Locals Governments Seek New Levies Despite $4 Billion Property Tax Surge

taxesLocal government officials throughout the state got some very good financial news when county tax assessors toted up changes in taxable property values for their 2018-19 budgets.

The state’s uber-strong real estate market generated a 6.51 percent increase in those values, adding another $374 billion to the property tax rolls and pushing the total to $6.1 trillion.

That increase, three times the rate of inflation, translates into $4-plus billion more in revenue for cities, counties and other local governments. While schools also receive property taxes, they don’t directly benefit from the increase because of how state aid is structured.

The big winners are cities because, unlike counties and schools, they are almost totally dependent on local taxes and fees to finance their budgets. San Francisco, which is both a city and a county, reported the state’s strongest assessed valuation gain, 10.35 percent.

The very strong growth in property tax revenue, however, raises a pithy question: Why then are so many local governments, cities especially, complaining that they can’t balance their budgets unless local voters raise taxes?

There are 254 local tax increases on the November ballot – sales taxes, parcel taxes, utility taxes and hotel/motel taxes, mostly – according to the California Taxpayers Association, 65 percent more than there were four years ago.

The reason is that even with strong property tax gains, local governments’ pension costs are growing faster than revenues, thus putting the squeeze on their budgets.

Cities have been hit the hardest by increases in mandatory payments to the California Public Employees Retirement System (CalPERS) as it tries to shrink its large “unfunded liability.” City officials have repeatedly complained about the specter of insolvency if pension payments continue to grow and the League of California Cities has labeled the situation “unsustainable.”

With very rare exceptions, however, officials who place the tax increases on the ballot will not publicly say the extra revenue is needed to offset rising pension costs. Officials believe that telling the truth would make voters less likely to vote for the new taxes. It could also make employee unions less likely to provide money for tax campaigns.

Rather, on the advice of high-priced consultants, they say the money is needed for popular police and fire services and parks.

Unfortunately, most local news media are carelessly complicit in this conspiracy of silence, tending to accept the official reasons at face value, rather than analyze them critically. That’s true even though data about what revenue the new taxes would generate and projections of pension costs are readily available.

Over the weekend, for instance, the Sacramento Bee published a long article about proposed tax increases in Central Valley cities, quoting officials about what they hoped to do with the extra revenue, including Sacramento Mayor Darrell Steinberg, who called his one-cent sales tax hike a “game changer.”

However, the article only tersely mentioned pensions as something brought up by unnamed “critics,” even though the city’s own budget complains about pension costs and data indicate that the new taxes would largely go to pensions.

The Santa Cruz Sentinel, in a similar piece about new hotel/motel tax proposals in its region, took the opposite – and more responsible – tack by delving into how pensions are straining local budgets and driving tax hikes.

The Sentinel’s article, unfortunately, is a very rare exception. Otherwise, local officials and local media seem to believe that ignorance will be blissful.

olumnist for CALmatters

Comments

  1. It used to be the Democrats would tap your Left shoulder and pick your right pocket.

    Now they just push you against the wall and rip open every pocket and steal your money…..(but we are such nice people…yea right)

  2. Dems will never stop spending and never stop taxing. Expect to see higher and higher tax revenues across the board

  3. Kristina Bell says

    Did you see the levy the put on reseeding the Parks…RESEEDING the park. FERTILIZING the park.

  4. Can’t manage, can’t budget!
    Most city, county, and our state are top heavy in every department with a population in mid-management beyond the need. Time to drain the swamp in every government entity. They are supposed to work for and serve the people they are not an employment machine.
    California could save tons of money if they had real managers.
    All cities, counties, and California have to expensive benefits and retirement.
    Time to audit and reorganize!

  5. Politicians have turned into ” You folks give us your money and we’ll give it to the folks who keep us in office to ask you for your money’.

  6. Well, a big fat whoopee……….. Ca folks are probably paying over 50% of income in total taxes. Property Taxes, Fuel Taxes, State Income taxes, SALES taxes, and all the thousands of hidden taxes most folks don’t even know about. Let alone EXCESSIVE fees like DMV. Ca is over burdened with regulation, and continues to create yet more taxes & FEES as they see fit. This is the problem caused by DEMOCRATS alone. And stupid voters continue to vote for same old useless incumbents. ….. When will they learn?
    YES on Prop 6! NO on Prop 10 for sure…………

  7. showandtell says

    Just LOVE paying more and more and more and more so that everything around us will get worse and worse and worse and worse. You too?

  8. I’m going to vote YES on 5 and 6. I am going to vote NO on the rest. I haven’t voted for a “bond” for years. Not when we owe a fortune in pensions.

  9. TheRandyGuy says

    Never, FOR ANY REASON, vote to increase your taxes. Make the politicians do it.

  10. The surge in government employee costs are outstripping the surge in property tax, and other revenues; forcing governments up and down the state to face the very real probability of bankruptcy.

  11. I only wish the rest of the California electorate was as intelligent as the posters on this forum….
    Be bold and get your friends on board and to the polls to take back California…
    I see articles that Cox is closing the gap on Newsom…
    #MCGA

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