Officials in four South Bay cities are campaigning for passage of a state bill that could provide hundreds of thousands of dollars to help pay for projects ranging from extra police protection to major street improvements.
The bill, authored by state Sen. William Campbell (R-Hacienda Heights), would allocate a portion of property taxes collected by counties to cities that do not levy property taxes of their own.
Representatives from Carson, Lawndale, Lomita and Rolling Hills Estates attended a Sacramento hearing earlier this month and are continuing to lobby local legislators for support of the Senate bill.
For these cities--many of which say the bill is the most important one affecting them in the current session of the Legislature--the issue is simple: Their residents pay the same percentage of property tax as everyone else in the state, but none of the money they pay comes back directly to their communities. Los Angeles County and special districts keep all of their property taxes, even though most other cities in California reap some share of that income.
Cities that levy no property tax say the issue is equity.
County Would Lose
But for financially strapped Los Angeles County--which would lose $18.5 million a year in tax revenue from its 20 cities affected by the bill, including the four in the South Bay--the legislation would give money to cities that have not proved they need it, officials contend.
They say residents throughout the county stand to suffer from the bill because the revenue loss would erode the county's ability to provide services for all its citizens.
To understand the issue, one has to look at the history of California's property tax laws.
When California voters overwhelmingly approved Proposition 13 in 1978, a limit was placed on the property tax rate statewide. The taxes for residents of all areas were leveled off to 1% of their property's market value.
(The market value is based on a March 1, 1975, assessment, if the property has not changed hands. Property is reassessed each time ownership changes. Assessments may be increased 2% a year--unless the inflation rate is less than that--and for any new facilities added to a property.)
To implement that tax cut, the state Legislature passed a series of bills that froze the percentage of revenue that each government agency was getting from a property.
For example, if a Torrance resident was paying $150 in property tax to the city and $850 to the county and such other agencies as school, fire and library districts, then 15% of that resident's reduced tax dollars went to the city and 85% was directed to the county and the other agencies.
The problem that arose from the new distribution system--which many city officials say they did not foresee--was that it left out cities that did not have property taxes when Proposition 13 was passed.
Officials from those cities then slowly began to protest what they saw as a great disparity. Before Proposition 13, residents in cities like Carson enjoyed a lesser tax rate because Carson had no city property tax; after Proposition 13 those residents paid the same rate as citizens in other cities but Carson received no percentage of its residents' tax dollars.
Yorba Linda Bill
Protests about the disparity have recently developed into a concerted campaign, officials say, because a similar bill was passed last year affecting only the city of Yorba Linda. The only city in Orange County that did not share in property tax income, Yorba Linda had been facing severe financial problems because it is almost entirely a residential community and had few businesses to generate other tax revenues.
Like the Yorba Linda legislation, the current bill would give cities that were left out of the post-Proposition 13 distribution system 10% of the money that the county and special districts collect in property taxes. The bill would not take any property tax revenue from school districts.
The current bill is set for a hearing in the Senate Appropriations Committee on May 6, after passing through the Local Government Committee on April 10. If approved, it will next be directed to the full Senate, after which it will be considered by Assembly committees, the full Assembly and the governor.
"We're going to have someone at every hearing that pertains to this cause," said Lomita Councilman Leonard Loy. "This cause is quite vital to us. I can't see any justification for us not getting the tax money that's coming from our people."
In the county's opinion, however, there is plenty of justification.
No Need, Says County
"Many of these no-property-tax cities are in better shape than the cities that are receiving property tax revenue," said Cliff Caballero, assistant head of the legislative section of the county's chief administrative office.