By Khalida Sarwari
The cities of Saratoga, Monte Sereno and Cupertino and the town of Los Altos Hills are each getting a little extra padding in their general
fund accounts after lawmakers approved a bill recently that corrects a long-standing property tax problem for the four municipalities.
SB 107 effectively eliminates a discrepancy in the law that’s lasted for more than 30 years whereby those four municipalities were given 2 percent less than the minimum allocation of 7 percent in property tax revenue. They are the only four jurisdictions in Santa Clara County that were affected by this discrepancy.
SB 107 restores the full share of the municipalities’ property tax allocation, which, based on current-year property tax assessments, comes out to a combined $2.5 million annually. Broken down, that comes out to an estimated $650,000 for Saratoga, $200,000 for Monte Sereno, $320,000 for Los Altos Hills and $1.4 million for Cupertino.
Ending the inequity will enable the city of Saratoga to invest in critical services, Saratoga Mayor Howard Miller said. “Property tax revenue is the greatest source of income for Saratoga,” said Miller. “Correcting this 30-year inequity in property tax distribution will go a long way in allowing Saratoga to continue funding critical services and infrastructure improvements, such as public safety and road maintenance.”
Cupertino Mayor Rod Sinks said the additional revenue “means a lot of things” for his city. “It could be used for improved roadways, bike safety and improved programs for seniors or students,” he said.
Jacqui Guzman, assistant to the city manager in Cupertino, said the city of Cupertino has been lobbying for this cause for years, so the news was received with relief and excitement among city officials.
“It feels wonderful because it was a really hard-fought win,” said Guzman. “We tried last year to get a bill passed. It failed because the department of finance wasn’t really supportive of it, so our strategy changed this year. We had a paid lobbyist … we went out and spoke about how important it was, especially for our smaller cities that have lower revenue, and overall how unfair it was to treat these four cities differently.”
Monte Sereno Mayor Walter Huff counts himself among those who made weekly calls to lawmakers, pressuring them to fix the inequity. The mayor estimates his city will get somewhere between $175,000 to $300,000, which for a city the size of Monte Sereno is “a huge amount,” he said.
“It’s really been a long time,” said Huff. “Not having a full tax allocation has really harmed us, I think. It seemed at the time everybody thought it was a great idea, but at the end of the day we all found ourselves struggling to a certain degree paying bills to the city.”
Huff said he’d like to see that money go toward a new city hall building in Monte Sereno but that that is a decision for the residents to make. The existing city hall is run down, infested with rats and snakes, and costs the city upwards of $100,000 a year just for maintenance, he said.
“Eventually this building’s going to have to come down,” Huff said.
The disparity began in 1978 following the passage of Proposition 13, a voter-approved initiative that froze property taxes, creating a revenue problem for jurisdictions with low rates at that time. Then in 2007, legislation was approved which increased their property tax allocations. What SB 107 does is return the remainder of what the municipalities are owed over a five-year period. Huff said he’s going to continue applying pressure on lawmakers to shrink that time span.
State Sen. Jim Beall and Assemblyman Evan Low helped champion the bill. As a member of the senate budget and fiscal review committee, Beall has been involved in the effort to restore the money since 2008.
“Residents in Saratoga, Cupertino, Monte Sereno and Los Altos Hills have been paying their property taxes for years but received less than their rightful share returned to them by the state,” said Beall. “SB 107 corrects this inequity and provides more dollars for their hometowns, money that will pour into their general funds to be spent on streets, libraries, parks or whatever priority they deem fit.”
Low noted the bill allows for a number of broad-based benefits for local governments, including an end to the requirement for the four municipalities to reimburse the county’s Education Revenue Augmentation Fund for tax equity allocations.
“This bill is a huge win for our region and will save our local governments millions of dollars each year,” said Low.
The governor ratified the bill on Sept. 22.
Link: Property tax problem solved, and that means cities will share $2.5M
