Recent changes made to the formula of the county’s master property tax sharing agreement will result in an additional $215,984 per year for the city of Ceres.
Supervisor Channce Condit addressed the Ceres City Council last week to explain the changes made on June 14 will help all nine cities within Stanislaus County.
“That’s gonna mean huge dividends for our cities, especially with Ceres, being the annual average of a little over $215,000 a year and an accumulation of five years a little over a million dollars,” said Condit.
The funds will go into the General Fund and could bolster public safety, park maintenance, code enforcement and wherever the council allocates it.
The city of Hughson stands to gain about $57,274 extra per year.
The biggest benefit will be realized in Turlock which is predicted to receive $533,797 each year, or $2.6 million over a five-year span.
Stanislaus County receives approximately 12 percent of total property tax allocations and, on average Stanislaus County cities receive 5.7 percent of total property tax allocations.
Since 1996 the county and its nine cities have been operating under an arrangement which determines how taxes are split for homes and properties annexed from the county into the cities. That agreement had the county retaining all base funding, while tax increment (or growth) was split at a 70-30 percent rate to the county and cities, respectively.
The county and cities don’t get to keep all of their respective shares of property tax revenue. The county turn over 55 percent to the Educational Revenue Augmentation Fund (ERAF) while the cities each surrender an average of 26 percent. That means the cities get to spend an average of $946 in revenue for every $1 million assessed compared to $891 for the county.
The new agreement allows the county to continue retaining all base property tax revenue, while the revenue growth for the new tax rate areas since the 1996 agreement will be split 50-50. That should result in cities netting an average of $1,365 in revenue per $1 million in assessed value growth while the county will net $637.
The cities’ gain will result in a loss to the county. In looking at the past five years, on average shifting to a 50-50 formula would have reduced county property tax growth revenue by $1.3 million per year, while increasing city revenue $2.1 million annually. The difference of approximately $800,000 is the result of the county requirement to shift a greater portion (55 percent) of property taxes to ERAF while cities shift an average of 26 percent.
Approximately 100 individual Tax Rate Areas (TRA) have been developed in the county following annexations. The combined base value of all properties at the time of annexation under the 1996 agreement is $266.6 million which has since grown to $6.2 billion. Impacts from the 1996 agreement vary by city and are a direct result of individual city growth patterns. The county Auditor-Controller estimated that $65.4 million in growth was allocated to the cities and $56.8 million of growth was allocated to the county.
A memo to the supervisors from the county’s Chief Executive Office notes that: “The greatest financial impact of the agreement occurs at the time of development. County staff is unable to project the fiscal impact of future growth for individual cities. The impact to the county for this kind of shift will materialize over a long period of time, and the true impact of the agreement will not be known for another 15 to 20 years based on individual growth patterns by city.”
Councilman Mike Kline thanked Supervisor Condit and the county for making the changes.