Saratoga News
News
Like the patriots in Boston in 1773, Saratoga stages its own tea party
City hopes for return of Tax Equity Allocation
By Jason Sweeney
A signature from Gov. Arnold Schwarzenegger could provide a financial windfall to the city of Saratoga. If the governor signs Assembly Bill 117 this summer, an estimated $1.2 million a year could be added to Saratoga's general fund.
"Our goal is to get the funds by the new fiscal year in July," Councilwoman Kathleen King said. "We are spending money to get it done, but it's the right thing to do."
The city has hired consultants to shepherd the bill through the legislative process in Sacramento.
King, Mayor Norman Kline and city officials from Monte Sereno, Cupertino and Los Altos Hills have been pushing for the return of Tax Equity Allocation funds paid to Santa Clara County. Saratoga, Monte Sereno, Cupertino and Los Altos Hills have been paying a larger percentage of their property taxes to the county compared to other California cities since the 1980s. The combined amount comes to about $4.2 million a year.
According to an analysis of AB117 by the Senate Local Government Committee, about 30 cities in California that never levied a property tax before Proposition 13 are called no-property-tax cities, and about 60 cities that levied only low property tax rates are known as low-property-tax cities. An amendment to the California tax code gave Tax Equity Allocation payments to no/low cities that had revenue shortfalls following the passage of Proposition 13. In most counties, Tax Equity Allocation payments to no/low cities are equal to 7 percent of the property tax revenues generated within city limits. However, Saratoga, Monte Sereno, Cupertino and Los Altos Hills struck a deal with Santa Clara County to allocate only 55 percent of the TEA funding they would have otherwise received. That money went to trial court funding.
Because of the agreement with the county, the four cities receive a lower portion of their property taxes than any other cities in the state. The four cities have tried unsuccessfully for several years to repeal the agreement as trial court funding is no longer an issue.
Delicate negotiations between the four cities and the Santa Clara County Board of Supervisors, with opposition from county staff, were wrapped up earlier this year. The board approved the return of TEA funding to the four cities on Feb. 28. In exchange for the approval, the cities agreed to annex urban pockets from the county and provide additional services that reduce the county's costs, as well as work with the county on other matters.
The OK from the supervisors sent AB117 to Sacramento. It repeals the 55 percent limit in Santa Clara County on Tax Equity Allocation funding for the four cities. Passage of the bill would mean $4.2 million a year in TEA funds would be transferred from the county to the four cities.
AB117 is moving through Senate committees on its way to the Senate floor. The bill received unanimous bipartisan support on the Senate Local Government Committee. It is now being reviewed by the Senate Appropriations Committee.
Greg Sellers is a consultant who is coordinating with consultants in Sacramento and serving as a liaison with the four cities. "It's a big process and we're trying to expedite it," he said. "We've yet to run into any opposition whatsoever."
If AB117 gets a two-thirds vote in the Senate, it then goes through Assembly committees before it reaches the Assembly floor. If the Assembly passes AB by a two-thirds vote, the bill is sent to the governor's desk. A signature from Schwarzenegger would make it a done deal. The city of Saratoga would then receive more than an additional million dollars a year in its coffers.
"We're trying to get it completed by the end of the fiscal year," Sellers said. "So far, we're on track to do that. It's an ambitious goal. Hopefully, we'll be able to keep it moving forward."
