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Under new California law, residents will get extra taxes refunded

By the CNN Wire Staff
  • Bell, California, drew fire this year over high salaries for officials
  • An audit found Bell residents were improperly taxed
  • Officials estimate residents paid $3 million in extra taxes since 2007

(CNN) -- The acting California governor on Monday signed legislation that will return "illegal and excessive taxes" to the residents of a town that drew anger for high salaries paid to its leaders, the governor's office said.

Acting Gov. Abel Maldonado signed AB 900, which stemmed from an audit of the city of Bell's finances. California State Controller John Chiang said last month that property owners in Bell paid an estimated $3 million in extra taxes over the past three years.

Bell passed an "illegal resolution in 2007 that resulted in a 50 percent increase in the tax rate over the course of three years," the governor's office said in a statement issued Monday. The new law signed by Maldonado requires the city to send the money to Los Angeles County by December 31 so the county can begin issuing tax refunds to the homeowners.

"Make no mistake, Governor (Arnold) Schwarzenegger and I consider returning or saving taxpayer dollars an urgent matter that must be expedited immediately," Maldonado said in the statement. "I will be watching these funds and fully expect the city of Bell and Los Angeles County to make getting taxpayers their refunds a high priority."

Maldonado is acting governor while Schwarzenegger is in Asia.

Bell City Manager Robert Rizzo, Police Chief Randy Adams and Assistant City Manager Angela Spaccia resigned in July after media reports that they were earning salaries of several hundred thousand dollars each. In addition, four Bell City Council members who were making almost $100,000 a year drastically reduced their pay after protests by citizens

outraged by the high salaries.

Chiang said Bell's City Council began raising property tax rates in 2007 to pay for pension obligations, even though state law caps those taxes at the rate used in fiscal year 1983-84. The lower rates would deliver, for example, an estimate $250 in annual savings on a property worth $275,000.

Bell is a working-class city in southeast Los Angeles County. The 2000 census counted 36,624 residents. The median annual income of city residents is less than $35,000.

The Bell salaries provoked statewide anger at a time when California is grappling with a nearly $20 billion budget deficit.

"It's my job to stand up for working families, and it is critical in these tough economic times that government scrutinizes every penny," Maldonado said in the statement Monday "I know that the residents of Bell are working hard to reform the way business has been done in the past, and AB 900 will help them on their way."

Maldonado also signed a bill amending the state's unemployment insurance law to show that elected officials are not eligible to receive unemployment benefits once they are either termed out or removed from office by California voters. The legislation also authorizes the state to recover any unemployment benefits already paid to former elected officials.