The Turlock City Council voted unanimously to accept Stanislaus County’s master property tax sharing agreement that is expected to bring in more than $500,000 per year for the City, but it wasn’t without a few comments that it should be more.
All nine cities within Stanislaus County will benefit from the new tax sharing agreement. Turlock is expected to receive the most at $533,797, which comes to approximately $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.
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.
While the Turlock City Council approved it unanimously, there were some grumblings that it did not include a retroactive element.
“This conversation has been going on for a lengthy amount of time and it keeps changing hands because, like other cities we’ve had people changing positions,” said Mayor Amy Bublak. “We were at a point where we were talking about retroactive and that retroactive would have been over $10 million for all nine cities.”