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The original item was published from 4/15/2014 12:57:11 PM to 5/1/2014 12:05:00 AM.

News Flash

Finance Department

Posted on: April 15, 2014

[ARCHIVED] Chart of the Month: Revenues From Property Taxes

Property Tax Revenues.png

Have you ever wondered what the Town receives in Property Taxes Year? The Town receives several different types of revenues that fall into the "property tax" category. Property taxes in California are collected at a rate of 1% each year, plus any other amounts imposed due to voter approved measures typically to fund debt. The amount is allowed to increase by the CPI each year, not to exceed 2%. The Town receives a portion of that revenue - 8.58%.

From a pure hypothetical perspective, a property with an assessed value of $7,000,000 faces a property tax liability of $70,000 per year (1%). The Town receives 8.58% of that amount or about $6,000. The remainder of that tax liability is divided up amongst various other agencies in differing amounts - the County (13.1% - $9,170), Fire District (13.83% - $9,681), schools, Open Space District, Mosquito Abatement District, Library etc. The largest allocation goes to schools at all different levels in different percentages from elementary to junior college - 42% or $29,400.

When looking at the chart, you can see that Atherton's property tax revenue is divided into several categories:

* Secured
* Special Tax
* ERAF Subvention
* Property Tax in Lieu of VLF
* Unsecured
* SB813 Redemption (secured and unsecured)
* Home Owners Exemption
* Motor Vehicle License Fees

Secured property taxes (the tax on real property) is by far the largest single revenue stream for the Town. The current budget reflects this revenue at about $6.8 million. The Special Tax (known as the Parcel Tax) follows at $1.8 million. Next up is ERAF at about $1 million. ERAF is one of those State creations left over from the 1990's when the State raided local government coffers to fund schools and the State budget. Some agencies receive a portion of revenue back locally if the minimum required revenues to the local schools are met through basic property taxes. Atherton is one of those fortunate communities; however, every year, because ERAF revenues run through the State coffers first, the State threatens to keep the revenues at the State level instead of returning them to local agencies. The revenue stream is always in jeopardy.

Other State-created revenue streams include Motor Vehicle License Fees, SB 813 (another school related measure involving the supplemental tax rolls), Homeowner's Exemption, and Property Tax In Lieu of VLF. These come in at varying levels each year based on a formulaic application at the State level (typically per capita).

Overall, the Town's property tax related revenue budget is increasing each year - in some cases more than the 2% CPI adjustment - largely due to resale and new construction valuation. Total revenues range between $10.4 and $11.0 million. The ERAF $1.0 million is at risk each year depending on State action and the Special Tax is a local creation up for renewal every four years. Compare this to an expenditure budget of approximately $10.4 million for operations and a capital infrastructure budget of approximately $2.1 million. More on that on next month's Chart of the Month.

View the Chart
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