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Bell overcharged residents on taxes by nearly $3 million, state controller finds [Updated]

August 13, 2010 | 11:29 am

The city of Bell appears to have overcharged residents by up to $2.9 million, according to state Controller John Chiang.

He said the property tax should be lowered and that refunds should be given.

Chiang sent a letter to the L.A. County auditor after he examined an increase in the level of taxes being assessed to pay the city of Bell’s pension obligations in 2007.

The controller concluded that some of the levies exceed the amount allowable under the law.

"Under this section, the city of Bell has no authority to levy a property tax rate greater than the rate imposed in the Fiscal Year 1982-83 or Fiscal Year 1983-84. The estimate of the unallowable taxes assessed during the fiscal years of 2007-08, 2008-09 or 2009-10 is $2.9 million," Chiang wrote in the letter.

[Updated at noon: Chiang's spokesman Jacob Roper said the tax hike “is not allowable under the state’s revenue and taxation code.” The tax code, he said, caps the amount of property tax residents can be assessed to cover pension costs to the rate Bell applied in 1984.

The increases the City Council set in motion starting in 2007, he said, are illegal.

“The code caps the rate a city can levy for a pension obligation…. Taxpayers should not have had to pay that money.” Under state law, Roper said, the $3 million residents overpaid must be directed to local schools in the Bell area.

The controller, meanwhile, has ordered the city to reduce its property tax rate immediately, with the new, lower rate applicable to the next round of property taxes due in November.

“The rates need to go down now,” Roper said.

Roper said the controller’s office is unaware if the property tax hike was implemented concurrently with increased pension benefits for local officials, or if they were intended to be used to cover existing contracts.]

The controller's investigation is one of several probes launched after The Times revealed that top city administrators got high salaries. The California attorney general and L.A. district attorney is also investigating.

[Updated at 12:18 p.m.: A previous Times story determined that Bell has the second-highest property tax rate of all but one of Los Angeles County's 88 cities. The countywide average of all tax rates is 1.16% for every $1,000 of assessed value. The rate in Bell is 1.55%.

That means the owner of a home in Bell with an assessed value of $400,000 pays about $6,200 in annual property taxes. The owner of the same house in Malibu, whose rate is 1.10%, would pay just $4,400.]

-- Richard Winton in Los Angeles and Evan Halper in Sacramento

For the record: An earlier version of this post incorrectly spelled Chiang's name as Chaing.

Investigating Bell: A Times special report:

Is a city manager worth $800,000?

Interactive: How much does your city manager make?

Interactive: How the salaries got so high

Interactive: Paying too much? How property taxes compare

Video: Why do Bell officials make so much money?

Photos: Protests in Bell