated (‘flipped’) them to fund a borrowing — economic recovery bonds — whoseproceeds wentto the State. In order to compensate for that revenue loss to local government, the State provided that each city and county receive property tax revenues that otherwise would have gone to the ERAF (the second“flip”), and then replaced from the State’s General Fund (now augmented by bond proceeds) the funds that local schools no longer received from the ERAF(the third “flip”). (Section 97.68.) The “VLF Swap.” During fiscal year 2004-2005, the Legislature provided for another swap of revenues. This time, the Legislature: (i) permanently reduced the tax rate on vehicle license fees constitutionally dedicated to counties and cities; and (ii) replaced the revenue shortfalls with property tax revenues that otherwise would have been gone into the ERAF. (Section 97.70.) The formula for the substituted revenues began by approximating the lost VLF revenues, but in . . . . “4: ll practice necessarily increased revenues for most counties andcities. "! See 2 JA 450-457 [FF 8-19 & Exs. 1-2]. 8 LA 129,052,081v1 8-13-10 As a consequence of these statutes, in most counties (including Los Angeles County), ERAFs nowexist in name only, as dollars that would have been allocated to ERAFsflow instead to cities and counties.” Thus, the State returned to where it began in 1990: It has restored to local agencies property tax revenues that (i) local agencies had received before the Legislature created ERAFs, and (ii) originally had been fully subject to PTAF recoupment. Rev. & Tax Code Section 97.75. Wearrive at the statute at the center of this mandamusproceeding. When it passed the VLF Swap, the Legislature also passed Section 97.75, which providesin full: Notwithstanding any other provision of law, for the 2004-05 and 2005-06 fiscal years, a county shall not impose a fee, charge, or other levy on a city, nor reduce a city’s allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 97.70. For the 2006-07 fiscal year and each fiscal year thereafter, a county may impose a fee, charge, or other levy on a city for these services, but the fee, charge, or other levy shall not exceed the actual cost of providing these services. Theplaintiff cities allege, and the Court of Appeal now has concluded, that this statute forever forbade the County from recouping the underlying costs of assessing and collecting the increased tax shares now allocatedto thecities. E. Counties’ Interpretation and Implementation of Section 97.75 As the trial court below later would recognize, there were two possible ways to read section 97.75, depending upon how oneinterpreted the undefined term “services.” On the one hand, it was possible to interpret the word “services” as intending to deal only with the incremental, new services associated with accounting for the Triple Flip and VLF Swap (which eventhe cities and Court of 2 2 JA 448-449 [9 4-6]. LA 129,052,081v1 8-13-10 Flip and VLF Swap amounts to approximately $35,000 per year. (Dec. at p. 9.) This disparity explains the motivation for this suit. F. The Trial Court Rules Against The Cities, And The Court of Appeal Reverses Through this mandamusproceeding, the cities alleged that section 97.75: (i) plainly forbade the County from recovering this $5 million not just for thefirst two fiscal years (the only years as to which section 97.75 prohibited recoupment of anything), but forever; and (ii) after the first two fiscal years, allowed the County to recover just the $35,000 incremental cost required to accountfor the additional tax shares being allocated underthe Triple Flip and VLF Swap. In rejecting the cities’ claim and holding that the County had faithfully followed the law, the trial court began by recognizing that, had Section 97.75 not been enacted, section 95.3 would have allowed the counties to recoup all PTAF associated with the additional tax shares allocated to cities under the Triple Flip and VLF Swapstatutes.'4 Turning to section 97.75, the trial court noted the ambiguity in the undefined term “services” and ultimately concludedthat, through section 97.75, the Legislature intendedto set forth the rules regarding recoupment of all PTAF associated with the cities’ additional new tax shares.!° Thetrial court then: (i) found nothing demonstrating a legislative intent either to forbid PTAF recoupment beyondthe two years expressly identified in section 97.75 or to limit recoupment to incremental costs; and (ii) held that it was powerless to rewrite the statute to supply what the Legislature hadseenfit to omit.!® The Court of Appeal read the samestatute very differently and reversed. The bulk of the appellate decision is devoted to disagreeing with the trial court’s conclusion that section 97.75 was concerned with the cost of all services necessary 143 JA 574. 5-3 JA 572-573. 16 3 JA 574-575. 11 LA 129,052,081v1 8-13-10 Appeal agree could be recovered beginning with fiscal year 2006-07). With this interpretation, though,it follows that section 97.75 would be irrelevant to the issue of whether the County could recoup the cost of the traditional, underlying services associated with assessing and collecting the additional revenues being allocated to the cities under the Triple Flip and VLF Swap. Instead, the issue of recoupmentof the cost of such underlying services would continue to be governed by section 95.3, which would permit recoupmentof suchcosts in all fiscal years. On the other hand, it was possible to interpret section 97.75 as intending to embrace all “services” associated with collecting the additional property tax revenues being allocated to cities under the Triple Flip and the VLF Swap — including, in addition to the incremental new services required to allocate the new tax shares, and the underlying services required to assess and collect the tax shares being allocated. Under this interpretation, counties would be forbidden from recouping any PTAFassociated with those revenues for the first two fiscal years, but would be authorized to recoup all associated PTAFforfiscal year 2006-07 and each fiscal year thereafter. The California State Association of County Auditors Accounting Standards Committee issued Uniform Guidelines to implement section 97.75 and related statutes. The Guidelines adoptedthelatter, “all services,” interpretation, and Los Angeles County (along with virtually all other counties across the State) have followed them.” The total actual cost associated with assessing and collecting the additional tax shares allocated to cities under the Triple Flip and VLF Swap amounts to approximately $5 million per year for the 47 plaintiff cities alone. Conversely, the cost of providing incremental new services to technically account for the Triple 'S 1 JA 94-95 [Appendix A, Schedules K1 & K2]; 2 JA 461-462 [Linschoten Decl.]; 2 JA 449-450 [§ 7]; see also Dec. at p. 8 [recognizing that County was acting consistently with Guidelines]. 10 LA 129,052,081v1 8-13-10 to assess, collect andallocate the cities’ additional tax shares underthe Triple Flip and VLF Swap (as opposed to simply the incremental new apportionment services). Had the Court of Appeal stopped there, the County would not have pursued this Petition. But, the Court of Appeal went on to conclude that, by providing express authority for counties to recover their incremental new costs from cities, section 97.75 somehow plainly, permanently and impliedly trumped section 95.3 recoupment of the underlying costs associated with assessing and collecting the cities’ additional tax shares. It is that further conclusion that the County asks this Court to review. ARGUMENT Recognizing that full merits briefing is not called for here, the County limits its points to three themes: logical consistency; harmony with the statutory scheme; and the Decision’s policy implications. A. Every Consistent Interpretation Of Section 97.75 Supports The County’s Practices. To reach the correct conclusion in this case, it is important first to assess what section 97.75 does — and, more importantly, does not — provide. Section 97.75 is a two-sentencestatute that provides in its entirety: Notwithstanding any other provision of law, for the 2004-05 and 2005-06 fiscal years, a county shall not impose a fee, charge, or other levy on a city, nor reduce a city’s allocation of ad valorem property tax revenue, in reimbursement for the services performed by the county under Sections 97.68 and 97.70. For the 2006-07 fiscal year and each fiscal year thereafter, a county may impose a fee, charge, or other levy on a city for these services, but the fee, charge, or other levy shall not exceed the actual cost of providing these services. (Emphasis added.) In simplest terms, the first sentence provides that, for two fiscal years, counties may not recover their actual costs for the “services” in 12 LA 129,052,081v1 8-13-10 question, whatever those “services” might be, even if the cost of such “services” otherwise would be recoverable under different statutes. The second sentence provides that for each fiscal year thereafter, the actual cost of such “services,” whatever they might be, may be recovered. But — and this is critical to appreciating where the Court of Appeal erred — there is no third sentence or additional language purporting to address the treatment in any year of the cost of “services”that fall outside the scope of section 97.75. Obviously, if one were to accept the trial court’s interpretation that section 97.75 covers the cost of all “services” necessary to assess, collect and allocate the cities’ additional tax shares under the Triple Flip and the VLF Swap, it is inescapable that: (i) the County has faithfully followed the law; and (ii) section 97.75 (as opposed to some other statute) expressly authorizes recoupmentofall PTAF associated with the cities’ additional tax shares for the fiscal years in question. However, even accepting the Court of Appeal’s interpretation of section 97.75 as embracing only the new, incremental “services” required to account for the additional tax shares, it simply does not follow that the County is forbidden from recovering the cost of the underlying services necessary to assess and collect the revenues in question under anotherstatute. Instead, accepting the Court of Appeal’s reading of “services,” the only logical conclusionsare that: (i) section 97.75is irrelevantto the issue at hand; and (ii) the controlling statute is section 95.3, which authorizes recoupment of the underlying PTAF associated with these revenues. To elaborate: = Underthe first sentence of section 97.75, the County, for the two fiscal years in question, would be forbidden from recovering the cost of the incremental new services required to account for thecities’ additional tax shares under the Triple Flip and the VLF Swap; » Underthe second sentence of section 97.75, the County, for all other fiscal years, would be authorized to recover the actual cost of the incremental new Services; 13 LA 129,052,081v1 8-13-10 = Neither sentence of section 97.75 concerns recovery of the cost of the underlying services necessary to assess and collect the additional revenues being allocated to cities under the Triple Flip and VLF Swap; « The relevant statute for all fiscal years would remain section 95.3, which (i) nowhere exempts the cities’ additional tax shares from responsibility for recoupment, and (ii) by its terms, would authorize recoupment of the underlying costs in each and every fiscal year.!” In other words, the Court of Appeal’s interpretation of the “services” embraced by section 97.75 should haveled that Court to affirm (albeit on different grounds than the ones articulated by thetrial court). B. Review Should Be Granted To Interpret Section 97.75 In Light Of The Entire Relevant Statutory Scheme. To frame the issue in terms of fundamental rules of statutory interpretation, review should be granted for this Court to interpret section 97.75 in context and to determine whether the Court ofAppeal impermissibly rewroteit. 1. The Court Did Not Interpret Section 97.75 In Context. Throughout its decision, the Court of Appeal emphasized that, becauseit had found section 97.75 to be unambiguous, the Court could not interpret section 97.75 in harmony with other related statutes.'® Respectfully, the law is to the contrary. (See, e.g., People v. Hull (1991) 1 Cal.4th 266, 272 [“A statute must be construed in the context of the entire statutory system of whichit is a part, in order '” See 3 JA 574 [trial court recognizing this effect]; Dec. at p. 4 [same]. '8 See, e.g., Dec. at p. 13 [“Looking at the words of Revenue and Taxation Code section 97.75 alone”], and fn. 6 [“we do not consider . . . the only relevant reference foundin the legislative history”], 15 [“Stated differently, section 97.75 is a stand-alone provision” authorizing recovery of incremental costs “only”], 15 [rejecting argument that section 97.75 must be “read [] in the context of the statutory scheme for property tax administrative fees as a whole” and “the Legislature intended that section 97.75 stand alone”], 16, fn. 8 [“we should not refer to the older statutes where the newer one, section 97.75, can be read by itself]. 14 LA 129,052,081v1 8-13-10 to achieve harmony amongthe parts.”]; Jurcoane v. Superior Court (2001) 93 Cal.App.4th 886, 893 [“undisputed rule” of review is that courts “must read statutes as a whole, giving effect to all their provisions, neither reading one section to contradict others orits overall purpose, nor reading the whole schemeto nullify one section. . . . In this regard, all parts of a statute should be read together and construed in a manner that gives effect to each, yet does not lead to disharmony with the others”].) By concluding that it must not look beyond section 97.75, the Court of Appeal reached conclusions that cannot be squared with the rest of the scheme. The Legislature’s pro-recoupment stance is detailed above, but other inconsistencies emerge. For example, as passing support the Court of Appeal observed that the Triple Flip and VLF Swapallocations “are made from property taxes that would otherwise have been allocated to the County’s ERAF (§ 97.68, subd. (a)),” and, if so, had been exempt from PTAF recoupment. But, examining the completehistory confirms that the undisputed purpose of the exemption from recoupment for school funding — to spare the State budget — has noapplication as to revenuesallocatedto cities. Review should be granted to interpret section 97.75 in light of the entire statutory scheme. 2. Review Should Be Granted To Determine Whether The Court of Appeal Has Rewritten Section 97.75. Neither section 97.75 nor its sparse legislative history contains so much as a syllable reflecting an intent by the Legislature to depart from the “pro- recoupmentintent”it has staked out in statute after statute since 1990. Indeed, as the Court of Appeal recognizes, the statute does not even reference section 95.3’s recoupmentauthority, muchless overruleit.’ '? Dec.at pp. 16-17. 15 LA 129,052,081v1 8-13-10 Once this is recognized, the Court of Appeal has done precisely what its Decision says it could not do — namely, “write into [section 97.75] by implication express requirements which the Legislature itself has not seen fit to place in the statute.” (Dec. at p. 14, citing and quoting Jn re Rudy L. (1994) 29 Cal.App.4th 1007, 1011.) More specifically, the Court of Appeal turned a simple, two- sentence statute supposedly dealing only with incremental, new services into a three-sentence statute that: (i) first, somehow broadly (if impliedly) forbids recovery ofall services necessary to assess, collect and allocate the revenues in question in all years — even though section 97.75, in the Court of Appeal’s view, has a morerestrictive focus; and (ii) then states the rules for recovery ofthe cost of incremental new “services” it expressly addresses.”’ In short, the Court of Appeal has redrafted and added to section 97.75’s first clause as follows: “Notwithstanding any—ether—prevision_ofiaw Section 95.3, counties shall not include the property tax revenuesallocated to cities under Sections 97.68 and 97.70 in calculating the cities’ administrative cost apportionmentfactor... .” It is error to impliedly repeal an earlier statute where it is possible to interpret the two statutes in harmony with each other — particularly where the earlier statute has been judicially construed, generally understood and long relied upon. (Hammond v. McDonald (1939) 32 Cal.App.2d 187 [repeal by implication disfavored under these circumstances; presumption is against such a construction; “where there are two laws upon the same subject, they will, if reasonably possible, be so construed as to maintain the integrity of both, the courts being bound to uphold the prior act if the two may well subsist together”]; see also In re MS. (1995) 10 Cal.4th 698, 726 [rejecting argument for implied repeal]; Briggs v. Eden 2° Over and over, the Court of Appeal uses the word “only” to characterize the statute as purporting to identify the “only” types of services as to which recovery is allowed at any time. (See, e.g., Dec. at p. 14 [“counties may only recover’] and 15 [“administering the Triple Flip and VLF Swap only”].) But, the word “only” never appears in section 97.75. 16 LA 129,052,081v1 8-13-10 Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 11189-1119 [“every statute should be construed with reference to the whole system of law of whichit is a part so that all may be harmonized and haveeffect” [internal quotations and citation omitted].) Review should be granted to determine whether such an error has occurred here. The fact that the Legislature presumably knew of the existence of section 95.3 and yet chose to enact a separate section 97.75, does not mean, as the Court of Appeal concluded, that the Legislature must have implicitly intended to trump section 95.3.7! Initially, to conclude that section 97.75 was intended to affect section 95.3 and its recoupment rules for the underlying PTAF associated with collecting the revenues in question, requires that “services,” in section 97.75, included the underlying PTAF-generating services embraced bysection 95.3. But, if this is so, then section 97.75 expressly authorized recovery of the cost of such services after the first two fiscal years; and the County has followed the law. Regardless, there are entirely benign reasons why the Legislature might chooseto enact a separate statute. Consider: * Section 95.3 deals with paying for processes of general benefit to every local government receiving property tax revenues. In contrast, the benefits ofproperty tax allocations under the VLF SwapandTriple Flip flowed only to cities (and counties), and no other local jurisdictions; and = Section 95.3 permits recoupment in every year. In contrast, section 97.75 forbade recoupmentfor the cost of certain “services” for two fiscal years — the sameperiod in which cities and counties also suffered separate property tax reductions (further ERAF shifts) of $350 million per year. (Section 97.70(b)(2)(B)(4) [cities]; section 97.71(a)(2) [counties].) Plainly, to forbid recoupment of at least some costs for two years (as section 97.75 does) required new statutory language somewhere. Inlight of the *I Dec. at pp. 14-15. “V7 LA 129,052,081v1 8-13-10 differences noted above — andespecially if one interprets section 97.75 as dealing only with incremental new services — it made perfect sense to put such language in a separate statute. Indeed, if the Legislature simply had let section 95.3 operate by its terms, not only would the County would have been entitled to full recoupmentin fiscal years 2004-05 and 2005-06, but the cost of incremental new “services” benefitting only cities would have been imposed onall jurisdictions. C. Ultimately, The Court Of Appeal’s Decision Will Harm Everyone. Lastly, the Court of Appeal’s Decision promotes bad economic policy that, in very short order, will harm everyone, including the cities themselves and the State of California. The reason is foundin related statutes the Court of Appeal did not consider. (See section 95.35(a) [noting “significant and compelling state financial interest in the maintenance of an adequately funded system of property tax administration.”].) Simply, higher spending for property tax administration results in higher property tax collections, with every dollar spent on property tax administration _ yielding in the range of $11 to almost $14 in additional revenues. (2 JA 386 [reported results of studies by California State Auditor and California Institute for County Government].) Thus, because every recoupment dollar must be used solely to fund property tax administration (section 95.3(d)), every dollar of recoupmentprovided by cities can be expected to generate additional revenue for allocation to all recipients, including the cities and schools. Leaving this obvious benefit aside, it is undisputed that, becausecities’ additional tax shares under the VLF Swapsignificantly exceed the VLF fees that cities otherwise would have received, cities come out tens of millions of dollars ahead, even accounting for all the additional PTAF recoupmentthey dislike. (2 JA 452 [for fiscal years 2006-2008, 47 plaintiff cities came out ahead by more than $85 million].) 18 LA 129,052,081v1 8-13-10 CONCLUSION The issues raised by this Petition are of widespread public importance. Indeed, they impact each city, each county, and the State. Absent review to set a uniform rule, further suits and appeals — with attendant inconsistent rulings, expense and delay — inevitably will require this Court’s consideration of the issues presented. The time to ensure uniformity of decision and settle these important issues of law is now. This is especially so where, as here, the Court of Appeal’s decision neglects the context, logic, and public policy that animates counties’ tax administration and entitlements. To achieve the statutory harmony and logical consistency this important question demands, werespectfully urge the Court to grantthis Petition. DATED: August 3, 2010 Respectfully submitted, GREENBERG, TRAURIG, LLP fidetite Scott D. Bertzyk Attorneys For Petitioners By: 19 LA 129,052,081v1 8-13-10 CERTIFICATE OF COMPLIANCE Counsel of Record hereby certifies, pursuant to Rule 8.504(d) of the California Rules of Court, that the enclosed brief was produced using 13-point type, including footnotes, and contains 5,790 words, whichis less than the 8,400 words permitted by this rule. Counsel relies on the word count of the computer program usedto preparethis brief. DATED: August \3, 2010 Respectfully submitted, GREENBERG TRAURIG, LLP Scott D. Bertzyk Attorneys For Petitioners 20 LA 129,052,081v1 8-13-10 CERTIFIED FOR PUBLICATION. IN THE COURTOF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE CITY OF ALHAMBRA et al., B218347 Plaintiffs and Appellants, | (Los Angeles County Super. Ct. No. BS116375) ‘: | | COURT OF APPEAL - SECONDDIS” COUNTY OF LOS ANGELESet al., JP IL JE ID JUL 0-7 2010 Defendants and Respondents. - JOSEPH A. LANE. Clerk Deputy Clerk APPEAL from a judgmentofthe Superior CCourt of Los Angeles County, James ‘Chalfant, Judge. Reversed and remanded with directions. Colantuono & Levin, Michael G. Colantuono and HollyO. Whatley for Plaintiffs and Appellants. . Jarvis, Fay, Doporto &Gibson, Benjamin P. Fay and Rick W.Jarvis for The Leagueof California Cities as Amicus Curiae on behalfofPlaintiffs and Appellants. Greenberg Traurig and Scott D. Bertzyk; Raymond G.Fortner, Jr., County Counsel, and Thomas M.Tyrrell, Deputy County Counsel, for Defendants and Respondents. | . . Jennifer B. Henningfor California State Association of Counties as Amicus -Curiae on behalf ofDefendants and Respondents. INTRODUCTION This appeal involves a question offirst impression. We are asked to determinethe proper calculation under Revenue and Taxation Codesection 97.75 of the fee a county | may charge local governmentalentities withinits jurisdiction for the services counties perform undertwospecifically designated tax statutes, the so-called Triple Flip (§ 97.68) _ andthe VLF Swap(§ 97.70). Appellants (plaintiffs below), 47! ofthe 88 general law or chartercities in the County ofLos Angeles,petitioned the trial court for a writ of administrative mandamuscontending that defendants, the County ofLosAngeles and Wendy Watanabein her official capacity as the County’s Auditor-Controller (together the County), failed to follow the law andviolated a clear and plain duty in calculating the section 97.75 service fee. A referee found that the County wasfaithfully following the — law. Petitioners appeal from the judgmentadoptingthe referee’s ruling. We conclude the statute is clear on its face and hold that the County’s method ofcalculating its fee undersection 97.75 was unlawful. Accordingly, we reverse thejudgment and remandfor further proceedings. ' ‘The plaintiff cities are: City of Alhambra, City of Arcadia, City ofArtesia, City of Baldwin Park, City of Bell Gardens, City of Bellflower, City of Bradbury, City of Burbank, City of Calabasas, City of Carson, City of Cerritos, City of Commerce,City of Covina, City of Culver City, City of Diamond Bar, City of Gardena, City of Glendale, City of Glendora, City of Hawaiian Gardens, City of Hawthorne, City of Huntington Park, City ofIndustry, City. ofIrwindale, City ofLa Habra Heights, City ofLa Mirada, City of Lakewood, City of Lawndale, City of Lomita, City ofLong Beach, City of Lynwood, Cityof Montebello, City of Monterey Park, City ofNorwalk, City of Paramount, City ofPico Rivera, City ofPomona, City ofRedondo Beach, City of Rosemead, City of San Dimas, City of Santa Clarita, City of Santa Fe Springs, City of Sierra Madre, City of Signal Hill, City of South El Monte, City of South Gate, City of West Covina, and City of Whittier. Not included as a plaintiff is the City of Los Angeles, the largest property tax-recipient ofthe cities in the County. 2 ‘FACTUAL BACKGROUND Theparties stipulated to the following pertinentfacts: 1. One effect ofProposition 13 on counties Counties are responsible for, among other things, assessing and collecting ad - valorem property tax revenues from assessed property within their borders. Aspart of their administration ofthe property tax system, the counties calculate and distribute to the various local governmentalentities (includingcities, redevelopment agencies, special districts, and counties themselves; hereinafter cities) within their jurisdiction each city’s share of the property tax revenue. Before passage of Proposition 13 (Cal. Const., art XIIIA, § 1) in 1978, counties set their property tax rates at a level that enabled them to recoup the cost to them of property tax administration. With limited exceptions not relevant here, Proposition 13 capped property tax rates to one percent of assessed value. After Proposition 13, counties continued to bear the burden ofassessing,collecting, and allocating property tax revenues, but lacked a meansofrecovering their costs for this administration. In 1990, the Legislature passed the first of several measuresthat addressed _ reimbursementto the countiesof cities’ proportionate share of the cost ofproperty tax - administration: . In fiscal year 1992-1993, the Legislature created an Educational Revenue Augmentation Fund (ERAF):in each county. The ERAF is a fund into‘which property tax revenueis shifted to pay for the State’s constitutional responsibility tofund public | education. The property taxes paid to both local schools and the ERAF are exempt from havingto pay this property tax administration fee, or PTAF. | In 1994, the Legislature enacted Revenue and Taxation Code section 95.3 that, | with the exception of schools and funds schools receive from ERAFs,permits counties to fairly apportion the burden of collecting property tax revenues by recovering from each city within its borders a PTAFthatcorrelates to the property tax revenuesallocated to | that city. (§§ 95.3, subd. (b)(1), 97.1.)? Section 95.3 provides the method for calculating an “administrative cost apportionmentfactor.” . Generally speaking, the PTAF fora given city is computed as follows: _ a. The County calculates the prior year property tax administration costs of the assessor, tax collector, assessment appeals board, and the auditor-controller. Such costs includethe direct costs,all activities directly involved in assessing, collecting, and processing property taxes, and overhead costs establishedin. accordance with Federal Budget Circular A-87. . b. The County calculates each city’s proportionate share of such costs by calculating anapportionmentfactor from the ratioofthe property tax revenue received by eachcity to the total property tax revenue distributed. _ c. The County multiplies the administrative costs it incurred in the immediately preceding fiscal year by each city’s cost apportionment factor to determine eachcity’s PTAF. Thecity’s annual PTAF is withheld by the County from the propertytax distributions made by theCounty to cities for each fiscal year. (See Arbuckle College City Fire Protection Dist. v. County ofColusa (2003) 105 Cal.App.4th 1155, 1158, 1 159, 1163 (Arbuckle--College).) ' 2. The revenue statutes at issue here . The three relevant revenue provisions were.created nearly simultaneously. On . December 12, 2003, the Legislature enacted Revenue and Taxation Code section 97.68 to be operative on March 3, 2004. (Stats. 2003, Sth Ex. Sess. 2003-2004, ch. 2, § 4.1 (Assem.Bill No. 5X 9 (2003-2004) 5th Ex. Sess.).) Seven monthslater inAugust 2004, 2 Revenue and Taxation Code section 95.3, subdivision (b)( 1) reads: “Each proportionate share ofproperty tax administrative costs determined pursuantto subdivision (a), except for those proportionate shares determined with respect to.a school - entity or ERAF,shall be deducted from the property tax revenueallocation ofthe _ relevantjurisdiction or community redevelopment agency, andshall be addedto the property tax revenue-allocation ofthe county. For purposesof applyingthis paragraph for the 1990-91 fiscal year, each proportionate share of property tax administrative costs shall be deducted from those amounts allocatedto the relevant jurisdiction or“community redevelopmentagency after January 1, 1991.”. (See also § 97.1.) 4 the Governor signed Senate Bill No. 1096, which amended section 97.68 and enacted sections 97.70 and 97.75 at issue here,all effective August 5, 2004. (Stats. 2004, ch. 211, §§ 20.5, 21, 26 (Sen. BillNo. 1096).) We describe these three provisions individually.- a. The Triple Flip In 2004, California voters passed the Economic Recovery Bond Act, Proposition _ 57 (Gov. Code, § 99050), which authorized the issuance ofbonds to preserve public education, among other things. (/bid.) To fund repayment ofthe economic recovery bonds, the Legislature passed Revenue and Taxation Code section 97.68,° a temporary. 3 Revenue and Taxation Code section 97.68 providesin part, “Notwithstanding any other provision of law,in allocating ad valorem property tax revenueallocations for each fiscal year during the fiscal adjustmentperiod,all ofthe following apply: “(a)(1) The total amount of ad valorem property tax revenue otherwise required to be allocated to a county’s Educational Revenue Augmentation Fundshall be reduced by , the countywide adjustment amount. “(2) The countywide adjustment amountshall be depositediin aSales and Use Tax Compensation Fund that shall be established in the treasury of each county: “(b) For purposesofthis section, the followingdefinitions apply: . “(1) ‘Fiscal adjustment period’ meansthe period beginning with the 2004-05fiscal year and continuing through the fiscal year in which the Director of Financenotifies the State Board of-Equalization pursuant to subdivision (b) of Section 99006 ofthe Government Code. “(2) Except as otherwise provided in subdivision (d), the ‘countywide adjustment amount’ means the combinedtotal revenue loss ofthe county andeachcity in the county that is annually estimated by the Director of Finance, based upon the actual amount of sales and use tax revenuestransmitted under Section 7204 in that county in the prior fiscal year and any projected growth on that amount for the currentfiscal year as determined by the State Board of Equalization and reported to the director on or before August 15 of each fiscal year during the fiscaladjustment period, to result for each of those fiscal years from the 0.25 percent reduction in local sales and use rate tax authority applied by Section 7203.1. The director shall adjust the estimates described in this paragraphifthe board reports to him or her any changesin the projected growthin local sales arid use tax revenuesforthe currentfiscal year. “(3) ‘In lieu local sales and use tax revenues’ means those revenuesthat are transferred underthis section to a county or a city from a Sales and Use Tax. Compensation Fund or an Educational Revenue Augmentation Fund. “(c) Except as otherwise provided in subdivision (d), for each fiscal year during the fiscal adjustmentperiod, in lieu sales and use tax revenues in the Sales and Use Tax 5 measure for a revenue swap known as the Triple Flip. The Triple Flip works | thusly: section 97.68 reducedthe Bradley-Burns Sales and Use Tax rate paidto cities and counties by one-fourth cent. Under section 97.68, the State retains that one-fourth cent and usesit to repay State-issuedeconomic recovery bonds(thefirst flip). To compensate the cities and counties for the lost revenue, section97.68 provides that, in lieu of the one-fourth cent sales tax money, counties take an equivalent amount in property tax revenue that would otherwise have beenallocated to each county’s ERAF _ and deposit it in a Sales and Use Tax Compensation Fund set up in each county’s treasury. (§ 97.68, subd. (a)(2).) The revenue deposited in the Fund is then allocated and Compensation Fundshall be allocated-amongthe county andthecities in the county, and those allocations shall be subsequently adjusted, as follows: “(1) The Director of Financeshall, on or before September | of each fiscal year during the fiscal adjustmentperiod, notify each county auditorofthat portion ofthe countywide adjustment amountfor thatfiscal year that is attributable to the county andto each city within that county. “(2) The county auditorshall allocate revenuesin the Sales and Use Tax Compensation Fund amongthe county andcities in the county in the amounts described in paragraph (1). The auditor shall allocate one-half of the amount described in paragraph (1) in each January during the fiscal adjustment period andshall allocate the balance of that amountin each Mayduring the fiscal adjustmentperiod. “(3) After. the end ofeach fiscal year-during the fiscal adjustment period, other than a fiscal year subject to subdivision(d), the Director of Finance shall, based on the actual amountofsales and use tax revenues that werenottransmitted for the priorfiscal year, recalculate each amount estimated under paragraph (1) andnotify the county auditor ofthe recalculated amount. [f] ... [J] “(f) This section maynot be construed to do any of the following: “(1) Reduceanyallocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts _ pursuant to clause(i) of subparagraph (B) ofparagraph (4) of subdivision (d) of Section 97.2, clause (i) of subparagraph (B) ofparagraph(4) of subdivision (d) of Section 97.3, or Article 4 (commencing with Section 98), had this section not been enacted. The allocation made pursuant to subdivisions(a) and (c) shall be adjusted to comply with this Paragraph. (2) Require an increased ad valorem property tax revenueallocation to a community redevelopmentagency. “(3) Alter the manner in which advalorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in acounty.” . amount. distributed by the counties to ‘each city recipient in the county in lieu of the lost one- fourth cent sales tax revenue (the second flip). (§ 97.68, subd. (c)(1)-(c)(6).) TheState replaces funds that local schools otherwise would have received from the ERAF out of the State’s General Fund(thethirdflip). b. The VLF Swap | Effective July 2004, the State permanently reduced the amountofthe vehicle license fee (VLF) payable to cities and counties from 2 percent to 0.65 percent of a vehicle’s assessed value. Revenue and Taxation Code section 97.70‘ replaces thelost ‘ Revenue and Taxation Code section 97.70 reads in part, “Notwithstanding any _ other provision oflaw, for the 2004-05 fiscal year and for each fiscal year thereafter,all of the following apply: - “(a)(1)(A) The auditor shall reduce the total amount of ad valorem property tax. revenue that is otherwise required to beallocated to a county’s Educational Revenue Augmentation Fund by the countywide vehicle license fee adjustment amount. -“(B) If, for the fiscal year, after complying with Section 97.68 there is not enough ad valorem property tax revenue that is otherwise required to be allocated to a county Educational Revenue Augmentation Fundfor the auditor to complete the allocation reduction required by subparagraph(A),the auditor shall additionally reduce thetotal amount of ad valorem property tax revenue that is otherwise required to be allocated to all school districts and community college districts in the county for that fiscal year by an’ amount equalto the difference betweenthe countywide vehicle license fee adjustment amount and the amount of ad valorem property tax revenue that is otherwise required to | be allocated to the county Educational Revenue Augmentation Fundforthat fiscal year. This reduction for. each: schooldistrict and community college district in the county shall be the percentage share ofthe total reduction that is equal tothe proportion that the total amount of ad valorem property tax revenue that is otherwise required to be allocated to the school district or community college district bears to the total amount of ad valorem property tax revenuethat is otherwise required to be allocated to all school districts and community college districts in a county. . “(2) The county-wide vehicle licensefee adjustment amountshall be allocated to the Vehicle License Fee Property Tax Compensation Fund that shall be established in the . treasury of each county. “(b)(1) The auditor shall allocatemoneys in the Vehicle License Fee Property Tax . Compensation Fund according to the following: “(A) Each city in the county shall receive its vehicle license fee adjustment “(B) Each county andcity and county shall receive its vehicle license fee adjustment amount. vehicle license fee revenue with property taxes in a substitution referred to as the VLF. Swap. As with the TripleFlip, counties take an amount ofproperty tax revenue, otherwise required to be allocated to each county’s ERAF,that is equivalent to the lost vehicle license fee revenue (§ 97.70, subd. (a)(1)(A)), and deposit that money in a Vehicle License Fee Property Tax Compensation Fund establishedin each county’s . treasury. (Id. at subd. (a)(2).) The counties distribute the money in this Fund to each city recipientin placeoflost vehicle license fee proceeds: (§ 97.70, subd. (b)(1)(A)-(B).) The VLF Swap has no sunsetprovision.- c. Revenue and Taxation Code section 97.75 . Pursuant to the Revenue and Taxation Code sections 97.68 (Triple Flip) and 97.70 (VLF Swap), the County has a duty to annually allocate and distribute to the 88 cities within the County,the appropriate payments from property tax revenues underthe Triple Flip and VLF Swap.- Revenue and Taxation Code section 97.73, at issue in this appeal, reads: “Notwithstanding any other provision oflaw, for the 2004-2005 and 2005-2006 fiscal _ years, a county shallnot impose a fee, charge, or other levy on a city, nor reduce a city’s allocation of ad valorem property tax revenue, in reimbursementforthe services performed by the county under Sections 97.68 and 97.70. For the 2006-07 fiscal year and each fiscal year thereafter, a county may imposea fee, charge, or other levy on a cityfor these services, but the fee charge, or other levy shall not exceed the actual cost of . providing these services.” (Italics added.) | The California State Association of County Auditors prepared Senate Bill No. 1096 Guidelines (Guidelines)iin responseto the Legislature’s enactment ofRevenue and Taxation Codesections 97.68 (Triple Flip), 97.70 (VLF Swap), and 97.75, among other provisions of the 2004-2005 Budget Act. The Guidelines do nothave the forceof law. Consistent with the Guidelines, the County did not charge appellants for any property tax “(2) The auditorshall allocate one-half of the amountspecified in paragraph (1) on or before January 31 of each fiscal year, and the other one-half on or before May 31 of each fiscal year.” administrative servicesrelatirig to the funds paid tocities under the Triple Flip and VLF Swap in the 2004-2005 and 2005-2006fiscal years. Beginningin fiscal year 2006-2007, the County included the property tax funds paid under the Triple Flip and VLF Swapas additional property tax shareto each city and apportioned the total PTAF costs to each city based on this share. The financial consequences ofthe County’s method ofcalculating the PTAF for | appellants are that the PTAF the County charged appellantswascollectively, over $4.8 million in fiscal year 2006-2007 and $5.3 million in fiscal year 2007-2008, more than such fees would have been charged had the Triple Flip and theVLF Swap revenues not - been included in appellants’ property tax share used for apportioning PTAF. By | comparison, beginning with the 2006-2007 fiscal year, the County’s actual cost of the . incremental tax allocation duties required bythe Triple Flip and VLF Swap only was approximately $35,000 per year. PROCEDURAL HISTORY | - In 2008, appellants petitioned the trial court for a writ of administrative mandate (Code Civ. Proc., § 1085) challenging theCounty’s methodof calculating the PTAF charged to appellants starting in fiscal year 2006--2007. Maintaining that the PTAF the County charged each appellant and retained by the County was in excess of that permitted by Revenue and Taxation Code section 97.75, appellants soughta writ ordering the County to comply with that statute andtocredit the excess withheld. The County denied appellants’ contention that its method of calculatingPTAF undersection 97.75is unlawful. Appellants argued that section 97.75 authorizes the County to charge only the actual cost of administering the Triple Flip and VLF Swap;it does not empowerthe County to include the property:tax revenue underthe Triple Flip and VLF Swapas additional property tax share for each city for purposes ofcalculating the administration fee for operating the propertytax system as a whole. The County contended that the Legislature’s enactmentofsections 97.68 (Triple Flip) and 97.70 (VLF Swap) decreased the-amount ofPTAF exempt from reimbursement because that money otherwise would have been attributableto the ERAF,and thus increased each city’s proportionate share of 9 the total property taxes distributed, thereby increasing appellants’PTAF. The County also argued that its method of calculating PTAF accords with applicable Revenue and Taxation Codesections including, butnot limited to, sections 95 .2, 95.3, 96.1, and 97.75. Theparties agreed to try this case by reference (Code Civ. Proc., § 638) and submitted the comprehensive stipulation of facts from which the above factual description was taken.’ Theparties also agreed to defer the question of recalculating each appellants’ PTAF until the trial court determined whether the method currently used by the County was lawful. Thereferee ruled that the County’s interpretation was | consistent with legislative intent, and thus the County’s methodofcalculation did not violate Revenue andTaxation Code section 97.75. Thetrial court entered judgment accordingly and appellants timelyappealed. . DISCUSSION “A traditionalwrit ofmandate under Code of Civil Procedure section 1085 is a method for compelling a public city to perform a legal and usually ministerial duty. [Citation.] Thetrial court reviews an administrative action pursuantto Code ofCivil Procedure section 1085 to determine whetherthe agency’s action was arbitrary, capricious, or entirely lacking in evidentiary support, contrary to established public policy, unlawful, procedurally unfair, or whetherthe agencyfailed to follow the 5 Without conceding that they were required to do so, each petitioner has filed a claim with the County for damagesin the amountofthe PTAF they contend was wrongfully withheld by the County. To date, the County has not paid or otherwise credited any petitioner for any PTAF withheld. The County further contends that, with respect to the PTAF attributable to the 2006-2007 fiscal year, each such claim was . untimely. Petitioners do not concedethis point. The parties by their stipulation agreed that petitioners’ preexisting claims need not be supplemented to assert alleged damages arising on the samebasis as stated in those claims, but occurringafterfiscal year 2007-2008, and thoseearlier claims shall be deemedto include those alleged ongoing damages, thus relievingpetitioners of any legalobligation to file such supplemental claimsandrelieving the County of any legal obligation to act upon such supplemental claims. The parties agreed to defer trying the timeliness issue until the court determined whether the method the County currently uses is lawful. If the court concluded the method was lawful, no further argument on timeliness would be necessary. 10 procedure and give the notices the law requires. [Citations.]” (Klajic v. Castaic Lake | Water Agency (2001) 90 Cal.App.4th 987, 995,fn. omitted.) | At issue here is the meaning ofRevenue and Taxation Code section 97.75. The - County contends that the Legislature’s enactmentof sections 97.68 and 97.70, decreased the amount ofPTAF that otherwise would havebeen attributable.to the ERAF -- and thus exempt from PTAF -- and increasedeach city’s proportionate share of the total property taxes distributed, thereby increasing each appellant’s PTAF obligation. The County believes the Legislature intendedit to recoup from cities the costs associated with property taxadministrative efforts of assessing, collecting, and allocating the share of property taxes that are includedin the Triple Flip and VLF Swap. Appellants counter that the PTAF charged in fiscal years 2006-2007 and 2007-2008 to each appellant was in excess of “the actual cost of providing” the services underthe Triple Flip (§ 97.68) and the VLF Swap (§ 97.70). That is, the County charged appellants more than that permitted by section 97.75 because the County should not have included the in-lieu property tax — proceeds underthe Triple Flip and VLF Swapin its calculation and apportionment ofthe cities’ general PTAFresponsibilities. Rather, the County should have charged each city only its proportion ofthe specific cost of making the accounting entries necessary to shift money in treasury accounts underthe Triple Flip and VLF Swap. Therefore, we.are — tasked with determining whether the County’s method of calculating appellants’ PTAF -violates section 97.75. Wherethefacts are undisputed, the issue here involves solely the interpretation of a statute, which is a question of law that we review de novo. (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332; International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 611.) | . 1. The County’s methodofcalculating thefeefor its services is not authorized by Revenue and Taxation Code section 97.75 and is hence not lawful. | | Ourtask is to “ ‘ascertain the intent of the drafters so as to effectuate the purpose of the law. [Citation.] Because the statutory language is generally the most reliable indicator of legislative intent, we first examine the words themselves, giving them their ~ usual and ordinary meaning and construing them in context.’ [Citation.]” (Mejia v. Reed 11 (2003) 31 Cal.4th 657, 663.) We accord “significance, if possible, to.every word, phrase ‘and sentence in pursuanceofthe legislative purpose. A construction making some words _ surplusage is to be avoided.” (Dyna-Med, Inc. v. Fair Employment & Housing Com. ( 1987) 43 Cal.3d 1379, 1387.) If the language ofa statute is unambiguous,the plain meaning governs andit is unnecessary to resort to extrinsic sources to determinethe _ legislative intent. (Kavanaugh v. West SonomaCounty Union High School Dist. (2003) 29 Cal.4th 911, 919.) Ifthe statutory language doesnotyield a plain meaning, we may consider extrinsic evidence ofintent, including the legislative history. (Mejia v. Reed, supra, at p. 663.) “[W]e presume the Legislature meant whatit said, and the plain ' meaningofthe statute governs. [Citation.]” (Huntv. Superior Court (1999) 21 Cal.4th 984, 1000.) . As noted, Revenue and Taxation Code section 97.75 reads: “Notwithstanding any other provisionoflaw,for the 2004-05 and 2005-06fiscal years, a county shall not imposea fee, charge, or other levy on a city, nor reduce city’s allocation of ad valorem property tax revenue, in reimbursementfor the servicesperformed by the county under Sections 97. 68 and 97.70. For the 2006-07fiscal year andeachfiscal year thereafter, a county may imposea fee, charge, or other levy on a cityfor these services, but the fee, charge, or other levy shall not exceed the actualcost of,providing these services.” (Italics added.) ; . Weagree with the referee that Revenue and Taxation Code section 97.75“is clear”in that: (1) notwithstanding any other provision of law, in fiscal years 2004-2005 and 2005-2006, the counties were forbidden to charge or recoup from the cities any administrative costs whatsoever“for services performed by the county under § 97.68 [Triple Flip] and 97.70 [VLF Swap];”and (2) the words “these services” in sentence two . have the same meaning as the phrase “ “for services performed underby the county under Sections 97.68 and 97.70”in thefirst sentence. | | Beyondthat conclusion,the referee found that Revenue and Taxation Codesection _ 97.75 was ambiguousand, there being no pertinentlegislative history, the referee read section 97.75 as part of the statutory scheme which encompasses, amongother statutes, 12 sections 95.2, 95.3, and 96.1,involving the computation of fees counties charge for property tax administration. However, we agree with appellants that section 97.75 is not | ambiguous and hence, does not require resort to extrinsic aidsforits meaning.® Looking at the words ofRevenue and Taxation Code section 97.75 alone, they revealthe clear intent that “services” are those that counties render pursuantto the Triple Flip (§ 97.68) and VLF Swap (§ 97.70) only. This is plain because section 97.75tells us the fee is “for the services performed by the county under Sections 97.68 and 97.70.” The County hasstipulated that “[pJursuant to Sections 97.68 and 97.70,[the County has] | a duty to annually allocate and distribute to cities within LosAngeles County the , - appropriate payments from property tax revenues under the provisions of the Triple Flip — and the VLF Swap.” Thetasks the Triple Flip and VLF Swap directthe County to undertake are to transfer, allocate, and distribute amounts, the size ofwhich are specified by the State Director ofFinance. (§§ 97.68, subd. (c)(1), (2), (4) & 97.70, subd. (b)(1)-(2).) The services countiesrender undersections 97.68 (Triple Flip) and 97.70 (VLF Swap) do not includethe additionalactivities of equalizing, assessing and . _ collecting property tax, processing appeals, or otherwise administering the property tax system as a whole. Rather, the Triple Flip and VLF Swap are mechanismsdesigned to replace lost Sales and Use Tax and Vehicle License Fee revenue with funds derived from property taxes that have already been levied. Our task “tis simply to ascertain and declare what is in termsor in substance contained therein, not to insert what has been 6 Although wedo not considerit, the only relevant reference foundin the legislative history is the. following from the Legislative Counsel Digest: “(7) Existing law authorizes a county to retain a portion ofthe ad valorem property tax revenue that would _ otherwise be allocated to specified entities in a county to reimburse the county for costs in collecting and administering the ad valorem property tax. . “This bill would, for the 2004-05 and 2005-06 fiscal years only, prohibit a county from imposinga fee, charge, or other levy on a city, or from retaining any portion ofthe ad valorem property tax revenueallocation of a city to reimburse the county for costs the _ county may incur underthebill and a specified statute.”. (Legis. Counsel’s Dig., Sen.Bill No. 1096 (2003-2004 Reg. Sess.) pp. 4-5.) There appears to be no dispute that this language provides no guidance about what the Legislature meant by the word “services” in Revenue and Taxation Code section 97.75. 13 | omitted, or to omit what has beeninserted... .” (Code Civ.Proc., §.1858.) “ ‘It is... against all settled rules of statutory construction that courts should write into a — statute by implication express requirements which the Legislature itself has not seenfit to placein the statute.’ [Citations.]” (In re Rudy L. (1994) 29 Cal.App.4th 1007, 1011; Code Civ. Proc., § 1858.) Therefore, the absence from theTriple Flip or VLF Swap. statutes of the words equalize, assess, or collect, demonstrates the Legislature’s intent that the administrative activities counties perform under the Triple Flip and VLF Swap are not part of the “traditional PTAF — generating”tasks ofproperty. tax administration, but are limited to the services the counties perform to process the Triple Flip and VLF Swaponly. | . | Furthermore, not only does Revenue and Taxation Code section 97.75 limit the scope of services counties provide to those necessary to process the Triple Flip and the ~ VLF Swap,but the second sentence ofsection 97.75 specifies that counties may only recoverthe “actual cost ofproviding these services.” The Legislature’s use ofthis phrase reveals its intentto restrict cities’ payment to no morethan the definite costs related to performing the services under the two revenue provisions, sections 97.68 and 97.70, the only two revenuesections mentioned in section 97.75. All three statutes, the Triple Flip, the VLF Swap; and section 97.75, were fashioned by Senate Bill No. 1096.’ The - Legislature knew ofthe existence of section 95.3 and other existing statutes governing PTAF,andyet it passed Senate Bill No. 1096 creating section 97.75 as a statute separate from property tax administrative-fee generating statutes, whose sole reference isto the Triple Flip and VLF Swap. “Generally, it can be presumed that when the Legislature has enacted a specificstatute to deal with aparticular matter,it wouldintend the specific statute to control over more generalprovisionsoflaw that might otherwise apply. [Citation.]” (Arbuckle-College, supra, 105 Cal.App.4th at p. 1166.) The Legislature’s Revenue and Taxation Codesection 97.68 was enacted effective December12, 2003, and became operative March3, 2004 (Stats. 2003, Sth Ex. Sess. 2003-2004, ch. 2 - § 4.1 (Assem Bill No. 5X 9 (2003-2004 Sth Ex. Sess.)) but was immediately amended, effective August 5, 2004, by enactmentof Senate Bill No. 1096 (2003-2004 Sess.)(Stats. 2004, ch. 211, § 20.5). 7 14 choice to enact section 97.75 where statutes addressing the calculation ofPTAF have existed for decades indicates the legislative intent that “actual cost”refers to the cost to counties of performing the newly created Triple Flip and VLF Swap only, and should not | be included in the cost to counties to perform the general property tax administration. Otherwisethe phrase “actual cost” would be superfluous. Stated differently, section . 97.75 is a stand-alone provision authorizing paymentfor the actual cost to the County of - administeringthe Triple Flip and VLF Swap only. Adding the property tax revenue - related to the Triple Flip and VLF Swapto the general property tax shares from which the County calculates the PTAF for property tax administration, as the County advocates, . would violate section 97.75’s language limiting reimbursement to “actual cost of providing these services,” i.e., the Triple Flip and VLFSwap. The County contends, where Revemue and Taxation Code section 97.75is ambiguous, that we mustreadit in the context ofthe statutory schemefor property tax administrative fees as a whole, includingsections 95.2, 95.3, and 96.1. The argument is © | unavailing for two reasons. First, we have concluded that section 97.75 is not ambiguous. “‘“It is a settled principle in California law that ‘Whenstatutory language is... clear and unambiguous there is no need for construction, and courts should not indulgein it.’ ” {[Citation.]’ [Citation.]” (California Ins.Guarantee Assn. v. Workers’ Comp. Appeals Bd. (2004) 117 Cal.App.4th 350, 355, italics added.) | Second and more important, however, is the fact that Revenue and Taxation Code section 97.75 commenceswith “[n]otwithstanding any other provisions oflaw....” “This ‘term of art’ expresses a legislative intent ‘to have thespecific statute control despite the existence ofother law which might.otherwise govern{]’ [citation]” (People v. Franklin (1997) 57 Cal.App.4th 68, 74,italics added) and thus clearly indicates the Legislature’s intent that section 97.75 govern the fees for administeringthe Triple Flip . and VLF Swapregardless ofany earlier enacted statutes governing the assessment and collection of property tax administration fees in general, such as section 95.3. (See Arbuckle-College, supra, 105 Cal.App.4th at p. 1167.) Stated otherwise, the Legislature intended that section 97.75 stand alone with respect to the administrative costs incurred in 15 performing the services required for the Triple Flip and VLF Swap, while assuring that counties wouldstill be reimbursed for thoseefforts.’ Evenif the phrase “[n]otwithstanding any otherprovisionsof law . .. .” were to apply only to section 97.75’s first sentence prohibiting the counties from recovering a service fee forthe first twoyears(fiscal years 2005-2005, and 2005-2006), our conclusion would be the same. . The secondsentence ofsection 97.75 reinstates the service fee, but specifies that such fee “shall not exceed the actual cost ofproviding these services” under the Triple Flip and VLF Swap. Indeed, had the Legislature meantfor the “services” performed pursuantto the Triple Flip and VLF Swap to encompass those governedbythe property tax administrative fee statutes including Revenue and Taxation Codesections 95.2, 95.3, and. 96.1, it could have said so in section 97.75. “The Legislature ‘is deemed to be aware of statutes and judicial decisions already in existence, and to have enacted or amended a statute in light thereof. [Citation.]’ ” (People v. McGuire (1993) 14 Cal.App.4th687,. _ 694.) Cognizantofthe extensive statutory scheme governing traditional propertytax | administrative fees, coupled with the. repeated legislative aim of compensating counties © 4 Althoughthereferee relied on Arbuckle-College, supra, 105 Cal.App.4th 1155, for the-contrary result, the referee overlooked the facts that Revenue and Taxation Code section 95.3 predates enactmentof section 97.75, and has not been amendedsince enactmentofsection 97.75. Hence, we should notrefer to the older statutes where the newer one, section 97.75 can be readbyitself. Although Arbuckle-College involves _ section95.3, it is otherwise inapposite. In thatcase, a fire protection district claimedthat the county’s recovery ofPTAF was controlled by Government Codesection 29142, which permitted a:county to recoveradministrative costs under an agreement between the county andthe fire protection district, and so the district was exempt from the PTAF provisions ofRevenue and Taxation Code section 95.3. Disagreeing, Arbuckle-College held that the county had the right to recover PTAF pursuantto the later enacted section 95.3, which specifies that its provisions apply notwithstanding any other provision of ' law. (Id. at pp. 1163, 1167.) Arbuckle-College.also held that section 95.3 was a remedial statute, which shouldbeliberally construed. (Jd. at p. 1167.) At issue hereis section 97.75, which was enacted a decade after section 95.3, and which alsospecifically applies, “notwithstanding any other provisions of law.” . 16 for their efforts in administering the State’s property tax system (see § 95.3, subd. (e)),? the Legislature could have, but notably did not refer to those traditional PTAF-generating statutes in thebody of section 97.75. Alternatively, had the Legislature intended the in-lieu property tax revenues in the Triple Flip and VLF Swap to be treated i n the same manneras property tax moneyin general, it could have remainedsilent because sections 95.3 and 96.1 already addressed the calculationoftraditional PTAF. Weare unpersuaded by the County’s.argumentthat under the-PTAFallocation ~ rule in effect for the “better part of the last two decades,” the County should beable to recoup the PTAF associated with the additional property tax revenues beingallocated to cities under the TripleFlip and VLF Swap. Neither the Triple Flip nor the VLF Swap existed two decades ago. The Legislature addedsection 97.75 a mere six years ago in conjunction with its creation of the Triple Flip and VLF Swap,andsection 97.75’s _ reference to sections 97.68 (Triple Flip) and 97.70 (VLF Swap)only clearly indicates that “services” under section 97.75 refers solely to activities performed under the Triple Flip. and VLF Swap. Thus, the in-lieu property tax payment amounts underthese two revenue swapping measures should not be includedin the. traditional computation for PTAF. Our reading of section 97.75 is in harmony with the traditional PTAF-generating statutes asit addresses the actualcostofthe services the County performs under the newer Triple Flip and VLF Swap. (Chatsky & Associates v. Superior Court (2004) 117 CalAppath 873, 876; Code Civ. Proc., § 1858.) oo, . The parties argue at length aboutthe effect ofthe differences between each sentence in Revenue and Taxation Code section 97.75. Thefirst sentencelists “a fee, . charge or otherlevy . : . reduc[tion of] a city’s allocation ofad valorem property tax , Revenue and Taxation Code section 95.3, subdivision (e) reads: “It is the intent of the Legislature in enacting this section to recognize that since the adoption of Article XIII A ofthe California Constitution by the voters, county governments have borne an unfair and disproportionate part ofthe financial burden ofassessing, collecting, and allocating property tax revenuesfor other jurisdictions and for redevelopment agencies. The Legislature finds and declares that this section is intended to fairly apportion the burden of collecting property tax revenuesandis nota reallocation of property tax revenue shares ora transfer of any financial or program responsibility. 17 revenue[,}” whereas the second sentence of section 97.75 lists only the “fee, charge, or other levy on a city” and then instructs that the.“fee, charge, or other levy shall not exceed the actual cost of providing these services.” (§ 97.75,italics added.) These two sentences are easily reconciled under the rule expressio unius est exclusio alterius,thatis, “* “ “the expression ofcertain thingsin a statute necessarily involves exclusion of other things not expressed[.]’”? [citation or] ‘ “where exceptions to a general rule are specified , by statute, other exceptionsare not to be implied or presumed,” ’ [Citation.]” (Bonnerv. County ofSan Diego (2006) 139 Cal.App.4th 1336, 1347-1348.) Reducing cities’ property taxallocations in recompense for services renderedunderthe Triple Flip and VLF Swapis prohibitedin the first two fiscal years after enactment of section 97.75, and thereafter such a reduction is simply not within the County’s grant ofauthority. Next, the County argues that“[t]he broad remedial intent behind [Revenue and Taxation Code] section 95.3 is clear[,]” that “[w]ith the exception of schools and ERAFs, every other entity receiving property tax revenuesis to payits proportionate shareof PTAF associatedwith the property tax revenuesit receives.” Wherethein-lieu payments underthe Triple Flip and VLF Swapderive from property taxes, and where sections - 97.68, 97.70, and 97.75 are all Article 3 adjustments under section 96.1, the County | argues, the in-lieu payments from property tax revenues under the VLF Swap and Triple Flip must be included in the calculation of the general PTAF it charges appellants. However, sections 95.3 and 96.1 are the very same earlier statutes over which,as | noted, the newer and specific section 97.75 controls. (People v. Franklin, supra, 57 Cal.App.4that p. 74.) Also, counties are not entitled to recover PTAF from schools and ERAFs. More important, however, by virtue of section 97.75, counties do recoverthe “actual cost” of administering the Triple Flip and VLF Swap. Furthermore,while in-lieu payments are made from property tax funds, they are designedto replenish lost revenues ‘that were not originallyproperty taxes but were collected from Sales and Use Tax and the Vehicle License Fees. And the in-lieu payments are made from property taxes that would otherwise have been allocated to the County’s ERAF(§ 97.68, subd.(a)), that are exempt from paying PTAF. The Triple Flip and VLF Swapare specific accounting 18 - manipulationsthat involve manysorts of revenue. It is fair to conclude that the Legislature’s use in section 97.75 ofthe phrase “actual cost” indicates its recognition, while the in-lieu payments derive from property tax funds,that the entire accounting scheme that comprises the Triple Flip and VLF Swap involves other revenue sources as well, such as the Sales and Use Tax and Vehicle License Fee. | Weare also unpersuaded by the County’s observation that appellants have benefitted from the VLF Swap,in that rather than being revenue neutral, appellants have experienced a revenueincrease as the result ofRevenue and Taxation Code section 97.70. Yet, such an observation does not justify a calculation ofPTAF that is not statutorily authorized.’° It is not our task to rewrite section 97.75 to offset perceived inequity created by anotherstatute, in this case section 97.70. Temporary fluctuations in the value ofthe taxesreveallittle about the meaningof section 97.75. | “As a generalrule, the courtsdefer to the agency charged with enforcing a regulation when interpreting a regulation because the agency possesses expertise in the subject area, [Citation.] However,final responsibility for interpretinga statute or | regulation rests with the courts and a court will not accept an agency interpretation which is clearly erroneous or unreasonable. [Citations.]” (Aguilarv. Associationfor Retarded . Citizens (1991) 234 Cal.-App.3d 21, 28.) We cannot accept the County’s calculation method here becauseit violates the clear instructions of Revenue and Taxation Code section 97.75. In the end, it is up to the Legislature not the courts to rewrite thestatute. 10 Likewise, the County’s reliance on the Guidelinesto justify its calculation method is unavailing. The Guidelines were not vetted under the Administrative Procedure Act and, as the parties stipulated, they “do not have the force of law.” 19 DISPOSITION The judgmentis reversed and the matter is remandedto the trial court to determine the issue oftimelinessand,ifnecessary, to calculate the service fee under Revenue and Taxation Code section 97.75 in accordance with the views expressedin this opinion. Appellants are to recover their costs on appeal. | CERTIFIED FOR PUBLICATION ALDRICH,J. Weconcur: KLEIN,P.J. KITCHING,J. 20 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employed in the aforesaid county, State of California; I am over the age of 18 years and not a party to the within action; my business address is 2450 Colorado Avenue, Suite 400E, Santa Monica, California 90404. On August 13, 2010, I served the PETITION FOR REVIEW on the interested parties in this action by placing the true copy thereof, enclosed in a sealed envelope, postage prepaid, addressed as follows: Supreme Court of California San Francisco Office 350 McAllister Street San Francisco, CA 94102-7303 Clerk Court ofAppeal, Second District 300 South Spring Street Floor 2, N. Tower Los Angeles, CA 90013-1213 Holly O. Whatley Colantuono & Levin, PC 555 West 5" Street, 31“ Floor Los Angeles, CA 90013 Los Angeles Superior Court Clerk for Delivery to Hon. James C. Chalfant Los Angeles Superior Court 111 N. Hill Street , Los Angeles, CA 90012-3014 Hon. Dzintra Janavs (Ret.) ADRServices, Inc. 1900 Avenueofthe Stars, Suite 250 Los Angeles, CA 90067 <] (BY FEDERAL EXPRESS) (Original + 13 copies) (Courtesy Copy) I am readily familiar with the business practice of my place of employment in respect to the collection and processing of correspondence, pleadings and notices for delivery by Federal Express. Under the practice it would be deposited with Federal Express on that LA 129,052,081v1 8-13-10 same day with postage thereon fully prepared at Santa Monica, California in the ordinary course of business. I am aware that on motionofthe party served, service is presumedinvalid if delivery by Federal Express is more than one day after date of deposit with Federal Express. I declare under penalty of perjury underthe laws of the State of California that the foregoingis true and correct. Executed on August 13, 2010, at Santa Monica,California. Ctrut VIKKI BARNETTE LA 129,052,081v1 8-13-10