Sorting Out S.D. County Taxes
Friday, March 12, 2010
GLORIA PENNER (host): KPBS has been looking at the impact of Proposition 13, the voter-driven tax revolt that passed in 1978. And now that the state is in the middle of a recession, local governments are battling with Sacramento for control over the tax pie. But like most things in government, the situation is not as simple as it might appear. So joining me to explain how taxes are collected and divvied up is KPBS reporter Joanne Faryon – welcome back Joanne.
JOANNE FARYON (KPBS reporter): Thanks Gloria.
PENNER: This is part of a longer report you are going to be doing later in the month right?
FARYON: Yes, yes
PENNER: So how has the recession exacerbated this tug-of-war over money between local and state government?
FARYON: Well, Gloria it’s probably like most of us at home right now, uh times, it’s a recession. We all have less money in our personal budgets. That’s happening also at the state and local level – there is less money to be had. However, there are many competing interests for that money. And I want to talk specifically about property tax money. There are various levels of taxation in the state. Property tax money is the tax levied against your home. That money is collected by the county and stays in the county. That pie is actually shrinking. Prop. 13, more than 32 years ago, limited how much property taxes could be collected on your home and it’s a forever limitation. It’s one percent of your purchase price forever and ever. And that pie is a finite size and because house prices are going down it’s actually shrinking as well.
PENNER: Ok, so what we have is a graphic that shows how the San County does divide its property taxes. So let’s take a look at that.
FARYON: The largest portion of property taxes goes to local schools – nearly 44 percent or $1.7 billion. The second largest amount goes to the county, just over 20 percent. The cities are right behind, receiving just under 20 percent. Nearly 11 percent is distributed to redevelopment agencies. The remainder goes to special water, fire and sewer districts. Less than one percent is left for libraries.
PENNER: Ok, so the big question is how much of the local property tax is collected by the state of California?
FARYON: It’s actually not collected by the state. That property tax money is collected locally. It’s collected by the county tax collector.
PENNER: Alright, so you are saying that no money goes to the state?
FARYON: Uh, yes and no.
PENNER: I mean I’m talking about the property tax.
FARYON: Property taxes. Legally property tax money cannot go to the state. However, the state under Proposition 13, remember passed 32 years ago, has control over what size piece of the pie you receive in the county. So that pie that you just saw, that graphic, well the state determined how large a slice the schools get, the state determined how large a slice cities and counties get. And the other thing, they get to shift that slice around. If they haven’t got enough money to give to schools, they’ll say well you know what we’re going to take a little bit of city and county pie and we’re going to shift it over to the schools. So you get this kind of an illusion that the state somehow is controlling it. They are controlling it, but they are not actually physically taking the money away.
PENNER: Ok, you did speak with our county Treasurer -Tax Collector Dan McAllister, about this very issue, and here’s what he had to say.
DAN MCALLISTER (San Diego County Treasurer - Tax Collector): Much of the money stays in San Diego. But, I think that the real danger here, when you see things on this chart that suggest cities and county in lieu of sales and use taxes for instance, that’s part of the shell game that gets played. When you see things such as VLF, in lieu of cities and county in lieu of VLF, vehicle license fees, charged in the county, those are the trade-offs. And that’s what they’re talking about. So in effect it does seek to steal property tax monies from San Diego County residents. And that’s what’s not fair.
PENNER: Well, you did a story on this very thing this morning on KPBS radio. I heard it and it has to do with the state quote borrowing money from cities and counties. So how much did the state borrow?
FARYON: Well again, they can’t actually keep the money. Uhm, under the law, they can only borrow property tax money two times in a ten-year period, under very special circumstances. Uh, countywide, I believe the amount was $150 million and that was money taken from this fiscal year’s revenue. However, that money is being paid back. Half of it’s already been paid back and deposited into a special account. And the other half will be repaid this May.
PENNER: Alright, then so then why the confusion? Why is it that many of our elected leaders are saying, and we’re hearing them saying it, that the state is taking our property tax money?
FARYON: I think there’s so many reasons. One is this all so complicated. California finance – very complicated. The second reason – there’s so many different forms of taxation. And I think that’s what people at home have to really realize. Property taxes, sales tax, income tax – they’re all different, collected by different agencies. Finally, when it comes to property taxes and Proposition 13, which basically redefined property taxes and gave control in terms of how that pie gets divided, I think that really created this illusion that somehow the state collects the money, pools it all together and then redistributes it.
PENNER: To get back to the borrowing, uh, the borrowed money, has it been paid back?
FARYON: Yes it has, as I said, half of it was repaid in January. It’s about $70 million that goes to the county, $35 million to the City of San Diego. The other half gets deposited in the next couple of months. All totaled about $150 million to the county.
PENNER: And are elected leaders telling us about the money that’s being paid back?
FARYON: Well, you know, that’s a great question Gloria. Actually I spoke with Ben Hueso, and as you know he’s the council president for the City of San Diego, and I spoke to him last night and yes he was very aware of this and actually knew all of the details. The League of Cities has also been instrumental in orchestrating a very complex financial plan to ensure that cities and counties were repaid this money.
PENNER: And actually, they’re getting an initiative on the ballot. Ok and so finally Joanne, what are you next stories on the topic.
FARYON: Well we want to now focus on education funding. You can’t really live in this county without knowing there’s some kind of crisis going on with funding for schools. Uh, we want to trace it back to Prop. 13 and we’re going to ask the question, is Prop 13 one of the reasons our schools don’t have enough money relative to the rest of the country.
PENNER: Alright, thank you Joanne. And let me remind our audience that you can learn more about Prop. 13 at our Web site. Just go to KPBS.org/Prop.13
Please stay on topic and be as concise as possible. Leaving a comment means you agree to our Community Discussion Rules. We like civilized discourse. We don't like spam, lying, profanity, harassment or personal attacks.