In 2001, the county's Open Space Authority established the assessment on property. The money was to be used to purchase open space, much of which is located in South County. But justices Monday said the assessment violated Proposition 218, "The Right to Vote on Taxes Act," passed by voters in 1996.

Prop 218 limited the ability of local governments to impose real property assessments. Five years later, the Open Space Authority imposed the county-wide tax through a vote by mail. Of the approximately 314,000 official ballots mailed, 48,100 were returned, a 15 percent response rate.

Immediately, the taxpayer's association filed a lawsuit charging that the tax was illegal because it did not meet Prop 218's "special benefit" distinction.

"It has been a long haul, seven years," said Doug McNea, president of the Silicon Valley Taxpayer's Association. "From the very beginning, we have felt that it was an illegal tax, as was proven out by the state in ruling that the tax was in violation, an improper use of prop 218."

Now, McNea added the association will be waiting to see what happens with the tax dollars collected.

"It sounds like (the Open Space Authority) is going to offer some resistance, and unfortunately this will have to be sorted out in the courts," he said. "From here on out, the issue is what's to become of the taxes illegally collected."

County Supervisor Don Gage said the ruling is not good for the county.

"The Supreme Court ruling is bad news," he said Thursday. "We don't lose the whole tax, the first part was legal and they say the second part wasn't, but with the revenue, the county had been purchasing a lot of open space land to keep in perpetuity. Now they don't have the dollars to do that, there will be fewer and fewer open spaces and more land used for development."

Patrick Congdon, general manager of the Open Space Authority, said he does not know yet if the agency will appeal the ruling. There will be a special closed session meeting of the board to discuss the ruling Thursday evening. He also said the agency still has a little more than $4 million coming in from a benefit assessment district that was approved in 1994, and cities including Morgan Hill can receive money from this fund to benefit their urban open space and park programs. Gilroy, however, is not a part of the authority and could not benefit from the funds.

"I encourage them to bring forward their programs in those categories for approval," he said. "They would have also been eligible to receive some of the $56 million, but now that may not be available. I'm not sure what is going to happen, we'll just have to wait and see what happens in the courts."

Congdon said Tuesday that organization was not totally surprised by the ruling.

"You have to think about how you are going to deal with something like that, how we going to deal with that decision," he said. "The Court of Appeals will be making a decision on what happens to the money ... Our counsel has no idea how long that will take, whether a few months or up to a year. We've already had some people commenting that the money should be given back and that should happen right away."

There is no plan in place to return the money, if that is the decision of the court, Congdon said.

"We're going to wait for the court, the decision could be quite complex," he said. "How the money is returned may be dictated by the court, it may be left up to us or it may be drafted by government code."

The original amount of the tax was $20 per year for a single family, one parcel home, not based on assessed value of the home, Congdon said. For condominiums, town homes and large businesses, there was a different equivalency ration. The single family tax was increased several years ago to $23.40 in a cost of living increase. If the money was returned, a single family homeowner would receive less than $200.

McNea said Tuesday that he is "very happy with the ruling."