City Hall Beat: Picking apart property taxes

In December 2020, I wrote a City Hall Beat column about General Fund revenues. I noted the two most significant sources of revenue funding our police, fire, library and parks and recreation departments are property taxes and sales tax revenue. Fast-forward to today, and not much has changed. Property taxes account for 54 percent of the current budget, while sales tax generates 22 percent. Californians typically pay a lot in property taxes, as 1 percent of a highly assessed value home (versus the national average) is a significant amount! Most people, however, are unaware that only a small portion of that payment returns to cities. The six cities of Placer County receive a total of 8 percent of property tax collections, with some cities having higher rates and others lower. Schools receive the largest portion at 61 percent, followed by the county at 17.5 percent, while special districts and redevelopment agencies receive the remainder. Most taxpayers look at their tax bills, grumble about what they're forking over and pay them. Later, when they read about a city budget problem or ask why a program can't be funded or their street repaved, they reason, "I pay XXXXX dollars in property taxes every year. Why can't the city make do with all that money?" The simple answer is that if the city received all that money, a LOT could be accomplished, but it only gets a small portion of the total. When you look at your tax bill, you will see the total for your property taxes, followed by a section labeled "Voter Approved Taxes, Taxing Agency Direct Charges and Special Assessments." What you won't see is the distribution of property tax among the city, Placer County, educational districts and selected agencies. So, frankly, your amazement at why the city cannot make do with all that money is understandable. Enter technology, and a creative city employee. Lincoln's Chief Innovation & Technology Officer, Jennifer Brown, wanted to see detailed tax breakdowns between various locations in the city because, as a growing city, different tax rate agreements exist between the city of Lincoln and Placer County, significantly impacting future revenues. Ms. Brown accessed Placer County property tax records and developed a new computer application that provides detailed information on property taxation levels at the specific property level. The application offered an opportunity to see precisely what each parcel in the city is paying, and to whom. Sun City Lincoln Hills example: According to the 1 percent of total valuation formula, the property tax on this parcel is $5,998. Of this amount, only $479, or 8 percent, is returned to the city. The remaining $5,519 is distributed among seven other local government agencies. Additionally, there are fees from various governmental jurisdictions, which include multiple charges from Sierra College and the Western Placer Unified School District for voter-approved bonds, as well as from the Placer Mosquito District. Downtown Lincoln example: Based on the 1-percent valuation formula, the property tax on this parcel is $4,710, of which $376, or 8 percent, returns to the city. $434 is distributed among the other seven local government agencies, and $273 goes to Sierra College, the Western Placer Unified School District for voter-approved bonds and the Placer Mosquito District. Sorrento area example: Based on the 1-percent valuation formula, the property tax on this parcel is $4,245, of which $599, or 14 percent, returns to the city. The remaining $3,646 is distributed among the other seven local government agencies, while $249 is allocated to Sierra College, the Western Placer Unified School District for voter-approved bonds, and the Placer Mosquito District. However, this home is located in a specific Lighting and Landscaping District, which incurs an additional charge of $76. (Not every area of the city is included in a Lighting and Landscaping District, an issue the city will address in the future.) Want to know where your property tax dollars go? It's easy. Just visit the city's main website and click on the box labeled "Updated Property Tax Allocation Map." Next, select the grey box "Interactive Parcel Map and Dashboard," locate your home, and then click on your parcel. Voilà! California government finance ... the devil is always in the details.