A California court's ruling this April could cost Orange County $285 million in property tax refunds.

The case turns on differing interpretations of Proposition 13, the 1978 ballot initiative that limited property tax increases in California to no more than 2 percent per year. Local assessors regularly "recapture" values by increasing their assessments more than 2 percent when property values have stagnated or declined. If the average increase over several years is 2 percent or less per year, they reason, they have kept within the spirit of the law.

Property tax attorney Robert Pool fought that logic after the assessment on his house went up 4 percent. The county's appeal board ruled that he was entitled to a refund, which he was given. The county then took the matter to court, however, where it lost in November and subsequently appealed the case. The April ruling will decide whether the county owes other taxpayers refunds as well.

The county is betting that it won't. "People are thinking it applies to everybody, but currently the lawyers say that it does not," says Orange County Assessor Webster Guillory. "The issue is, for more than 20 years, the state of California and all the assessors in the state of California have applied the law in one consistent way."

The county is likely to appeal an adverse decision to the next court level. Meanwhile, in January, the county Board of Supervisors voted to direct the assessor to stop the practice of recapturing values, but its vote was nonbinding. A week later, a state Assembly committee rejected a bill that would have modified the tax code to ensure that it conformed to the judge's rulings.