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City of Turlock may gain $500k annually under county’s new property tax sharing agreement
Stanislaus County

Recent changes made to the formula of the county’s master property tax sharing agreement could result in an additional $533,797 per year for the City of Turlock. 

All nine cities within Stanislaus County would potentially benefit from the new tax sharing agreement. Turlock is expected to receive the most at $533,797, an approximate $2.6 million over a five-year span, followed by Patterson at $328,438 and Riverbank at $322,870. The City of Ceres stands to gain an additional $215,984 and Hughson $57,274.

The County Board of Supervisors unanimously approved the new tax sharing agreement at their June 14 meeting.

“This has been a very long process and at times, very challenging…I am proud of the work that was done here with all nine of our cities, entire teams that came together to work on the city side, as well as the county side, to recognize that even while you have differences in your interpretation of data, your thoughts on what’s best to move forward as a community, we can work through those differences. We can continue to come to the table, we can continue to talk about it. And we can continue to try to be the best listener in the room. I saw that both on the city side and the county side throughout this process and for me that was very, very encouraging as a final result,” said Stanislaus County CEO Jody Hayes.

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 turns 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. 

“The bottom line is… in Stanislaus County we have a smaller pie, so, we’re going to reallocate a smaller pie. I’m going to challenge all the employees of the cities and the county, as well as ourselves and the city managers, to change the size of the pie,” said County Supervisor Vito Chiesa, who represents Turlock.

Turlock Mayor Amy Bublak has been advocating for a change in the county tax sharing agreement for years.

“It’s a double-edge sword,” Bublak said about the tax sharing agreement. “I’m happy we got to the table and made changes, but would have liked to see some current changes.”

The mayor said she would have liked to see the County make a retroactive agreement that would have been money in the city’s coffers from the growth seen in Turlock over the past several years.

“We all know we’re facing financial problems in the future,” Bublak said.

The cities now have until July 20 to approve their individual agreements with the county for the next fiscal year. If the Turlock City Council does not vote to approve the agreement by July 20, Turlock would have to wait until the next fiscal year to approve an agreement.

— Jeff Benziger contributed to this report.