What began as a clerical error that cost the school district $6
million in uncollected taxes has mushroomed into a legal quagmire
that puts a $5.3 million bill the district owes in September on
shaky ground.
What began as a clerical error that cost the school district $6 million in uncollected taxes has mushroomed into a legal quagmire that puts a $5.3 million bill the district owes in September on shaky ground.
At the previous board meeting, Gilroy Unified School District trustees passed a resolution calling upon the Santa Clara County Board of Supervisors to issue a corrected tax levy in order to collect approximately $6 million in Measure J taxes that should have been collected during the 2008-09 fiscal year. However, the Board of Education issued a formal statement after emerging from a closed session – which included an item labeled “initiation of litigation” on the agenda – that the school district will likely not pursue the corrected tax bill due to legal issues.
According to the statement, read by board Vice President Francisco Dominguez, the Board of Supervisors will not place the tax levy on their agenda unless the district provides a court order demanding so. The county instead suggested that the district “indemnify the county against all claims that could conceivably occur if they (the county) issue a corrected tax bill plus pay for all hard and soft costs involved in doing so, estimated at over $100,000.”
Not willing to pick up the $100,000 bill associated with issuing a corrected tax bill or face potential lawsuits that could result if taxpayer constituents protest the corrected bill, Superintendent Deborah Flores said the district has considered several scenarios for collecting this year’s tax in the next two years. Flores said the board will likely double up on the Measure J levy – which taxes property owners $70.50 per $100,000 of assessed property value – in the final two years of the measure’s lifespan to recoup the money that should have been collected during the last round of taxes.
Based on the district’s statement, it is unclear how they will make their fall payment of $5.3 million but the county has expressed its support in the past for loaning the district money to pay their debts.
“They’re going to be made whole one way or another,” County Supervisor Don Gage said.
County officials and staff have also indicated they believe doubling up on the Measure J tax is the best option.
“Honestly, it would be my preference for them to pick up the missing amount on next year’s tax bill,” said John Guthrie, the county’s director of finance. “It would be cheaper and easier.”
